[Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) GRAIL reported strong Q2 2024 revenue growth and significant clinical trial progress, despite a substantial net loss due to impairment charges [Q2 2024 Financial Performance](index=1&type=section&id=Q2%202024%20Financial%20Performance) GRAIL reported strong revenue growth of 43% year-over-year to $32.0 million for the second quarter of 2024, but recorded a significant net loss of $(1.59) billion primarily due to a $1.42 billion impairment charge Q2 2024 Financial Highlights (vs. Q2 2023) | Financial Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $32.0 million | $22.4 million | +43% | | **Gross Loss (GAAP)** | $(17.9) million | $(24.3) million | +26% improvement | | **Net Loss (GAAP)** | $(1.59) billion | $(193.0) million | +721% increase | | **Adjusted Gross Profit (Non-GAAP)** | $16.0 million | $9.6 million | +66% | | **Adjusted EBITDA (Non-GAAP)** | $(139.4) million | $(136.5) million | -2% | - The significant increase in net loss was primarily driven by a goodwill and intangible impairment charge of **$1.42 billion**[3](index=3&type=chunk) - As of June 30, 2024, cash and cash equivalents totaled **$958.8 million**[3](index=3&type=chunk) - This is the company's first quarterly report as an independent public company following its separation from Illumina on June 24, 2024, with over **215,000 Galleri® tests** sold as of June 30[2](index=2&type=chunk) [Recent Business Highlights](index=2&type=section&id=Recent%20Business%20Highlights) GRAIL has achieved significant milestones in its major clinical trials, including commencing enrollment for REACH and completing enrollment for PATHFINDER 2 and final visits for NHS-Galleri - Began enrollment in the REACH (Galleri-Medicare) study, which will enroll **50,000 individuals** from the Medicare population to provide clinical validation and utility data[4](index=4&type=chunk) - Completed enrollment of over **35,000 participants** in the registrational PATHFINDER 2 study, evaluating Galleri's safety and performance in individuals aged 50 and older[4](index=4&type=chunk) - Completed final study visits for the NHS-Galleri trial, a large-scale randomized controlled trial with over **140,000 participants** in the UK[4](index=4&type=chunk) [Strategic Update & Outlook](index=2&type=section&id=Strategic%20Update%20%26%20Outlook) GRAIL is implementing a corporate restructure to prioritize core MCED initiatives, reducing costs and extending its financial runway into 2028 [Portfolio Prioritization and Corporate Restructure](index=2&type=section&id=Portfolio%20Prioritization%20and%20Corporate%20Restructure) Following a portfolio review, GRAIL is implementing a corporate restructure to focus resources on its core multi-cancer early detection (MCED) priorities, particularly the Galleri test - The company is reducing overall spending to focus on core MCED priorities, including completing registrational studies and the premarket approval (PMA) application submission for Galleri[5](index=5&type=chunk) - Restructuring includes a reduction of approximately **30%** in existing headcount and planned hires for 2024[6](index=6&type=chunk) - Commercial operations will be refocused on the most productive provider territories, with streamlined investments in the enterprise business (employer and life insurance)[6](index=6&type=chunk) - Investment in biopharmaceutical partnerships will continue, leveraging GRAIL's methylation technology for precision oncology applications[6](index=6&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) The strategic cost reductions are projected to significantly improve GRAIL's financial runway, extending it from the second half of 2026 into 2028 - The cost reduction measures are expected to extend the company's cash runway from **H2 2026 into 2028**[7](index=7&type=chunk) - The company anticipates reducing its cash burn to **$325 million** in 2025[7](index=7&type=chunk) - Expected savings in 2024 are **$27 million**, net of anticipated severance and benefits costs[7](index=7&type=chunk) [Financial Statements & Reconciliations](index=4&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section provides detailed financial statements including balance sheets, income statements, cash flow statements, and reconciliations of GAAP to non-GAAP financial metrics [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, GRAIL's total assets were **$3.27 billion**, a decrease from **$3.91 billion** at the end of 2023, largely due to the complete impairment of goodwill Selected Balance Sheet Data (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $958,845 | $97,287 | | **Intangibles assets, net** | $2,086,056 | $2,687,223 | | **Goodwill** | $0 | $888,936 | | **Total assets** | $3,269,640 | $3,913,814 | | **Total liabilities** | $574,513 | $267,627 | | **Total stockholders' equity** | $2,695,127 | $3,646,187 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2024, GRAIL generated **$32.0 million** in total revenue, a 43% increase, but reported a net loss of **$(1.59) billion** primarily due to a **$1.42 billion** impairment charge Statement of Operations Summary - Three Months Ended (in thousands, except per share data) | Account | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | | **Total revenue** | $31,970 | $22,414 | | **Goodwill and intangible impairment** | $1,420,936 | $0 | | **Loss from operations** | $(1,641,291) | $(204,367) | | **Net loss** | $(1,585,337) | $(193,044) | | **Net loss per share** | $(51.06) | $(6.22) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, net cash used in operating activities was **$(379.1) million**, with a net increase in cash of **$861.3 million** primarily from financing activities, ending with **$962.8 million** in cash Cash Flow Summary - Six Months Ended (in thousands) | Activity | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | | **Net cash used by operating activities** | $(379,085) | $(309,391) | | **Net cash used by investing activities** | $(3,934) | $(5,923) | | **Net cash provided by financing activities** | $1,244,300 | $303,775 | | **Net increase (decrease) in cash** | $861,251 | $(11,282) | | **Cash, cash equivalents and restricted cash — end of period** | $962,763 | $234,846 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details the adjustments made to arrive at non-GAAP metrics, such as Adjusted Gross Profit and Adjusted EBITDA, by excluding specific non-cash or non-recurring expenses for comparable operational performance assessment - Adjusted Gross Profit is used by management to assess operational performance by excluding indirect costs, amortization, and stock-based compensation from the cost of revenue[16](index=16&type=chunk)[17](index=17&type=chunk) - Adjusted EBITDA is used to assess financial performance and for internal planning, providing a comparable overview by excluding items like capital structure, tax rates, and certain non-cash or non-recurring expenses[18](index=18&type=chunk)[19](index=19&type=chunk) [Reconciliation to Adjusted Gross Profit](index=9&type=section&id=Reconciliation%20to%20Adjusted%20Gross%20Profit) For Q2 2024, a GAAP gross loss of **$(17.9) million** was reconciled to a non-GAAP Adjusted Gross Profit of **$16.0 million**, representing a 66% increase from Q2 2023 Reconciliation to Adjusted Gross Profit - Three Months Ended (in thousands) | Line Item | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | | **Gross loss (GAAP)** | $(17,912) | $(24,278) | | Amortization of intangible assets | $33,472 | $33,472 | | Stock-based compensation | $463 | $450 | | **Adjusted Gross Profit (Non-GAAP)** | **$16,023** | **$9,644** | [Reconciliation to Adjusted EBITDA](index=10&type=section&id=Reconciliation%20to%20Adjusted%20EBITDA) For Q2 2024, the GAAP net loss of **$(1.59) billion** was reconciled to a non-GAAP Adjusted EBITDA of **$(139.4) million**, with the largest adjustment being the exclusion of the **$1.42 billion** impairment charge Reconciliation to Adjusted EBITDA - Three Months Ended (in thousands) | Line Item | June 30, 2024 | July 2, 2023 | | :--- | :--- | :--- | | **Net loss (GAAP)** | $(1,585,337) | $(193,044) | | Goodwill and intangible impairment | $1,420,936 | $0 | | Benefit from income tax expense | $(53,144) | $(9,796) | | Amortization of intangible assets | $34,583 | $34,583 | | Stock-based compensation | $25,947 | $25,548 | | Other adjustments (Interest, D&A, etc.) | $17,624 | $6,162 | | **Adjusted EBITDA (Non-GAAP)** | **$(139,391)** | **$(136,545)** |