Guardant Health(GH) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenue grew 34% to a record $191.5 million in Q3 2024, driven by precision oncology revenue, which increased 35$180.6 million [11][39] - Clinical test volume grew 21% year-over-year and 7% quarter-over-quarter, reaching 53,100 tests in Q3 2024 [12][40] - Biopharma test volume increased 40% year-over-year to a record 10,500 tests in Q3 2024 [13][41] - Guardant360 ASP reached $3,000 in Q3 2024, achieving the long-term goal four years ahead of schedule [17][43] - Non-GAAP gross margin excluding screening was 65$56.2 million [46][48] - Free cash flow improved to negative $55.3 million in Q3 2024, with$1 billion in cash on hand [49][50] Business Line Performance - Guardant360 LVT upgrade expanded the number of genes by nearly tenfold, improved sensitivity for tumor burden detection by a factor of 10, and introduced methylation tech stack features [14][15] - Guardant360 LVT on smart liquid biopsy was the strongest contributor to year-over-year and sequential volume growth in Q3 2024 [17] - Reveal continues to see strong growth, with clinical validity studies for additional cancers such as lung, pancreatic, and gastric planned for 2025 [24][25] - Shield, the first FDA-approved blood test for colorectal cancer screening, launched in August 2024 with a Medicare price of $920 [29][34] Market Performance - The company partnered with Policlinico Gemelli in Rome to implement on-site processing of Guardant360 CDx tests, marking one of the first dedicated liquid biopsy testing facilities in Italy [19] - Strong momentum in China with a growing pipeline of biopharma samples [22] - Shield received a Medicare price of$920, with expectations to secure an ADLT designation and a more favorable Medicare price of $14.95 in 2025 [34] Strategic Direction and Industry Competition - The company aims to achieve greater than 60$720 million to $725 million, representing growth of approximately 28$200 million in the following years [57] - While USPSTF recommendations are seen as a major milestone, the company believes there is significant market depth to mine in the covered patient population [60] Question: Shield's performance and market feedback [63] - Shield's initial volume post-launch was ahead of expectations, with strong momentum continuing into Q4 2024 [65] - The company plans to report Shield volume and revenue contribution in Q4 2024 [65] Question: Therapy selection TAM and repeat testing [71] - The market for therapy selection is expected to grow significantly, with potential for patients to receive multiple tests over their lifetime [72] - The company sees liquid biopsy as uniquely positioned to capture this market due to its ability to perform repeat testing easily [73] Question: Reveal's potential upside and ASP [74] - The company expects an acceleration in Reveal volume growth in 2025, driven by CRC surveillance reimbursement and cost reduction initiatives [76] - ASP for Reveal is expected to increase with CRC surveillance reimbursement, though the exact uptick is difficult to quantify at this stage [76] Question: Shield's market penetration and V2 data [78] - Shield V2 data is expected in 2025, with potential for an upgrade to the test [79] - The company assumes a 60% market share in blood-based CRC screening in its long-term projections [80] Question: Core revenue growth and Shield reordering rates [83] - Prior period cash upsides contributed approximately $20 million to revenue growth, with the remainder driven by clinical volume growth, Guardant360 ASP increases, and biopharma performance [84] - Reordering rates for Shield are not yet measurable, as the recommended interval for retesting is every three years [85] Question: Clinical volume growth acceleration and Shield lab setup [87] - Clinical volume growth is expected to accelerate above 20$1,000, with further reductions expected as volume scales [115]