GRAIL, Inc. (GRAL) Q2 2026 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the GRAIL Second Quarter 2026 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that this conference call is being recorded. GRAIL Investor Relations, please begin.

And thank you all for joining us today. On the call are Josh Offman, our Chief Executive Officer, Aaron Frieden, Chief Financial Officer, Sir Harpal Kumar, Chief Scientific Officer and President, Global Clinical and Medical Affairs, and Andy Partridge, Chief Growth Officer. I'll remind you that we'll be making forward-looking statements based on current expectations. It's our intent that all statements other than statements of historical fact, including statements regarding our anticipated financial results and commercial activity will be covered by the Safe Harbor provisions for forward-looking statements under federal securities laws. Forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from those projected or discussed. All forward-looking statements are based upon currently available information and GRAIL assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that GRAIL files with the Securities and Exchange Commission, including the risk factor section in GRAIL's most recent annual report on Form 10-K and the quarterly report on Form 10-Q. We plan file for the second quarter of 2026. This call will also include a discussion of GAAP results and certain non-GAAP financial measures, including adjusted gross profit and adjusted EBITDA, which exclude certain specified items. Our non-GAAP financial measures are intended to supplement your understanding of Rails financials. Reconciliations of the non-GAAP measures to most directly comparable gap financial measures are available in the press release issued today which is available on our website with that we turn to josh thank you good afternoon everybody and thanks for joining us to review the results of the second quarter of 2026 to discuss recent business updates grail continues to execute across our clinical and commercial priorities.

We launched a gallery test in 2021 after our approximate 6,000 participant interventional Pathfinder study, which was conducted under an FDA-approved investigational device exemption and read out and demonstrated strong performance and safety in a screening population. For several years, Pathfinder was the only interventional study that clearly demonstrated the benefits and evaluated the potential harms of deploying an MSED test in the intended use population. Since then, we've read out two additional large studies. Our 35,000 participant Pathfinder 2 study in North America and the groundbreaking 140,000 participant NHS gallery trial in England, which included three annual tests. We recently presented detailed performance, safety, and clinical utility results from these studies at the 2026 American Society of Clinical Oncology Annual Meeting, and they are currently under review for publication, further establishing Gallery as the only MSED with extensive clinical delegation from interventional settings. These data in the asymptomatic screening population are critical for physicians and patients to understand test performance as case-controlled studies can fail to replicate performance when tests are rolled out in an intended use population. We're extremely proud of the unparalleled performance demonstrated in these studies in the screening population, and we're focused on driving to FDA approval and subsequent Medicare and commercial reimbursement. Gallery test performance is highly differentiated, with a false positive rate of less than 0.5 percent, resulting in at least three to six times fewer false positives than other MSED tests in development. Our technology at GRAIL was designed specifically for population-scale MSED screening. Our extensive research published in top-tier journals concluded that methylation holds the highest biological information density, which is why GRAIL's proprietary methylation platform, the largest of its kind, is uniquely capable of delivering high-accuracy detection and precise localization. We have published, to our knowledge, the largest head-to-head genomic feature comparison study in the entire field, and we showed that combining other approaches considered did not improve performance over our proprietary methylation technology. Adding these other features only introduced additional complexity, cost, and biological noise, and the field is increasingly moving to methylation as the technology of choice, further validating our approach. Today in the market with Gallery, we continue to expand access through new and existing partnerships, and we are accelerating our international expansion activities. Related to that in the second quarter we completed the previously announced 110 million dollar financing with samsung alongside that closing we began work with samsung cnt corporation on our strategic collaboration as a reminder we and samsung cnt corporation will work together to commercialize the gallery tests in south korea with the potential to expand into additional asian markets including japan and singapore a 110 million dollar investment in grail represents a long-term investment to support our growth and international goals we were very pleased to complete this financing and we look forward to moving forward with samsung to introduce our msid technology to patients throughout asia in the us we continue to see growing position adoption of the gallery test. We sold over 61,000 gallery tests in the second quarter, a 35% increase in volume year-over-year. Total gallery screening revenue was $42.6 million, up 24% over the year prior. For the first half of 2026, we saw gallery test revenue growth of 30% year over year to more than 80 million dollars and gallery test volume growth of 42 percent to more than 117 000 tests we announced early in 2026 the planned expansion of our field sales and medical teams based on the positive performance and clinical utility results observed in our pathfinder 2 and nhs gallery trials this expansion was substantially complete at the end of the second quarter new personnel have been onboarded and trained and are now in the field and initial feedback from salesforce engagements with physicians since asco has been really positive last month we announced a collaboration with priority health to enable its employer groups to add the gallery tests to their existing screening coverage priority health is a nationally recognized non-profit health plan with more than 1.4 million members in michigan and nearby states priority health launched coverage for gallery within certain plans in 2025 and our collaboration announced in july marks a promising expansion of this partnership moving to our clinical evidence base we recently shared strong clinical utility performance and safety results from our NHS Gallery trial and Pathfinder 2 studies at the recent Hasco annual meeting in May. Although the primary endpoint for the NHS Gallery trial of a combined reduction of stage 3 and 4 cancers was not met, we believe the other results of this study demonstrated very strong performance, safety, and utility. Across both studies, adding gallery to standard of care increased the cancer detection rate by 4 to 6.5 times the gallery test demonstrated very consistent performance with a false positive rate of less than 0.5 percent and positive predictive values ranging from 50 to 60 percent gallery also demonstrated high accuracy in predicting cancer signal of origin enabling efficient and patient-centered diagnostic evaluations. Today, standard of care screening finds only about 14% of cancers in the U.S. and about 6% of cancers in the U.K. By adding Gallery, we estimate that those figures can increase to 50% or more, and indeed in Pathfinder 2, this number was 60%. This represents a substantial improvement that expands detection of clinically meaningful cancers that otherwise lack recommended screening. Across these two studies, approximately 40 to 50 percent of the gallery-detected cancers were found at stages 1 and 2, and approximately 70 percent were found at stages 1 through 3. Remarkably, in the NHS gallery study, gallery detected 366 stage 1 and 2 cancers, Many more than the 290 cancers detected at any stage by the entirety of the UK's standard of care screening program in the control arm. This is truly remarkable. The promise of multi-cancer early detection is not just in finding cancer, but in finding it early enough to open the door to curative treatment options for as many people as possible. What is clear across these groundbreaking trials is that the gallery test detects a large number of asymptomatic cancers in stages 1 through 3, the majority of which have the opportunity for curative intent treatments. Together, these findings underscore the consistency and actionability of the gallery test results and demonstrate that adding gallery to standard of care screening has the potential to improve the effectiveness and efficiency of our current national screening program. This is critical for providers, regulators, and payers as they evaluate the clinical and economic value of gallery alongside standard of care screening. These data support the potential of MSED screening at population scale to identify cancers at earlier stages when treatments are more effective and are potentially curative. Turning now to our regulatory process, we submitted our pre-market approval application to the FDA in early 26, and we remain in an ongoing, iterative review process. We are very confident in the data package that's been submitted. Gallery's performance has been validated and replicated in multiple rigorous, intended-use, population-level studies. We have consistently shown that GALLERY can detect asymptomatic cancers well over and above the standard of care, and the evidence clearly demonstrates that GALLERY can be useful and safe when implemented at scale. Our PMA for GALLERY is focused on test performance and safety results from the first approximately 25,000 participants in the Pathfinder 2 study with one year of follow-up, and the prevalent screening round for the first year of the NHS Gallery trial. The submission also includes a bridging analysis to compare performance of the version of Gallery used in these clinical studies to the updated version that has been submitted to the FDA for pre-market approval. As Gallery is the first-of-its-kind technology and multi-cancer early detection represents a potential paradigm shift in cancer screening, we do expect the FDA to convene an advisory committee for gallery in the fall. The FDA will announce specific timing of an advisory committee. Turning now to the evolving market environment. As additional MSED tests have launched, a few things are very critical to mention. Other MSED products have been introduced based only on observational case-controlled data and have yet to evaluate the benefits and harms in an actual screening population. First, that means it is unknown how the purported benefits of these tests shown in case control data will translate, if at all, into performance when deployed into an asymptomatic screening population. And without interventional studies, it's not clear whether the diagnostic pathways and procedures have been developed to support physicians and patients after a positive test. Second, MSED tests with high false positive rates may expose patients to significant risks of radiation exposure and invasive diagnostic tests, which carry potential for complications and increased morbidity. Until these tests have been robustly studied and validated in the intended use screening population. They represent an unknown benefit risk profile and should be considered experimental screening tests at this stage. When we launched Gallery, we deliberately chose to do so only after reporting results from a prospective interventional study under an FDA-approved investigational device exemption in the screening population. We believe that patients deserve and the field demands this level of robust evidence because the true litmus test test performance, both benefits and harms, is demonstration in interventional clinical studies in the actual intended use population. Now, why do I say this? This is because case control data will not always replicate in interventional studies. For example, after very strong performance for the CancerSeq assay was observed in a case-controlled study published in a top-tier journal of science the detect a study failed to replicate performance and safety in an interventional study and as you know this test is currently not available or on the market beyond study rigor gallery test characteristics stand apart in the field based on data from observational studies that are case control experimental insight tests are operating at a three to five times higher false positive rate they detect a smaller number of cancer types and some have no ability to predict a cancer signal origin which we believe is necessary for safety and performance of any mset test in a field where hope and hype can easily collide braille is defined by rigorous science evidence and validated by the most extensive evidence base. We believe we chose the right biological signature of cancer after unbiased comparisons. We have built the most advanced proprietary technology to interpret that signal, and we have proved this performance in the real world on an unprecedented scale. I'll now hand off to Aaron for a review of our second quarter financials.

Thanks, Josh, and good afternoon, everyone. Second quarter results were strong, with revenue of $44.7 million, up $9.1 million, or 26%, as compared to the second quarter of 2025. Total revenue for the second quarter consisted of $42.6 million of screening revenue and $2 million of development services revenue. Screen revenue was up 24% as compared with the second quarter of 2025, with test volumes of more than $61,000, an increase of 35% over the second quarter of 2025. Net loss for the quarter was $110.2 million, a decrease of 3% as compared to the second quarter of 2025. Non-GAAP adjusted gross profit for the second quarter was $21.6 million, an increase of $5.4 million, or 34%, as compared with the second quarter of 2025. Primary drivers of the increased gross margin were improved fixed cost leverage from higher volumes and a decrease in sample reprocessing costs, partially offset by a decrease in ASP. Adjusted EBITDA for the second quarter was negative $90.3 million, an increase in adjusted EBITDA loss of $11.9 million, or 15%, as compared to the second quarter of 2025. We ended the second quarter with a cash position of $861.6 million, which includes $110 million strategic investment by Samsung, which closed in June. Our cash balance today provides us with financial flexibility as we advance key priorities, including securing regulatory approval and reimbursement for Gallery in the United States. Back to you, Josh.

Thank you, Aaron. We're really pleased with the continued growth for Gallery and the progress we're making towards FDA approval and broad-based access. And we anticipate continued progress over the next year. with asco behind us our expanded field teams are now fully equipped to educate clinicians about our groundbreaking trial results and continue market development and initial feedback from the field has been really positive we look forward to potential fda approval of gallery expanding distributor partnerships internationally progressing r&d on gallery improvements and cost of goods reduction, and publication of the NHS Gallery and Pathfinder II studies, as well as additional analyses from our extensive clinical program. Operator, we can now go to Q&A.

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you'll hear your name called and receive a prompt to unmute. As a reminder, we are allowing analysts one question and one related follow-up today. We'll wait one moment to allow the queue to form. Our first question will come from Subbu Nambi with Guggenheim. Please unmute your line and ask your question.

Hey, team. Thank you for taking my question. As you anticipate an FDA outcome in the fall, where do you think the FDA will focus on, like what type of questions and how are you preparing for those questions?

You know, we are obviously getting ready and preparing internally. We don't know the nature of any of that information at this time, but we should, you know, obviously we'll be informed about that as the time approaches. We're waiting to hear something from the FDA as it relates to timing.

Okay, that's helpful. And then given all the leadership changes at the FDA and the delays we have seen recently when it comes to finding the right panelists for ADCOMs, is there a risk this meeting pushes into next year at all? I know it's an unfair question.

Well, it's fine. We don't know the answer to that question. We know that the division that we're working with has been fairly stable at the FDA, which has been very, very positive and productive, and we continue our interview with them, but I couldn't really comment on their ability to find experts.

Okay. Can I squeeze one more? Would you expect CMS to wait for an FDA approval before better defining the NCD criteria for an MSAT test?

You know, again, it's a good question. I'd be speculating if I tried to answer it. We do know that CMS's coverage authority is only for FDA-approved products. So, our assumption has been that they would only undertake a national, you know, upon an FDA approval. Whether they're going to set specific coverage criteria.

Thank you so much.

Our next question will come from Kyle Mixon with Canaccord Genuity. Please unmute your line and ask your question.

Hey, Baskin, for the questions. Congrats on a strong quarter. Yeah, following up on Sidhu's questions about FDA. So maybe, Josh, like, it wasn't clear to me what the specific communication with the FDA was for you to now anticipate the meeting at ComD in the fall. So if you could talk about that, that would be helpful. And then additionally, you know, in the past you've talked about, like, an early 27 sort of approval timeline. Let's say this is, like, mid-fall or something. How would that affect your new timeline for FDA approval? Thank you.

No, thanks for the question, Kyle. You know, we have long stated publicly that we would anticipate that a groundbreaking technology like an MSED test, like Gallery, that is really changing the potential cancer screening paradigm would get an advisory panel. And we continue to believe that. There's no specific information that's been made public yet from the FDA about that. but we certainly are anticipating that an ad-com would occur. The timing of it, you know, has not been made public yet. That's, you know, still to come. And our potential approval as it relates to timing remains unchanged. You know, we would expect it to occur in the first part.

Perfect. Thanks for that. And then on competition, you know, you called that. That's interesting. It doesn't seem like there's been a volume impact, but how is that impacting your pricing? It looks like ASP in the quarter was 700 or something around there. And then, you know, kind of on that note, I think USPSTF is meeting later this month. Could they possibly talk about MSET at that meeting? How do you think that progresses, given it's more noise in the marketplace than some of these other entrants recently?

Yeah, it's a fair question. Let me take your second question, and then I'll have Andy address your first. As it relates to USPSTF, I think there's just a lot that's unknown right now about the USPSTF. It's unknown what its competition is going to be, what its focus will be. And I think, you know, without, you know, before there's an FDA approved product on the market, it's, in my mind, less likely that they're going to take MSETs up, irrespective of the amount of noise that's in the market or not. But there's just a lot of unknown about the USPSTF, and it's mandated at this time. Your first question, which was about the impact of competition on our pricing, I'm going to let Andy discuss that.

Yeah, I think the – Our next question will come from Bradley Bowers with Mizuho. Please unmute your line and ask your question.

Hey, thank you for taking my questions. Maybe just wanted to click on the Salesforce expansion, obviously a pull forward of some of the costs. Just wanted to hear about why the timing is right. You know, seemingly, you know, the first part of 2027 timeline seems coincident with expected productivity ramp. But also just wanted to hear about if you knew about the adcom scenario from the FDA, kind of when you allocated this size and if this is kind of the max salesforce you expect.

Yeah, we pulled forward the Salesforce expansion really on the back of the NHS gallery and App Finder 2 data that we announced earlier in the year. Given how excited we were with both sets of that data, that Salesforce expansion is essentially complete now. Those sales members are now in the field. We expect to see the true benefit of that additional salesforce horsepower as we go through.

Just real quick, would you give a number just because of competitors, we do know a lot of them, and then just actually totally switching gears. On the panel, do you think this would make it maybe easier or harder for, you know, the incremental MSED test, you know, asking just because, you know, the government initiative right now seems to be just trying to ease the pathway towards getting MSED tests, adding more to the market. But obviously, the panel would be kind of differentiated. So, I wanted to hear if you think it would be kind of a competitive advantage, kind of an extra barrier to entry, or if it might, you know, have the adverse effect of making it easier for other MSEDs down the line. Thank you for the question.

Just to clarify, when you say a panel, do you mean an advisory committee panel?

Sorry, sorry, the IACOM. I apologize. Yes, this fall, the meeting of this fall.

Yeah, no, an ad-com, look, the reason we expect an ad-com is because typically when the FDA reviews a kind of groundbreaking pioneering type of technology, particularly one that could have this kind of impact on public health that is really paradigm changing, they typically hold an ad-com because they want to get advice from other experts. The ad-com will be completely about gallery. It will not be about the field of MSEDs. It won't be about other MSEDs. It'll be just about our data package that we've submitted to the FDA. So we don't really view it as a competitive advantage or disadvantage. We view it as part of the FDA approval process for a groundbreaking technology like GALLERY. Necessarily any bearing on whether there will be outcomes for future MSEDs, and I don't see any MSEDs right now, even on the horizon, doing registrational trials or anything like that. So, it's really hard to say.

I think just building on Josh's point, what the outcome of the FDA approval is going to do is establish that for future MSEDs. And that's why we're...

The question will come from Dan Brennan from TD Cohen. Please unmute your line and ask your question.

Great, thanks. Congrats on the quarter. Thanks for the questions. Maybe just one more on the panel since it's obviously the topic of yours. So, Josh, you started pretty definitive that there will be a panel. The FDA will alert us when, you know, kind of when the time is right. Can you just share any color, like, so does that mean, like, an outright decision popping up one day to go off the table? Like, just what's the level of the discussions that you have with FDA under these types of processes and just anything you can share on that front would be helpful. yeah there's until the fda from the very outset we we don't see any reason uh why that wouldn't be the case and so really it's just our own internal preparation at this point until the fda great thank you is there anything you can share about the back and forth like in terms of obviously you can't get into specifics but i'm sure there's a certain cadence to questions and responses all but i'm not sure how you might categorize or you know if there's anything you a chair on that front you know not really i mean it's pretty typical there have been you know a series of questions we've responded you know there's been you know performed uh through those okay how about the uh marketing since asco you know i know that you guys were uh kind of held back a bit from being out in the field since then it's just gallery headline was out but you wanted to wait until you presented the full data set at asco now that that was out can you just share any color about how like what the plan has been in the you know in the last six weeks or so or eight weeks excuse me what have you guys done how many customers have you hit what's been the response anything on that front to kind of provide color on yeah we trained all of the cells to do that we also trained all of our new establishing the gallery is the only and section rate in Pathfinder

2 about those kinds of numbers, you get a very positive reaction. And Andy's point is, I want to underscore it, the whole purpose of screening for cancer is to give individuals an opportunity to find cancer in stages that have curative intent. You know, in Pathfinder 2, for example, the vast majority of gallery-detected cancers receive curative intent treatment.

Maybe just, I'll speak two more in, publications, just latest thoughts there, timing, when we might expect the data to be in a, you know, a leading journal.

Harpal, yeah, Harpal here, thanks Dan, so we're, we have submitted publications both on Pathfinder 2 and NHS Gallery, those have been in active review at top tier journals, and those review processes are going well and they're going quickly. And so, you know, we are hopeful of publication in the near future.

And then maybe, so assuming FDA approval comes, you know, at some point this fall or early next year, obviously Medicare will have to follow the decision there. But in the interim, what type of impact will FDA approval do you think have upon either, Could some payers adopt then? Will maybe self-insured plans look to do anything, volumes? Just what's the meaning of FDA approval, do you think, on the business, you know, say like in that 12-month period between that decision and when the Medicare decision comes?

Yeah, thanks for the question. So FDA approval is – so we're looking forward to that. Also, many employers have took confidence going forward in terms of their sales efforts.

Terrific. Thank you all.

Our next question will come from David Westenberg from Piper Sandler. Please unmute your line and ask a question.

Hey, guys. It's Karan Patel on through David Westenberg, and I'll maybe shift gears here. If you could speak to the Illumina royalty resuming some time in Q4, how can we think about margins for Q4 and then specifically for full year 27?

Yeah, but Darren, so that royalty will kick in.

So minimal for.

Our next question will come from Callum Tishmarsh from Morgan Stanley. Please unmute your line and ask your question.

Yeah, great. Thanks for taking the question, guys. Sorry, again, to move back to the outcome. I was just reading through the transcript from the Q4 call back in February, and the message did seem to be that you were prepping for an outcome, but one likely wasn't necessary. So I'm still just trying to unpackage what perhaps has changed maybe from the questions that you've had from the FDA to the tone that you've given today. And I realize you can't perhaps go into too many of the specifics, but just some guidance would be helpful.

Sure, that's fair question. There's nothing that's changed in our minds or in our point of view about the FDA adcom. You know, I'm not sure what you're reading into prior comments. We've been very consistent saying that we are expecting that there will be an adcom, and we still expect that, and we're fully prepared for that. In fact, we look forward to the opportunity to really discuss unprecedented performance and scale with the adcom.

Okay, fair enough. And then, you know, some pretty sizable financing completed with Samsung in the quarter. Can you maybe just speak to the level of engagement there and how we should be thinking about the regulatory and commercial timelines in, you know, South Korea, Japan, and Singapore? Thank you.

Yeah, it's Aaron again. Yeah, so we close that in the near term in this review.

From Robert Bamberger with Baird. Please unmute your line and ask your question.

Hi, guys. This is Josh on for Robby. Thanks for taking my question. And I guess first, another solid quarter for gallery here. What was the primary growth driver in the quarter? Was this more on new physician ads or improving order rates among existing physicians?

And self-pay remains the majority of gallery's volume, but counting for about 70% of sales. You see that most of the volume is coming from brick and mortar physicians, And we added, again, about 1,000 new ordering providers in Q2. Depth of prescribing continues to increase over time. Electronic order integrations with Quest and Athena are also both bringing on new prescribers expansion and pension in our payer partnerships with Priority Health now joining a number

And I was just wondering too with the NHS, you know, how have discussions here gone around expanded gallery studies or future collaborations? Do you have any concerns around the ongoing NHS reform? How is that impacting gallery and diagnostic aid for cancer conversations?

Yeah, thanks for the question, Josh. So look, there's no getting around the fact that the fundamental changes in the sort of organizational structure and governance for NHS services in the UK is causing some hiatus in decision making and what those future structures will look like and there's still an enormous amount of uncertainty around that and quite a lot of organizational upheaval that's flowing from that. What I will say is that, you know, as we have talked to the leading clinicians in the NHS and indeed clinicians more generally in the UK, the overwhelming reaction is one of positivity about the results. You know, really as Andy has described for the US, we're seeing a great deal of enthusiasm around the stage four reduction and, you know, some of the other metrics that we've talked about, but particularly the stage four reduction and the opportunity that promises to really transform cancer outcomes. So, look, as we get through this, as I say, this organizational upheaval with the NHS, you know, I would anticipate those conversations will translate into, you know, defining hopefully a meaningful way forward.

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes the call. You may now disconnect.