Guardant Health, Inc. (GH) May 12, 2026 Conference Transcript

All right. We'll kick things off. Thanks, everyone, for joining us for our next session. My name is Mike Riskin. I'm on the Bank of America Life Science Tools and Diagnostics team. And for our next chat, we're excited to host Garden Health. We're joined by Co-Chief Executive Officer Helmi Otuki and Mike Bell, Chief Financial Officer. Helmi, Mike, thanks so much for being here. Really appreciate you taking the time.

Great to be here.

For it will be a fireside chat. If you've got questions, throw up your hand and we'll call on you to squeeze you in. Maybe we'll start as sort of a high-level question. You guys just reported first quarter just a couple days ago, really strong beat, broad base, nice raise. Can you talk through how the quarter played out to your expectations, where things came a little bit better, and how you're taking that going forward?

Yeah, I mean, I think it's been exciting to see us sort of lean into the three S-curves that we're embarking on in terms of utilization and adoption. Certainly therapy selection continues to be doing really well, and that I think is a, I think the smart platform is sort of a gift, it's a gift that keeps on giving, and we see that continuing. We see very strong momentum. You know, there's a saying in diagnostics and even therapeutics that, you know, how you start the year is how you finish it. So having a strong first quarter in therapy selection, I think, bodes well for the rest of the year. MRD, I think you see us continuing to lean into that. We obviously are pushing longitudinal testing, we're pushing in the indications we're in, and then we had a very strong start to therapy monitoring. And so we're very excited about where that is going. It obviously grew 100% year over year, so we're excited there. With 360, obviously, we grew 30% year over year, which I think is pretty impressive, given sort of, you know, how mature this space, you know, I think the perception of the maturity of the space. And then S.H.I.E.L.D., with screening, I think we continue to, you know, really drive, I think, really excellent adoption relative to, you know, even some of the historical comps that are out there. And I think it just shows the power of blood-based screening and really the fact that it is, I think, going to quickly become the new standard of care for screening over the long term. And so, yeah, you don't often get these kinds of very fast-growing, sort of stacked S-curves in one company. And so to see it sort of all coming together is, I think, fruition of the vision we had 10 years ago.

And maybe we'll just build on that in terms of taking that into the full-year guide raise. you know you raise the guide by more than you beat you updated some of your assumptions for oncology for shield sort of what gives you confidence in that momentum continuing sort of maybe you could deconvolute the guide raise like what are the biggest drivers of that Mike yeah I think we yeah we're really pleased with with the Q1 performance it you know it enabled us to raise our guide for the full year there's two there's two key drivers of that guide race it one is one is oncology volume and secondly it's shield volume and so

you know on the on the oncology volume really the key there is is garden 360 and really the strength that we see and I think and we was talking about it with with the smart platform we started q1 very strongly and I think again it just gives us a lot of confidence going into the rest of the year. We know we've got additional catalysts with new waves of smart apps through the year. And then specifically on the reveal side, again, we saw good traction with MRD, but we were very pleased with how therapy monitoring is tracking. We launched that in Q4. It was incredibly strong in Q1. And so, again, I think the strength that we saw just enabled us to have a lot of confidence for the remainder of the year. And then with Shield, you know, we talked about the momentum in March. We see a lot of catalysts starting to come into play. So we're seeing better rep productivity. We're adding to the number of reps we have. And so throughout the year, we expect that additional number and the increased productivity to drive continued volume growth. we initiated our quest collaboration towards the end of Q1. You know, that's still early days, but the signs were very, very positive. And so, you know, we think that's going to be a contributor for the remainder of the year. And, you know, as well as having a strong HPC marketing campaign, last year we added to that in Q1 with a lot of DTC initiatives. So I think we see a lot of catalysts on the screening side, and again, that gave us a lot of confidence to increase our volume guide. And then, of course, the volumes driving for those products are driving the revenue increase.

Maybe sticking on Screening and Shield, you raised your, you know, were both volume and revenue assumptions for the year. Kind of, you know, if you just do the math real quick, you kind of talk to maybe 10,000 tests, sequential quarter-requorter through the year. You know, as you talked about, you know, Quest in the second half, sales rep productivity, are those the big pieces driving that? Is that more of a second-half dynamic, sort of like, is there upside to that 10K per quarter jump, just sort of a degree of conservative in that, and what are the key drivers of that step up?

You know, well, I would say that sort of on average $10,000 a quarter, you know, we're very confident with that quarterly cadence. We've got a lot of experience now from the prior year, and we know how sort of the seasonality works, so that gives us confidence. And again, you know, probably the key driver at the moment of the volume growth is on the sales rep side, as it has been for, you know, the last sort of 12, 18 months as we're adding new reps and those, you know, tenured reps are starting to get more and more, sorry, better and better productivity. So they'll continue to drive in the near term, and I think, yeah, we would look at, you know, the impact of Quest really starting to kick in in the second half, and similarly with the DTC, I think that'll start to really kick in on the second half. You know, on top of that, and we've talked about this a lot, but we're expecting ACS guidelines to come in the relatively near future. That's not in our guide at the moment for 2026. But if and when that comes, you know, we see that that can be a positive upside. Initially on the volume side, it will enable us in those ACS states to open up to patients under 65. We see that, you know, the revenue impact of that coming more into 27 because it'll take time for the commercial payers to come on board and start paying us. But again, we see that as being a potential upside to our guidance for the back half of the year.

Okay. All right. Maybe on the topic of ACS and, you know, reimbursement or ASPs, you know, you've been talking about the revenue impact of the year. came in a little bit higher in the quarter for S.H.I.E.L.D. than you expected. I think you're projecting something like 7.75 for the rest of the year, which is relatively consistent with where you were before, but there was a little bit of a catch-up dynamic there. Can you just talk about how that played out in the quarter and just sort of the mixed component for S.H.I.E.L.D. and how that factors into the guide?

Yeah, I mean since launch we've had this real focus on reimbursable tests, so the Medica age population where we're getting paid 1495 Medicare fee for service with the ADLT rate and we're getting very good payments from Medicare Advantage payers that actually keeps continuing to get better and better that's what drove the out of period trip that we had for screening in Q1 and also in Q3 and Q4 of last year so that's going incredibly well as we open up with Quest as we've got the DTC campaigns going and then potentially as ACS kicks in, we're expecting to see more and more volume come from the under 65s. And we've put a lot of friction in the system previously to sort of prevent that, but I think we'll just relax that. And so our expectation on ASP is initially that's going to tick down the ASP because we'll get more commercial zeros initially. But effectively, we're opening that up because we're expecting us, particularly with ACS guidelines, to start getting better and better commercial payments. So it'll be an initial tick down, but over time, it's going to ramp back up as the commercial payers start to pay us.

Do you have a sense of the timing on that in terms of how long until it ramps back up? Is it really dependent on ACS? Or is there, you know, do you assume like a 12-24 month gap or just sort of walk us through the bridge back up?

Yeah, you know, some of it obviously is going to depend on the timing of ACS guidelines. But I think, you know, we think probably it'll take around 12 months to really get to a position that we want to be with commercial payers. You know, there's probably going to be some payers that early on start to pay us. But we're fully expecting it'll take time. We've got a very strong team, reimbursement team, that's got good relationships with pretty much all of the key payers. And we've built that up over time from the oncology side of the business. So, yeah, once we get into guidelines, I think, you know, that team will go into full effect and, you know, we'll be having a lot of dialogue with those payers. And, you know, 12 months is our sort of expectation, but hopefully we'll be trying to sort of bring that forward as quickly as we can.

Let's chat a little bit about therapy selection. How, I mean, in your opening comments, you made an interesting point, you know, perception of maturity in that business. I mean, that's certainly been a talking point for a while, but you can put up really impressive numbers there. 30% volume growth despite, you know, growing competitive noise.

You know, really strong growth both in liquid and tissue. sort of what's driving that sustained strong performance you know you continue to sort of push out that narrative of you know maturation or saturation in the business yeah I think it's a testament to what we said in our investor days that you know we'd rather we'd much rather be sitting where we're sitting as the leader in liquid biopsy sort of therapy selection rather than on the on the tissue side just because we think the market has so much more room to grow When you think about patients living longer, like every patient progression that's there, different lines of therapy, the guidelines and clinical practice really requires essentially doing another genomic profiling at each progression since the cancer is changing. And frankly, that is not standard practice right now. I think very few patients are getting tested multiple times. And that's something that I think is a huge catalyst and a huge driver of, frankly, you know, pretty significant growth multiples over where the market is today. Secondly, you know, still a lot of patients aren't getting even an initial comprehensive profiling, especially on the liquid side. And so I think that's where, you know, I think you see outsized growth there as well. And so I think what's exciting is that a lot of the growth we're seeing is really, I think, predicated on what we believe to be superior product market fit we have with this new smart platform and the fact that we're seeing sort of share gains as a result of that, as well as we seem to be sort of sucking up more than our fair share of market growth as well, at least on that initial time point, that sort of zero to one moment. And that bodes well for us continuing to lean in on moving the market from one to sort of, you know, n number of tests per patient. And, yeah, so it's been exciting. And the pieces are all coming together with, you know, you can think of the tip of the spear as Garden360 Liquid for us in the smart platform. But that sort of brings along our tissue platform. It brings reveal for therapy monitoring along for the ride and creates this really nice flywheel and synergistic effect between these products.

You mentioned share gains. Is that across the board? I mean, obviously, tissue is still really, really early in terms of ramp. How much are you seeing, like you just discussed, being able to leverage both?

Yeah, I would say speaking more for liquid, I think tissue is still probably too small. It's probably in the weeds in terms of exactly where that's coming from. But, you know, we're excited for, you know, really this next chapter as we get FDA approval for Garden360 Liquid, as we continue to lean into therapy monitoring more. We feel it's going to be increasingly harder to use multiple sort of providers for something that you'd rather see a holistic and unified view of with each and every patient.

I mean, you touched on therapy monitoring, so maybe let's go there. Is that starting to matter? Is that starting to show up in numbers? It's still very early, but you seem to be having really good traction there. So can you talk about what you're seeing there?

Yeah, we're just one full quarter now in terms of the launch of therapy monitoring. We think it's going to be a pretty large indication in general when you think about a million-plus cancer patients under sort of a late-stage therapy, each of those patients sort of needing to be monitored, needing to be potentially switched to another therapy. We think it's a really nice sort of prompt for leaning into progression testing as well. If, you know, you see a number that you're following for that patient, you see ctDNA levels going up, then it's pretty clear that patient needs to be tested for new mutations, for potentially new therapeutic options. And so we think the sum is greater than sort of the individual parts there in the sense that these tests really work together really nicely.

You talked a lot about on the quarter in your last couple quarters about smart apps and the contribution there and the benefit you're seeing to the platform. It seems like that's having a bigger and bigger impact over time. Just talk about the uplift you're seeing in the air and where do you think that trajectory could take you?

Yeah, ever since we launched the smart platform in 2024, we've seen just kind of a steady sort of accelerated growth rate for 360 Liquid that continues to this day, and we see that continuing, I think, into 26 and beyond. The nice thing about the platform is that we're continually amazed by the capabilities that are unlocked by not just having this differentiated chemistry, but by then the data that we're accruing as we have hundreds of thousands of samples, well more than 500,000 methylation profiles. As we use more and more data to train some of these new algorithms, The resolution we can see, some of the performance capabilities we can see continuing to grow quite exponentially. And so we are very confident. We have dozens of new applications under development. And, I mean, even just, you know, this weekend, the team was emailing me with, like, new applications that we didn't think were possible that suddenly are working now. And obviously, this is being accelerated with some of the agentic AI capabilities and our ability to sort of increase the velocity of exploration we can do with multiple agents looking at, you know, sort of like different analyses. And so it's a great time. I think our thesis that he or she who has the most sort of biological data will eventually run out, is playing out. We've been sort of heads down focused on building the sort of data acquisition engines and 360 and Reveal and Shield. And now with like the whole AI revolution, it's made our ability to sort of take all of that data and analyze it in a streamlined and very cost-efficient way, you know, all the more powerful.

Okay. Are you, I mean, let's stick on that topic. Are you leveraging that today already? Is that starting to manifest already? Is that sort of like a future trajectory?

In terms of AI? Yeah, I mean, it's been transformational for the company. I mean, there's a huge shift from, you know, obviously we are always tech forward coming from, you know, engineering space and so on and from Silicon Valley, but really pushing to really rebuild the stack in a sort of AI native fashion across the different divisions in the company from legal to HR to operations to obviously like our software. I think something like 50% of our software is written by AI now and produced, and this has been the case for many quarters and for over a year now. You think about just the logistical burdens, administrative burdens that are required in the healthcare space around billing and reimbursement and appeals. And the level of automation we have now has been really fascinating and really exciting same thing on the regulatory side being able to put together regulatory submissions much more quickly making sure you double and triple check that with consistency and coherency that can be sort of aided by ai i think has been really transformative in terms of the velocity by which we can move across these different divisions and then you know on the r d side the informatics work you know our 10x engineers have become 100x engineers frankly and the fact that you know you have individuals are really good at algorithmic development but maybe didn't have the bandwidth to sort of harden the software build like you know very hardcore kind of software deployments can do that now like very easily through a genetic fashion I think has given you know a number of individuals frankly unforeseen superpowers in terms of being able to move much more quickly.

Okay I mean so far I think we've touched on a lot of the positives from the quarter and recent trends let's just run through some of the a little bit more negative data points real quick I mean one is the Serena 6 adcom was a lot of focus on the quarter maybe a little bit too much of a focus now that you moved past and had a little bit of time to digest it just what do you think are the more practical implications both near term for Serena specifically but also for you know future opportunities on the same vein yes I think the silver lining there was that you know I think to every single person on the committee there was I think supportive and believed that CT DNA testing was the future of oncology so I think you know sort of their North Star

is still alive and well I think you know despite you know the next decision there I think you had a number of the sort of key KOLs there, also very supportive of this sort of new paradigm, which I think was great to see. And then I think Serena 6 was never really the primary sort of avenue to get to this sort of modality of longitudinal testing and adaptive management of disease. It was really reveal for therapy monitoring is our sort of number one sort of plan of attack of making that new vision, that new reality, a standard of care. And I think we're off to a really good start. Obviously, we have some submissions for reimbursement in flight with IO and chemo, and we'll have a number of other ones as we accrue more data. And so, yeah, I think regardless of how chemizestrin sort of turns out, But we think this is a future that is very much in the near term and one that we can make happen just within the capabilities we have within our own company.

Another topic during the quarter that got a lot of attention was CRUSH, more broadly, I think across the entire diagnostics universe. Not even necessarily as much on Garden, but certainly spilled over into that as well. Where do you sit on that debate, and why do you think you're insulated and not necessarily impacted by that.

Yeah, I think there's a lot of, I think, confusion around that. You know, I think, you know, from what we see, that it was a discussion of sort of different practices of some of the different MACs in terms of how they adjudicate claims. And, you know, I think MOLDX has, you know, sort of been proactive in that discussion in terms of, you know, some of the, you know, the positive assessments that are required, technical assessments and submissions, you know, positive LCDs and so on. Obviously, you know, we're squarely within that MAC. And so we actually think we're less sort of affected than most. And then the other piece is, you know, most of our products are essentially going to national CMS. So we're sort of above the fray, I would say, to some extent. S.H.I.E.L.D. obviously has a national coverage decision. Garden 360 CDX does. Soon, Garden 360 Liquid will, too, as we get through FDA approval. So I think there was confusion around that and ADLT and so on. And this is really something that is a very different conversation than anything around PAMA, which is really in the realm of sort of legislative action and we don't think is under any kind of risk at this point.

Okay. And the last one that we had some questions on immediately post the result was you had a little bit of a update in the 10Q about civil investigation in Florida. You know, doesn't seem to be a huge concern. Just talk us through why you're not necessarily worried about that. Maybe any background you can give there?

Yeah, you know, I think in this industry, we look at this as sort of normal course of business. I think these come every now and again. I think, you know, a lot of our peers, you'll see, have had those sort of CIDs over the last few years. We had one back in 2022, you know, a list of questions which we answered. Nothing came of it. And, you know, we take these things, of course, very seriously. And, of course, we'll work with them and respond accordingly. And, you know, suffice to say, we have a very strong compliance program across Garden that we're actually very proud of. And so, you know, based on that, we don't look at this as an issue. Again, we'll take it seriously, but we don't see it as material or a specific issue for us to deal with.

Maybe in the last couple of minutes left, I want to ask a couple sort of big picture thematic ones, kind of debate that emerged during dinner last night that I thought was really interesting was sort of the, you know, where diagnostics fits and especially, you know, cancer care continuum diagnostic fits in therapeutics in the world today. You know, you've been fighting this fight for more than a decade now, and it's sort of this question of value of diagnostics versus the therapeutic. You made an interesting point earlier in talking about Serena 6. You talked about, you know, increasingly people do view CTDNA as the future of oncology, and there is a paradigm shift. Sort of where are we on that curve, and, you know, is that, is the progression along that curve of the understanding of the importance of diagnostics, Is that, at the end of the day, what's underpinning the strong growth you're seeing in oncology? Is that conversion of, you know, that paradigm shift really what we're seeing play out now?

Yeah, look, I think diagnostic companies for probably decades have been saying that, you know, they're not getting the true value they deserve, that they inform decisions. There should be more value there. And, you know, the reality is that 70% of clinical decisions are informed by diagnostic testing today. So they are essentially the lion's share of how physicians make decisions on patients. And when you think about this sort of wallet share, you know, across the board and, you know, people sort of wring their hands around diagnostic testing, frankly, all of Medicare diagnostic testing is $8.3 billion compared to $1.7, $1.8 trillion in terms of total Medicare and Medicaid spend. And so, you know, we're sort of stepping over dollars to grab pennies when we think about, like, you know, optimizing the price of diagnostic testing. When, you know, we have these massive boulders of cost when you think about these $100,000 costs, you know, therapeutics that are out there, a million-dollar cost of therapeutics. Any other industry, you measure twice and cut once. For some reason, we think we want to save like a little bit of money, you know, a couple thousand dollars to then misutilize $100,000 drugs. And so I think we just have to take a step back and look at the totality of the picture. You know, and I think it'll happen. There's just no industry where data is not king. I mean, financial industry, tech industry everywhere. And, you know, I think historically, diagnostics have been pretty simple. They've been sort of very unidimensional in terms of the type of data that you're getting out of them. When you have these broad tests where the potential utility of the test is way greater than its current utility, that's where I think you get these big step shifts in industries. And that's what's starting to happen now, and especially in our industry, I think, is the one that's leading the charge here. I mean, we're going to have one exabyte of data very soon, like, in our portfolio. And there's just this nice sort of snowball effect in terms of, like, greater and greater utility that we can sort of glean and provide to physicians. So, yeah, we're very much, I think, on sort of our way to, I think, correctly shifting the value proposition towards diagnostics.

Mike, maybe one for you. You know, continue to make strong progress on gross margins. and you've got some nice operating leverage and volume leverage as you're moving through the year, but at the same time, you're still making a lot of investments in commercial sales force and continue to make an investment in R&D. Just talk about the balancing opportunities there of investments versus margin expansion as you go towards EBITDA break-even, free cash repositive.

Yeah, at the moment, we're sort of balancing that by taking screening separately and then we take the rest of the business. If you take the rest of the business you know from sort of middle of last year that was free cash flow positive and adjusted EBITDA positive and for the full year this year it's going to continue to be so in fact quite strong adjusted EBITDA and cash flow in 2026 and so I think we're getting the balance right of reinvesting in the right areas of R&D and sales and marketing across the sort of oncology and biopharma business because we still want to support innovation and we still want to support top-line growth. So I think we're making the right sort of balance there. On the screening side, you know, this year, same as last year, we're investing heavily on the commercial build-out. We want to take as much advantage of this first mover position that we have. We want to ramp up the sales field team as quickly as possible. And so that's what we're doing. And so we're reinvesting every sort of dollar of incremental gross profit back into the sales and marketing line. And that's going to continue until we get to a certain level of scale. And then we're very confident in 2027 that on the screening side, we'll reach an inflection point where we've got to that scale on the commercial build-out. And so incremental gross profit as we're deriving that then can start to drop down to the bottom line. So, you know, we're still, even with these heavy investments across screening, we're still committed to being break-even by the end of 27 and very confident we'll do that.

All right.

Maybe just quick closing remarks. Helmy, anything specific you want to call out? I mean, again, really good progress, really good start to the year, but just sort of concluding thoughts or what you'd like to leave investors with?

Yeah, I mean, I think the numbers speak for themselves. Very strong quarter, everything sort of firing in all cylinders, and, yeah, I think it bodes well for this sort of next chapter of Garden's growth. All right.

Well, thank you. Thank you very much. Helmy, Michael. Thanks so much for being here. Thanks, everyone. Yeah, pleasure.