Guardant Health, Inc. (GH) Q2 2025 Earnings Call Transcript

Good afternoon and thank you for attending the Garden Health Q2 2025 earnings conference call. My name is Jason and I'll be the moderator today. All lines will be muted during the presentation portion of the call and the opportunity for questions and answers at the end. I would now like to pass the comments over to your host, Zarek Hershid.

Thank you. Earlier today, Garden Health released financial results for the quarter ended June 30th, 2025. Joining me today from GARDEN are Helmi Oltouki, Co-CEO, Amiralee Telethas, 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 financial reconciliation to most directly comparable GAAP financial measures are available in the press release GARDEN issued today, as well as in our 10-K and other filings with the SEC. GARDEN 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 live call over to Helmi.

Thanks, Eric. Good afternoon, and thank you for joining our second quarter 2025 earnings call. Starting on slide three, Q2 marked another exceptional quarter for Gardened. We continue to build the momentum across oncology, biopharma, and screening business lines, including accelerating therapy selection and MRD volume growth, record biopharma sales, and quickly scaling shield volumes and revenues. Product innovation built on smart liquid biopsy combined with strong commercial execution were integral to the strong performance in the second quarter. I'll walk through some of the key highlights of the quarter in just a moment, but first, as always, I would like to start with a powerful story that demonstrates the impact our tests can have on patients around the world. Last August, a 46-year-old woman was diagnosed with stage 3 endometrial carcinoma. Once it became clear that her cancer was progressing, her oncologist ordered a Garden360 tissue test to help identify potential treatment options beyond the standard of care. Garden360 tissue had just gone through a major upgrade to incorporate comprehensive DNA and RNA, and oncologists ordered both results. The test identified a RET fusion, an actionable biomarker that made her eligible for a targeted therapy she likely would not have received based on her initial diagnosis alone. I'm glad to be able to share that she has responded positively to this treatment and is doing well today. This case is a powerful example of how comprehensive molecular profiling through our recently upgraded Garden360 tissue test can help guide treatment decisions and improved patient outcomes. Turning to top-line performance in slide four, Q2 revenue grew 31% year-over-year to $232 million, with strong performance across our oncology, screening, and biopharma and data businesses. Starting with our oncology business in slide five, roughly half of the overall year-over-year revenue growth in Q2 came from the oncology business, with revenue increasing 22% to $159 million. Oncology volumes increased 30% year-over-year to approximately 64,000 tests in the second quarter, with the majority of growth driven by Garden360 Liquid, again closely followed by a strong contribution from Reveal. Looking more closely at some of the recent highlights within our oncology business on Slide 6, we saw continued volume growth across all oncology tests this quarter, with particularly strong performance from Garden360 Liquid, where year-over-year growth accelerated for the fourth consecutive quarter and was over 20 percent in q2 we continue to believe that the steady cadence of new app introductions powered by smart liquid biopsy has been instrumental to the accelerating growth profile of garden 360 liquids in late may as part of the lead-up to asco 2025 we introduced 11 groundbreaking smart liquid biopsy applications for garden 360 liquid significantly expanding the clinical utility and further extending our technical leadership in the liquid CGP market. I'll walk through some of these applications in more detail shortly. Garden360 tissue continues to be our second fastest growing oncology product and is even better positioned today to accelerate following the major upgrade in April, which we believe make it a best-in-class product. As a reminder, the recent improvements expand the panel to include RNA and broad methylome analysis powered by our smart liquid biopsy platform and enable readouts with 40% less slides than the industry norm, which we believe is an important differentiator. We are also excited to report for the first time that Garden360 Tissue ASP was approximately $2,000 in Q2, achieving our 2028 target three years ahead of schedule. For Reveal, we made great progress with data generation and publications. We recently submitted our Reveal breast cancer data package to Moldex for Medicare reimbursement and the first publication of immuno-oncology therapy monitoring data on Reveal was published this week. In May, we continue to augment our offering with the launches of garden hereditary cancer testing and a suite of immunohistochemistry, or IHC, tests. These additions bring us closer to becoming a one-stop shop for oncologists, providing insights across the patient journey. Turning to slide 7, at the annual ASCO meeting in early June, results from the landmark Serena VI trial, sponsored by AstraZeneca, were featured in a high-profile plenary session. This was the first pivotal trial to use a CT-DNA-guided approach to detect and treat emerging resistance in first-line therapy ahead of disease progression in breast cancer. Garden360 was the exclusive companion liquid biopsy used in the trial for this monitoring application. Feedback from KOLs during and after ASCO was incredibly positive, and we look forward to chemizestrin potentially becoming a new option for breast cancer patients. This important new paradigm involving frequent GARDEN 360 testing in order to quickly detect the emergence of resistance mutations has potential to change clinical practice and improve outcomes for patients with advanced breast cancer. With a prevalence pool of approximately 40,000 patients in the U.S., this new application of GARDEN 360 has the potential to drive significant incremental GARDEN 360 revenue in 2026 and beyond. Moving on to slide We have built a powerful real-world evidence platform utilizing over 100,000 genomic and broad epigenomic profiles across more than 50 cancer types. By combining the multi-eomic profiling capabilities of our INFINITY platform with the analytical power of our INFINITY AI learning engine, we are driving the development of first-of-their-kind clinical applications that are setting a new standard in precision oncology. Turning to Slide 9. Since July of last year, Garden360 has delivered accelerating growth each quarter, fueled by our GardenInfinity smart liquid biopsy platform. In Q2 alone, we launched nearly a dozen groundbreaking new apps, greatly expanding the utility of Garden360 Liquid. The latest wave of new apps include complementary genomic features which add an even higher resolution view of tumor biology, helping healthcare providers to make smarter, more personalized treatment decisions, even when tissue isn't available for analysis. Among the many newly launched applications are cancer subtype classification using tumor-specific methylation signatures to complement and enhance standard testing methods, cancer site of origin identification when the primary site is unknown guiding better diagnosis and therapy, advanced negative prediction to confidently identify wildcat patients, and pharmacogenomic profiling to identify genetic variations that impact the safety and efficacy of commonly used anti-cancer therapies. Now shifting gears to Reveal on slide 10, where we are the leader in tissue-free MRD. Over the last few months, we have continued to generate and publish compelling data on Reveal across a number of cancer types. As I mentioned earlier, the Reveal Breast Reimbursement Submission has been made to MOLVX, and the IO Monitoring Study just published will support reimbursement submission for this application in the near future. Starting with slide 11, we were excited to announce a new breast cancer publication in ESMO Open highlighting the performance of reveal. This retrospective study evaluated 95 patients who were diagnosed with early-stage ER-positive HER2-negative or triple-negative breast cancer undergoing chemotherapy prior to surgery. Notably, nearly 40% of patients had minimal or no residual tumor following neoadjuvant chemotherapy, demonstrating the value of Reveal's tissue-free approach. Reveal showed strong performance with 100% sensitivity for distance recurrence in patients with ER-positive HER2 negative breast cancer, 100% specificity, and 100% positive predictive value for relapse, and an overall sensitivity of 71%. These results, combined with the data recently published in clinical cancer research, further validate Reveal's potential to transform neoadjuvant and post-treatment surveillance strategies with the ultimate goal of improving patient outcomes. Moving on to slide 12, I am proud to share the Radiohead Reveal Immuno-Oncology Monitoring Study, which involved 521 stage 4 pan-cancer patients treated with standard of care immunotherapy, was published in Cancer Research Communications, a journal of the American Association of Cancer Research. This study demonstrated that any decrease in revealed tumor fraction signal in the study was significantly associated with improved patient outcomes. Additionally, Reveal identified non-responders more than three months and as many as five months before disease progression was visible and standard imaging. Turning to slide 13, at this year's ASCO annual meeting, data from the largest study to date using ctDNA in stage 3 colon cancer further validated the clinical utility of Reveal. This phase 3 study involved over 2,000 patients evaluated with a median follow-up of 6.1 years showed that ctDNA detected after surgery and before chemotherapy is a powerful predictor of recurrence and survival. Among patients with detectable ctDNA, 63% experienced recurrence within three years compared to just 15% of those without detectable ctDNA. These findings strongly support the routine use of garden reveals to stratify patients by risk, inform adjuvant therapy decisions, and ultimately improve outcomes. We have made strong progress over the last few months in MRD. Reveal volume growth accelerated in the second quarter on a year-over-year basis, consistent with our expectations, and we continue to have an extensive pipeline of clinical cohorts to further support clinical utility and analytical validity for Reveal. Turning now to slide 14, our oncology business is well-positioned for durable growth, supported by continued CGP penetration, favorable ASP dynamics, and international expansion. Garden360 Liquid and Garden360 Tissue are seeing increased adoption driven by the recently expanded genomic and epigenomic breadth of our platform, which is unlocking greater clinical utility and driving share gains. With a redoubled commercial focus and reveal following major COGS improvements and Medicare CRC surveillance reimbursement earlier this year, the business is primed for strong growth in MRD. Looking more closely at some of the recent highlights within our biopharma and data business in slide 15. We delivered a record quarter for our biopharma business, achieving all-time highs in both volume and revenue, with second quarter revenue growing 28% year-over-year. We continue to deepen our relationship with large pharma and sign two new companion diagnostic deals in Q2. We continue to have a robust and growing pipeline of partnerships, and near-term revenue visibility remains high. Of note, our biopharma volume mix continues to skew towards methylation analysis on INFINITY powered by our smart liquid biopsy platform. With that, I will now turn the call over to Amir Ali for an update on screening.

Thanks, Elmi. Moving on to slide 16. We delivered $15 million of S.H.I.E.L.D. testing revenue in Q2, driven by approximately 16,000 tests. We are pleased to see continued strong traction for S.H.I.E.L.D. in the third full quarter of commercial launch. SHIELD continues to generate strong enthusiasm from both patients and physicians with high adherence rates that continue to be over 90%, meaning we receive blood samples for more than 90% of ordered cases. This demonstrates the simplicity of SHIELD as a routine blood test for CRC screening that can be implemented into standard PCP care. We also continue to observe strong depth of ordering per physician. Moreover, we've been encouraged with the momentum in sales rep productivity in the field, although it's still early days in our commercial journey and the average tenure of our sales reps is less than eight months. Even our performance this quarter across revenue, volume, and gross margin, we are further accelerating the build-out of our commercial infrastructure and now expect to surpass 250 sales reps by year-end to support this growth as we go to 2026. Moving on to slide 17. In late May, we are very encouraged to see National Comprehensive Cancer Network updated CRC screening guidelines to include SHIELD. The new NCCN guidelines place SHIELD in Category 2A, which is the same category recommendation as the other first-line screening modalities. This represents the first national guideline recommendation for S.H.I.E.L.D. and, in our view, paved the way for improved commercial coverage and patient access. This also supports our confidence that S.H.I.E.L.D. will be included in other national CRC screening guidelines in the future. Now, turning to slide 18 to take a closer look at screening highlights for the second quarter 2025.

Starting with S.H.I.E.L.D.

CRC, As I mentioned earlier, we are very pleased with the high patient adherence, strong depth of ordering per physician, and the productivity of our reps in the field. We are also very excited to see SHIELD is now a guideline-recommended screening test by the NCCN. Along with this strong momentum, SHIELD was recently named a winner of FAST Company's 2025 World Changing Idea Awards, an award that recognizes innovative companies and projects addressing the world's most urgent challenges. Beyond CRC, we made meaningful progress with SHIELD Multicancer Detection, MCD, in the second quarter. As a reminder, we presented the clinical validation of SHIELD MCD tests at ASCR and ASCO this year. This momentum continued when SHIELD MCD received breakthrough device designation from the FDA, making an important milestone for us. Moving on to slide 21. As a reminder, our goal has always been to detect cancer early when it's most treatable. We developed our SHIELD assay as a platform, capable of multi-cancer detection with CRC screening representing just the first indication for SHIELD, given it has an established regulatory and reimbursement pathway while we are encouraged by the strong traction we are seeing for shield crc we are even more excited about broadening the impact of shield across multiple cancer types moving on to slide 22. in early january we announced shield selection for inclusion in the national cancer institute's vanguard study which is a 24 000 patient pilot study to evaluate the use of MCD tests. As a reminder, SHIELD was one of only two technologies selected through a highly competitive process. We are pleased to share the commencement of NCI Vanguard's study just a few weeks ago, and we have already started delivering MCD results to physicians and their patients through this trial. The initiation of this study establishes the clinical and operational readiness for SHIELD MCD and marked an important milestone for the SHIELD platform. We are looking forward to broadening access to SHIELD MCD beyond the scope of the Vanguard study in the near future. Looking ahead, SHIELD V2 continues to be a very active program for us and we remain confident about the potential inclusion of SHIELD in American Cancer Society or ACS guidelines. With that, I will now turn the call over to Mike for more detail on our financials.

Thanks, Amir Ali. Turning to slide 23, I'll now discuss some select financial highlights for the quarter ended June 30th, 2025. I'll refer to year-over-year growth rates unless otherwise noted. Second quarter total revenue grew 31% to $232.1 million, driven by strong performance across all our key revenue lines oncology biopharma and data and screening starting with our oncology business oncology revenue grew 22 to 158.7 million dollars primarily driven by another quarter of accelerated volume growth as a reminder oncology volume consists of our garden 360 liquid and tissue therapist selection tests and our reveal and response monitoring tests. Oncology volume grew 30% to approximately 64,000 tests in Q2, with the majority of growth driven by GARDEN360 Liquid, closely followed by a strong contribution from REVEAL. GARDEN360 Liquid year-over-year volume growth accelerated for fourth consecutive quarter and was over 20% in Q2. REVEAL year-over-year volume growth also accelerated in Q2 and continues to be our fastest-growing oncology product. We also continue to see strong oncology ASPs in Q2. Garden360 liquid ASP was in the range of $3,000 to $3,100 in the second quarter of 2025, in line with the prior quarter. Garden360 tissue ASP increased to approximately $2,000 in Q2, which means that we have reached our 2028 tissue ASP target three years ahead of schedule. This has been driven by the increase in Medicare pricing from $3,140 to $3,500 at the start of the year, good progress with commercial payers, and incremental reimbursement related to the recently launched tissue RNA feature. We've been very encouraged by the attachment of RNA to our Gardner 360 tissue test, and we want to highlight that we do not count tissue RNA separately from Gardner 360 tissue in our reported volumes. Reveal ASP continues to be in the range of $600 to $700 following Medicare CRC's surveillance coverage earlier in the year. Out-of-period revenue was consistent with normal expected levels in Q2 and did not provide a material upside in the quarter. Finally, note that we do not include guidance hereditary cancer testing or IHC volumes in our reported volumes and we expect minimal revenue contributions from these new offerings throughout 2025. Our biopharma and data business performed incredibly well again in the second quarter with record revenue totaling 56 million dollars an increase of 28 percent. Our biopharma pipeline continues to shake up solidly driven by gardens infinity and additional companion diagnostic partnerships signed in the quarter all of which add to our confidence in both the short-term and long-term business finally we continue to see increasing revenue contribution from shield with screening revenue totaling 14.8 million dollars in q2 generated from the 16 000 shield tests that we reported in the quarter turning to slide 24 we're extremely pleased to report that we're making great progress with Shield non-GAAP gross margin, which increased to 48% in Q2, compared to 18% in Q1 2025, and 2% in Q4 2024. This was driven by continued improvements in both ASP and COGS. Shield ASP was over $900 in Q2, which represents a significant increase over the ASP of approximately $600 in Q1. The main drivers of ASP improvement were the increase to our Medico rate from $920 to $1,495 following the receipt of ADLT status, which became effective on April 1, and the continued high mix of reimbursable test volume. It should also be noted that the SHIELD ASP reflects the strong reimbursement that we are receiving from Medicare Advantage payers. Equally pleasing is that SHIELD non-GAAP cost per test further reduced in Q2 and is now less than $500. This continued improvement is driven by increased SHIELD volume and the excellent performance of our operations team in maintaining rigorous cost controls and driving efficiency gains. Similar to last quarter, we plan to reinvest the incremental SHIELD gross profit we generate back into the sales and marketing line to accelerate the screening commercial infrastructure build out. We continue to be very proud of the financial profile that SHIELD has demonstrated in such a short period of time. Turning to slide 25, our non-GAAP gross profit was $153.8 million, an increase of $47 million or 44% year-over-year. Our non-GAAP gross margin of 66% was above our expectations in the second quarter of 2025 and was a significant improvement compared to 60% in the second quarter of 2024. The improvement in gross margin is primarily a result of improved oncology ASPs, as well as a significant turnaround in gross margins for Reveal and Shield, which were both gross margin negative in Q2 2024 and which are now both gross margin positive. As we noted last quarter, Reveal cost per test has reduced from over $1,000 in 2024 to less than $500 in 2025. Non-GAAP operating expenses were $215.3 million in the second quarter of 2025, an increase of 20% and in line with our expectations. Both non-GAAP R&D and G&A expenses in the quarter were approximately flat compared to prior years, which reflect the operating leverage that we're achieving throughout the business. Non-GAAP sales and marketing expense increased 45% to $107.8 million in the second quarter of 2025. This increase was due to the ongoing screening commercial build-out, as well as continued investment in oncology sales and marketing. Adjusted EBITDA loss was $51.9 million for Q2 2025, an improvement of $10 million compared to a loss of $61.9 million in Q2 2024. We continue to be focused on cash management and reducing our burn in 2025 versus 2024 due to 2025 free cash flow burn was $65.9 million compared to $99.1 million in the prior year period. We ended the quarter with approximately $735 million in cash, cash equivalent, and restricted cash. Moving to slide 26 for our outlook and assumptions for the full year 2025. We're increasing our full year 2025 revenue guidance for the second time this year to be in the range of 915 to 925 million dollars representing growth of approximately 24 to 25 percent compared to 2024 and an increase of 35 million dollars compared to our prior range of 880 to 890 million dollars we now expect oncology revenue to grow approximately 20 percent year over year in 2025 compared to our prior guidance of 18 The increase is based on stronger-than-expected Garda360 Liquid and Reveal volumes in Q2 2025, as well as higher oncology volume now projected for the remainder of the year. For the full year 2025, we now expect total oncology volumes to grow greater than 27%, versus our prior expectation of greater than 25%. We continue to expect our biopharma and data business to perform well throughout 2025, and now expect mid-teams revenue growth compared to our prior expectation of low double-digit growth. We're also raising our full-year 2025 Shields revenue guidance again this quarter to $55 to $60 million from our prior guidance of $40 to $45 million. This increase is largely driven by a higher volume where we now expect 68 to 73,000 tests This is our prior guidance of $52,000 to $58,000 tests. Our Shields revenue guidance assumes an ASP of approximately $800 for the second half of 2025, slightly lower than our Q2 ASP as we anticipate potential changes to the mix of Medicare and commercial pay tests as we scale the business. With the significant improvements to gross margins that we've generated during the first part of the year. We're raising our full-year non-GAAP gross margin guidance to be in the range of 63% to 64%, compared to the previous range of 62% to 63%. As we've previously outlined, we plan to reinvest any incremental screening gross profit we generate throughout the year back into the business to accelerate our commercial infrastructure build-out. As a result of improved shield volume and gross margin, we're increasing our sales and marketing and now expect 2025 non-GAAP operating expenses to be in the range of 840 to 850 million dollars representing an 11 to 12 percent increase compared to 2024. We continue to expect full-year non-GAAP R&D and G&A expenses to be relatively flat compared to 2024. Lastly our commitment to cash down reduction each year in order to reach company-wide cash flow breakeven in 2028 is unchanged for full year 2025 we still expect free cash flow burn to be in the range of 225 to 235 million dollars an improvement compared to 275 million dollars for 2024. we continue to expect our cash burn in 2025 to consist of approximately 200 million dollars related to screening as we scale our shield business and maximize our first mover advantage significantly excluding screening we continue to expect the remainder of the business to burn approximately $25 to $35 million during the year and to reach free cash flow breakeven in the fourth quarter of 2025. Moving on to slide 27. At the start of the year, we outlined an ambitious pipeline of catalysts, and it's a testament to our team's strong execution that we've delivered on nearly all of them just halfway through the year. And finally, turning to slide 28, we'll be hosting an investor day on Wednesday, September the 24th in New York City. We look forward to sharing a deeper dive across our business. Please reach out to investors at gardenhealth.com for more information. With that, we'll now open the call to questions.

If you would like to ask a question, please press star followed by one on your telephone keypad. We are limiting questions to just one question per person. Our first question is from Mark Massaro from BTIG. Your line is now open.

Hey, guys. Congratulations on the strong, beaten raise. Helmi, the first one's for you. You know, clearly, you guys are doing a really great job in G360 Liquid, and you've raised the volume guidance for the year. You talked about Serena 6, and what I'm curious about is, did you see any benefit from the New England Journal publication, perhaps in Q2? and can you give us a sense for the likelihood that you can continue to drive the interval of testing in 360 and breast cancer?

Yeah, no, thanks for the question. Happy with the quarter, obviously, and happy with the performance of our core business. I think, as we've said, this quarter, we saw something like over 20% growth for G360, which is just fantastic you know to see this kind of growth you know product that's been in the market for so long and I think what we're seeing right now is really I think a testament to you know the product market fit we've achieved with our infinity smart liquid biopsy platform and I think I think there's a lot more juice to squeeze I don't you know if there was Serena 6 impact it was very minimal this quarter we think we'd see the majority of that you know once and if the drug is finally approved and we obviously are very excited about that in terms of the potential for adding significantly more testing opportunities to the liquid spy liquid biopsy space but I think this is really I think you know shows kind of you know how big the CGP liquid biopsy market is I think we're still in the early innings of converting users to essentially just one test or to the first test from a liquid biopsy space, but we have so much room to run, I think, so many years of growth ahead of us as we start getting this sort of monitoring paradigm really, you know, kind of fully realized by the market.

Our next question is from Puneet Soda with Leer Inc. Your line is now open.

Yeah, hi, guys. Thanks for the questions here, and congrats on a really strong quarter. If you don't mind, I'll try to squeeze my questions into one. First, shield growth is obviously very impressive. Can you talk a little bit about what's driving data, Merrill-Aid, PCPs, among the PCP practices? Is it NCCN? Is it the RAMP in the Salesforce? And wondering if you can give, you know, the sort of an ASP number. It seems to be higher than the 800 that you had projected. So, wondering where that's going to land. And around Shield, if I may also ask, Shield V2 is a big focus for investors. We were hoping for data by now. Any updates on that data? And I'll pause there. I have more questions, but I'll follow up and tell me later.

Okay, thanks, mate, for good questions. So, you know, we are very excited with the Shield commercial performance. You know, we are continuing to see a very strong pull by market. You know, when physicians are becoming aware of this test and they're getting access to this test as we are scaling up our footprint in the field in terms of reps, we are seeing a very strong demand and i think this beat and raise is really uh an endorsement of a higher productivity that we are seeing in this newly formed sales team that we have kind of assembled and we are very excited about it i'm looking forward to see what you can do in second half of the year maybe i go to shield v2 and then i give it to mike to talk about the asp as i mentioned the uh prepared

remark v2 is a very active program for us a lot of work has gone into it and still it's ongoing and we'll see what happens mike yeah and uh uh yes i i can add on the on the asp so we saw a really good uplift in shield asp in the quarter we went from in q1 uh asp was just over six hundred dollars and in q2 that increased to over nine hundred dollars and the main the main drive with that obviously was that the ADLT status became effective on the 1st of April, so our Medicare rate increased from 920 to 1495. And we're also seeing very strong Medicare Advantage reimbursement that's coming through now from pretty much all of the payers, and so that's helping to really stabilize that ASP. I think when we look at the back half of the year, and we said it in the prepared remarks, you know, we'd expect our ASP for the next six months to be around $800. And so that would be slightly lower than Q2. And really, that's a function of the mix. As we continue to scale, we think we'll see more of the mix move from Medicare, Medicare Advantage onto commercial. So we're just allowing for that over the next six months. But yeah, I think ASP's story on Shield has been really positive for us.

Our next question is from Dan Brennan with TD Coward. Her line is mouthful.

Great. Thank you. Thanks for the question. Maybe just one on G360 since doing so well and it's your biggest business. Just could you give a little color in terms of kind of where the growth is coming from? Do you feel that, you know, you're seeing better penetration maybe locally or big AMCs? Do you feel like it's more just penetration of the existing market, or do you feel like maybe you're taking share? And then, you know, the other factor is, you know, tell me you discuss a lot of the benefits of smart liquid biopsy in terms of the performance. Is that resonating at the oncologist level? Is that really a sale into the hospital administrator, just trying to unpack a little bit your growth versus maybe the other players the broader market? Thank you.

Yeah, no, that's a great question. When we dissect the numbers, it really is a broad-based growth. We're seeing more oncologists than ever before ordering every single month, so that continues to grow pretty dramatically over the last few quarters since we launched Smart Liquid Biopsy. We're seeing higher depths, so in those same accounts we're seeing a much higher average of number of 360 tests per month and so that's really exciting so we know that is coming from just the increased utilization of the test we're growing you know the sort of market and use cases of liquid biocene but also you know significant share gains as well which is which is great to see and I think as I alluded to before we have a test that truly has achieved much greater product market fit than anything out there. And when we talk about these features, these features are really resonating at the oncologist I was at ASCO. I can tell you that many of the key opinion leaders we work with, many academic center oncologists are really, really excited about these features. but these features resonate at the community level as well. The fact that we can do what sometimes tissue can't, the fact that we can see, you know, how the tumor is evolving from a subtype of view, which has serious implications in terms of treatment decisions. We can see those patients who maybe may qualify for certain drugs that many other tests out there can, from immunotherapies to PARP inhibitors. And this is just the beginning in terms of what we're able to do. I can tell you the pipeline we have of new applications and new apps that we're going to launch over the coming quarters is probably even more exciting than what we've launched today. So many things, I think, if I told you we could do three years ago, most oncologists, most scientists would have said is science fiction and and that is really i think um the power of this platform in terms of what we can do um and it's and then you're you're starting to see it in the numbers on both the biopharma side and now the clinical side our next question is from taijo peterson which freeze your line is now open okay thanks um on shield you know congrats on the vanguard enrollment i just wondering if you can walk through kind of next steps to getting shield marketed you know as an

MSED test? Do you have to wait for data from the ongoing lung study or an interim Vanguard readout? How do you feel about inducement concerns? That seems to be a bit of a debate in the investment community. And then, can you maybe just talk to your view on the risk around USPSTF? Obviously, you know, if the whole panel gets replaced, that could throw a monkey wrench in things. Thanks.

Yeah. So, Tyco, we are very excited with this progress we had on the R&D side. Now, MSED is clinically validated. So, it's clinically actually validated we are not waiting for any other test for tests to be a clinical grade test it's we spent some energy and effort to make it operationally ready for patient testing and you know now that we are started the vanguard study you know lab are running these samples we are reporting out these clinical reports for patient management within the vanguard so from those aspects we are actually ready it's not that we are waiting for any kind of pivotal study readout to come before we take any action on broadening access for S.H.I.E.L.D. M.S.A.T. As I mentioned in the preferred remark, hopefully we can have some conversation about it in the near future and stay tuned about it. In terms of some of the, I think, the matters you mentioned, we are very well of the laws. We are here to help the patients. Remember, we are going to something which is against the laws and I think the way I read about it is the tremendous opportunity that we have with shield that excites us I think just over time would increase us we have very quickly we are monitoring the situation very closely yes looks like the whole panel appears to be to get into the process to get replaced the good success that we had with our shield in the market right now with a very healthy gross margin and a very big green field which is in front of us we had a lot of actually opportunity in front of us to mine build this business while

we are waiting for task force guideline inclusion our next question is from subu anambi with google time your line is now open hey guys thank you for taking my question um You had recently said that Reveal was at approximately 1.7 tests per patient. How much do you expect the CRC surveillance reimbursement to drive this number upwards in the near term in 2026? And then in the long run, what do you think this number could look like? And I noticed in the catalyst slide, you don't have Reveal ADLT listed. I don't think that was on the slide before, but I'm curious if you have any updates there.

Yeah, no, good question. And, you know, we're already seeing it drive higher with some of the progress we've made. We've seen not only great traction, as we've said, Reveal is our fastest growing product on the oncology side for the only second to shield across the company. And so we're really excited about the progress we've made. We're seeing acceleration there. Really good traction with new patient starts, but even more so with subsequent draws, was, which is where we hadn't been pushing quite as much before. Now that we've turned a lot of that machinery on, it's been exciting to see how much we can start to lean into that and really drive that volume. So yeah, I think the next few quarters and certainly into 26, we have high expectations for reveal and we can certainly get that number i think up significantly in terms of a number of tests for patients in terms of adlt you know there was never on the milestone chart there but it's certainly something we've submitted for and uh we are waiting for a decision basically hopefully over the next quarter or so we'll know the resolution i think we're you know i think we're uh very positive we we know that you know the test qualifies for adlt so um you know hopefully

it will come back as opposed our next question is from kyle mixon with canaccord your line is now open hey guys thanks for the questions congrats on the great quarter um tell me you know why are you confident that reveal medicare reimbursement for breast is going to be obtained faster than trc including surveillance that you know for colon that took a while and then second for are merely, you know, NTC inclusion was nice, but is that having an impact on shield volumes, or do we need ACS and USSTF? And then on the point of USSTF from earlier, you know, if the panel's replaced with people that, you know, clinicians don't really trust, is this going to make that milestone for you guys maybe less important? Thanks.

A lot of questions. In terms of Reveal Medicare coverage, you know, the second time we got for CRC surveillance was actually pretty quick. I think it was just, you know, I think something like four or five, you know, months, which, you know, as fast as it really comes and from a submission to sort of coverage. So, yeah, I mean, obviously the first time we went through the process, it took a little bit longer. Second time, much, much faster. So I think we have a better sense for what is required from a Medicare point of view. Obviously, it's always up to their discretion in terms of what passes the bar or not but clearly having gone through the process multiple times now you have a better sense of what is required and so yeah we have pretty high confidence around press we have a good confidence around io in terms of you know when we finally submit that to to multi-x and and we're making good progress in other cohorts as well with the reveals so it's an exciting pipeline for us and regarding NCCN guideline you know definitely it was a surprise great milestone for us you know how much of it is impacting our volume like within this very strong ramp that we are experiencing

it's very hard for us to kind of you know start out the impact of each one of these kind of catalysts for us but NCCN again it's the voice of expert oncologists at the end so we are very excited with it and uh also continue to be very confident about inclusion by other guidelines including acs and usps if i think some of these stuff is just common sense you detect almost all stage two and above crcs you can cure or have very long-term survival even if you detect crc at stage two you want patient to be on screened and you know uh do not detect their cancer i think

some of this stuff is just common sense but over time we are going to figure it out but and we what we were very confident and we remain very confident about guideline inclusion our next question is from dan arias with steve your line is now open guys thank you amirali you were sufficiently vague on that answer to v2 data timing is everything squared away on your end and it's just a matter of when you decide to pull back the curtain on results or are there still things that are being worked on there sorry to ask again but hot topic

to say the least no problem i understand so uh you're not putting a fine point on the exact timing of the v2 data but you know as i mentioned it's a very active program a lot of work has gone into it it's a lot of work is going into it as we speak and uh we'll see like uh you know on the The other side, we do not feel rushed to get to this, and some of it is really because of commercial success we are seeing by the currently approved product, the V1. It gives us opportunity to balance some of our R&D initiatives. Like, you know, we pulled forward this MSET clinical validation, bringing the lab and operation up for patient reporting, which can open up opportunities for us in the near future down the road. And we'll see when we can wrap up this V2. Still, we're working on it.

Our next question is from Patrick Bunnelly with City. Your line is now open.

Hey, guys. Thanks for taking the questions. Maybe one just on the profitability side. Nice to see the gross margins continue to creep higher with the profitability side. As you guys have advertised the last couple quarters, we're going to continue to invest that on the sales and marketing side. I mean, Mike, does that speak to just your confidence in the path to real profitability here in the out years? You know, the fact that you are willing to continue to reinvest rather than chase near-term profitability. Can you just talk about the confidence in the balance sheet and, again, that path to profitability as you reinvest some of these profit dollars? Thanks.

Yeah, Patrick. I mean, I think at a high level uh you know at our last investor day uh two years ago we set this path to profitability uh of 2028 and we said from from then 2023 you know we would be reducing our cash burn every year and so uh you know so far we're we're well on track well on track with that things are going things are going very well and we remain uh very confident that we can get to uh to break even uh in in 2028 on the on the screening side you know um we've sort of repeatedly said over the next couple of years we'll manage the burn to something like 200 million dollars and we'll be very thoughtful about reinvesting the any additional gross profit back into the sales and marketing line and i think we're we're ahead of track there a gross profit very strongly in q2 and q2 is 48 percent gross margins and so we're reinvesting that but that's not increasing our overall burn of the target that we set at the start of the year and so I think we're managing that very well and it's giving us this 200 million burn is giving us you know everything that we need to really scale that commercial infrastructure as quickly as we can and if you exclude screening actually we're making fantastic progress you know we said earlier on in the year that excluding screening the rest of the business is on track to be break even before the end of the year and that's still the case and i think you know with the attraction that we continue to see on asps uh better than expected gross margins we feel really confident on that so i think from a from a balance sheet perspective after profitability um yeah we're still confident and on track to our next question is from rachel bedsell with jp morgan your lines now perfect good ass good afternoon thanks so much for taking the questions.

I wanted to press on Shield v2 a little bit more, but more so around the timelines associated with it. So you previously had talked about hoping to get that launched by year end, not really committing to timelines in terms of when we'll see that data, but just given we don't have it yet, can you walk us through your updated assumptions on how long do you think it will take for FDA to review once they do have the data, and are you still on track to launch that by year end at this point?

Yes, I'm not sure how much I can add, but in terms of, yeah, the time timelines for FDA approval and launch obviously it's a function of when we get to the readout and how long it would take FDA to review our package so they're pleased with a bunch of conversation we had with agency in terms of what they're going to look at and how they're going to look at now how long it's going to take to go through that review process we have to see how long their process would take but yeah but maybe in terms of end of the year maybe that's fair maybe we are delayed a little bit but you know as i mentioned i i don't feel rushed to get to that milestone and you know it was important for us to balance some of our rnd activities between v2 and m set and i'm very pleased with where we are today and we are working on it very uh extensively a lot of work is happening so but maybe it's a little bit delayed yeah our next question is from eve bernstein with bernstein research the line is to hope great thanks so much for taking the questions um uh a couple on shield so now that shield has had adlt status for four months you're through a chunk of the time that you have to get private

payers to contract with you um so first can you give us some color on how those conversations are progressing. I imagine that many private payers don't want to reimburse a test that won't get them quality credit yet. So how are you handling that? Second, do you expect a contract with private payers at or close to the ADLT rate? Or is the, you know, 920 rate more reasonable? Or do you expect it to be below that? And then third, you've given us a guide to ASP of 800 bucks for the rest of the year, but how should we think about what happens to ASP next year? Could it actually decrease pretty meaningfully as that rate resets and as the payer mix shifts up a bit?

In terms of conversation with private payers, we've been in touch with them, and even after NCCN guideline, we've been in touch with a fraction of commercial payers that we think maybe they would barely add software. We'll see what happens. We are not counting on any major coverage before getting into ACS and USPSPS guidelines. So we'll see how it goes. In terms of expectation for ADLT rate, based on the collections that we are having from Medicare Advantage, we are very confident of keeping our ADLT as what it is today as we go to the next reporting cycle which is going to start from January of 26 till December of 27. So that $14.95 we are very confident it would remain the same. In terms of ASV I think it's going to be a function of the payer mix. I think still we are in the early innings of this commercial execution. We are pleased with how the payer mix is landing at this time but we are going to monitor it and then would set expectation for ASP as we get closer to 2026.

Our next question is from Bill Bonello with Craig Helm. Your line is now open.

Hey, guys. Thanks a lot for taking the question. I guess this one is for Helmi, maybe more big picture. You're thinking about the traction that you've gotten with, you know, Garden 360 liquid and the, you know, paradigm shift from, you know, years ago, sort of tissue first to, you know, the big ramp you've had and the evolution towards people being, you know, willing to consider liquid first or, you know, looking at doing both. I'm just kind of curious how you might extrapolate that experience to reveal and, you know, sort of this notion that seems to be out there that, gosh, you know, there's some superiority to tumor-informed and, you know, tumor-naive is fine if you can't get a tissue, but, you know, otherwise you want to do tumor-informed. Could you see sort of a similar evolution? Are you hearing anything from physicians, KOLs in particular, now that leads you to believe that will happen?

Yeah, no, that's a great question. I think that maybe one of the sort of underappreciated aspects of our Infinity platform, the sort of smart liquid biopsy ecosystem, is that many of these apps that we're populating on 360 liquid will eventually make their way to 360 tissue and even reveal where appropriate. And so when you think of, you know, where Reveal could be, it's going to look like a very different sort of product than any tumor-informed product out there that is just looking for sort of you know passenger mutations or number of mutations that may not be actionable and we're actually seeing the biology that is there in that individual things like you know the subtype how that's evolving the you know potentially even toxicity from the some of the adjuvant therapy that they're being exposed to it really opens up a different space, which is why we've said that the MRD market will likely have two aspects to it. There'll be a tumor-informed sort of market that some physicians would like to use, and there's going to be, I think, a pretty massive issue-free aspect to it in the market, too, just like there is in comprehensive genomic profiling. There's two big markets there, and I I would argue that the liquid market in CGP, I think few would argue, is ultimately going to be massively bigger than the tissue market, and we potentially see the same dynamic shaping up on the MRD side.

Our next question is from Yoko Oku with Morgan Stanley. The line is now open.

Hello. Thank you for taking my question. The recent Serena 6 readout provides a compelling argument to monitor emergence of ESR mutation for treatment with camisestrin. What do you think may be the split at steady state to monitor emergence of ESR1 mutation between comprehensive panel like G360 versus hotspot tests? And also with cuts to Medicaid, what is your view on the impact to cancer testing more broadly? Yeah.

So we really see this as a beachhead for a new paradigm in essential oncology that will ultimately be the paradigm that I think all patients are monitored and treated with. And the point is ESR1 is the first of what we think will be many opportunities to switch therapies dynamically, really this idea of adaptive management of disease. And, you know, the chemisestrant example, you know, we are the enrolling assay. We will be, you know, if it gets approved, the official CDX for that, at least in the United States. And so, you know, I think we have a very good chance of not only opening the door in this new paradigm, but capitalizing on the majority of the opportunity and volume that would be there in the first couple of years. So we see it as, I think, a very significant upside opportunity on G360 volumes in the future. One more question, please.

Our last question is from Luke Sergat with Barclays. Your line is now open.

This is Salem. Salem on for Luke. Thanks for squeezing us in here. Just kind of piggybacking off of a question before, I guess on Medicaid, could you give us an update on what your exposure is to those volumes, if possible by test, which I realize is a tall order, and if not, kind of ballpark numbers, just given the expected fallout of the big, beautiful bill. and what do you kind of expect on pacing of any potential headwinds this year or next year?

Yeah, I can take that one. I mean, very simply, Medicaid volume is very, very minimal in our overall volume across all products and even less so on the revenue side. So, you know, any impact overall to Medicaid isn't really going to have any impact on our overall volume or...

That concludes the conference call. Thank you for your participation. Enjoy the rest of your day.