Earnings call: Guardant Health reports robust growth in Q1 2024

Guardant Health , Inc. (NASDAQ:) has announced its Q1 2024 financial results, showcasing a 31% increase in total revenue to $168.5 million. This growth is attributed to a surge in clinical test volumes, particularly the Guardant360 test, and advancements in its product offerings such as TissueNext and Response.

The company has also achieved positive free cash flow in its Therapy Selection business and reported improvements in average selling prices. With over 500 peer-reviewed publications to its name, Guardant Health is advancing in the field of precision oncology and is preparing to launch its Shield blood test for colorectal cancer screening in 2024, targeting an unscreened population of 50 million individuals.

Key Takeaways

• Guardant Health’s total revenue grew by 31% to $168.5 million in Q1 2024.
• Clinical test volume increased by 20% year-over-year, with Guardant360 driving growth.
• Positive free cash flow was reported in the Therapy Selection business.
• The Shield blood test for colorectal cancer screening is gaining positive attention and is positioned for potential Medicare reimbursement.
• The company forecasts full-year 2024 revenue between $675 million and $685 million, a 20%-21% growth from 2023.
• Cash flow breakeven is expected by 2028 with a current cash balance of $1.1 billion.

Company Outlook

• Full-year 2024 revenue is expected to range from $675 million to $685 million.
• Cash flow breakeven is anticipated by 2028, potentially earlier.
• Non-GAAP gross margin excluding screening is projected to be between 61% and 63%.
• Non-GAAP operating expenses are forecasted to be between $720 million and $730 million.
• Free cash flow for 2024 is estimated to be negative $275 million to $285 million.

Bearish Highlights

• Free cash flow for 2024 is expected to be negative, between $275 million and $285 million.
• Expenses for the Shield lung clinical study will significantly reduce post-enrollment, indicating current high costs.
• The company has not provided specific guidance for the next year due to uncertainties including FDA approval timing.

Bullish Highlights

• Strong adherence rates for Shield LBT and increased CRC screening compliance when offered alongside standard care.
• Positive attention from media and advocacy groups for the Shield blood test.
• Advancements in smart liquid biopsy and epigenomics expected to catalyze volume growth.

Misses

• The company did not provide specific guidance for next year’s performance.

Q&A Highlights

• No indication of a delay for the USPSTF update, expected this year.
• Plans to expand based on American Cancer Society guidelines.
• GuardantINFINITY platform may include immunohistochemistry capabilities if market demands.
• Newly finalized FDA regulations for laboratory developed tests have minimal impact on the company.
• The convertible debt due in 2027 is being strategically managed, with options being explored.

Guardant Health remains confident in its strategic direction and product pipeline as it prepares for FDA approvals and aims to capitalize on the significant market opportunity for non-invasive cancer screening. With a strong financial position and a focus on innovation, the company is poised for continued growth and expansion in the precision oncology space.

InvestingPro Insights

Guardant Health, Inc. (GH) has shown remarkable revenue growth in Q1 2024, but a deeper dive into the financial health of the company using InvestingPro data and tips reveals a more nuanced picture. According to the latest metrics, the company’s market capitalization stands at $2.37 billion, reflecting its significant presence in the precision oncology market.

Despite the lack of profitability over the last twelve months, an InvestingPro Tip indicates that Guardant Health’s liquid assets surpass its short-term obligations, suggesting a degree of financial stability in the near term. Moreover, the company operates with a moderate level of debt, which could be a strategic advantage in managing its finances and investing in new technologies.

Key InvestingPro Data points include a negative Price/Earnings (P/E) ratio of -5.27 for the last twelve months as of Q1 2023, which aligns with the analysts’ view that the company will not be profitable this year. The Price/Book ratio is high at 14.93, which may indicate that the market has high expectations for the company’s growth potential or that its assets are valued significantly by investors.

Another important metric is the Revenue Growth of 25.45% over the last twelve months as of Q1 2023. This robust growth rate is in line with the company’s reported 31% increase in total revenue for Q1 2024, underscoring the success of its product offerings and market strategy.

For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available, which can be accessed at Using the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a wealth of financial insights and investment strategies. There are 5 more InvestingPro Tips listed for Guardant Health, offering valuable information for potential investors and current shareholders alike.

Full transcript – Guardant Health Inc (GH) Q1 2024:

Operator: Good afternoon and thank you for attending the Guardant Health Q1 2024 Earnings Call. My name is Kate and I will be the moderator for today’s call. At this time all lines are in a listen-only mode, and will be until the question-and-answer portion of the call. I would now like to turn the call over to Eric [ph] with Guardant Health. You may proceed.

Unidentified Company Representative: Thank you. Earlier today, Guardant Health released financial results for the quarter ended March 31, 2024. Joining me today from Guardant are Helmy Eltoukhy, Co-CEO; AmirAli Talasaz, 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 specific items. Additional information regarding material risks and uncertainties, as well as reconciliation to the most directly comparable GAAP financial measures are available in the press release Guardant issued today, as well as in our 10-K and other filings with the SEC. Guardant disclaims any intention or obligation to update or revise financial projections and forward-looking statements whether because of new information, future events or otherwise. The information in this conference call is accurate only as of the live broadcast. With that, I’d like to turn the call over to Helmy.

Helmy Eltoukhy: Thanks, Eric. Good afternoon and thank you for joining our first quarter 2024 earnings call. Starting on Slide 3. Guardant is a liquid biopsy leader for therapy selection with a robust pipeline of opportunities in tissue-free MRD and cancer screening. With our comprehensive suite of tests we are transforming patient lives across the continuum-of-care. We are just scratching the surface of what we believe is a massive opportunity in front of us. At Guardant, every action is fueled by our dedication to serving patients and fulfill a noble mission to get everyone more time free from cancer. In line with that mission, I’d like to share a story of the impact our tests had on patients. In March 2022, a male in his 40s was diagnosed stage 4 non-small cell lung cancer after he visited the hospital for gastrointestinal distress and back pain. That very same day he was given a Guardant360s CDx liquid biopsy at his hospital bedside, and his oncologist later followed up with a tissue test. Within days, the Guardant360 CDx tests results came back identifying an out-genomic [ph] rearrangement. With this information the patient was started [indiscernible] a first-line TKI treatment just 10 days after his diagnosis. Within just two weeks after starting treatment, the patient reported his back pain was resolved. Notably, the in-house tissue test result also confirmed the out-positive mutation but the results were received 5 weeks after the patients had already started therapy. The rapid turnaround time enabled by Guardant360 help to result in life saving record timely treatment. I’m pleased to share that the therapy has been successful in managing new cancer and the patient continues to do well today. Turning to top line performance in Slide 4. We had a fantastic start to the year, with total revenue growing 31% to $168.5 million in the first quarter of 2024. This was driven by various precision oncology revenue, which increased 38% in the quarter supported by significant Guardant360 reimbursement tailwinds, as well as strong growth in clinical and biopharma volumes. Turning to Slide 5. Clinical test volume for the first quarter grew 20% year-over-year reaching 46,900 tests. We achieved a record number of average tests for oncologists driven by continued growth in both, breadth and depth of ordering. Guardant360 continues to be the primary driver of clinical volume growth with increasing contributions from newer products such as TissueNext and Response. Reveal also continue to grow nicely despite our continued management of volumes ahead of broader reimbursement. Biopharma volumes were incredibly strong in the first quarter supported by strong collaborations with our growing number of biopharma partners. We now have over 170 lifetime partners. Test volume grew 37% year-over-year reaching 8450 tests. Despite discussion of biopharma headwinds across the sector, biopharma continues to be a bright spot for Guardant. We continue to see a lot of excitement for GuardantINFINITY, our newest biopharma offering, powered by our smart liquid biopsy platform. This is an important leading indicator for future demand for our clinical tests. Looking more closely at some of the recent highlights within our Therapy Selection business on Slide 6. I’m very excited to share that we generated positive free cash flow in our Therapy Selection business in the first quarter supported by continuing improvements in Guardant360 ASPs. We had another significant step-up in Guardant360 reimbursement reflecting the new cross walked rate for Guardant360 LBT that took effect on January 1. This increased the Medicare rate for Guardant360 LBT to $5,000. We also saw significant revenue upside from recent commercial payer coverage wins and believe that this is a tailwind that will continue to play out over the course of the year. We also saw continued progress in our EMR integration efforts with streamlined orders and workflows for physicians. Notably, more than 1/3 of orders in the first quarter were digital showing the effectiveness of the integration process. We had strong growth in the quarter driven by continued Guardant360 volume growth across all cancer types, as well as contributions from Japan and the UK. At Guardant, high quality science and data have always been the driving force in our mission to transform patient care. To that end, I’m excited to share that we recently reached a significant milestone and surpassed 500 peer reviewed publications highlighting the data produced by our innovative suit of products. Over the years, we have deliberately made investments to develop tests based on cutting-edge science, and we are proud to have conducted some of the largest and most impactful studies ever to be performed in our field. This incredible breadth of data demonstrates the impact our technology has in both, patients and the scientific community, in order to improve patient outcomes and ultimately give us more time free from cancer. We are committed to generating evidence that supports the real world impact of our technology and it’s impact on patient outcomes. This will physician demand and favorable reimbursement as we continue to improve payer coverage, which will in turn expand volume and increase our ASPs. Now taking a closer look at our international progress on Slide 7. We recently launched a new service at the Royal Marsden in England to test advanced non-small cell lung cancer patients using Guardant360. This partnership is supporting a new national pilot with NHS [ph] integrated liquid biopsy testing due to routine care, much earlier in a patient’s treatment journey. It allows patients with prospective non-small cell lung cancer to receive a CCP [ph] blood test concurrent with a diagnostic CT scan, so they may benefit from even earlier biomarker identification and subsequent targeted treatment. We are excited about this program demonstrating the value of bringing liquid biopsy testing much earlier into the patient journey to improve outcomes. The NHS study has already enabled more than 2000 patients with suspected advanced lung cancer to receive a CPP [ph] test concurrent with a diagnostic scan, and it’s set to expand to an additional 10,000 patients by next March. Moving on to Slide 8. At our Investor Day last fall, we shared an exciting vision for our smart liquid biopsy platform which is enabling first of its kind capabilities across a myriad of applications. Last month we presented exciting methylation fueled data for few of these applications at the ACR Annual Meeting, highlighting the value of the GuardantINFINITY epigenomic signal to generate novel insights. There this data shows how smart liquid biopsy technology provides information on not only boosting sensitivity for important drug classes such as targeted therapies and immunotherapies, but for giving unprecedented biological insight into the patient’s cancer and their health as a whole. For example, we presented data that demonstrated that we could do more than just detect the tumor tissue of origin in blood by unlocking the specific tumor histological subtype which is critical given patients can often fail therapy due to transformation of the tumor subtype. And today these transformations are often difficult to detect, even in tissue. Just as exciting, we presented data showing that we can predict adverse cardiac events in patients in HER2 directed therapy, including the detectability of heart risk and damage months prior to drug induced heart failure. These are just a handful of the profound applications that our smart liquid biopsy platform will enable setting a new bar for what physicians will expect from their testing partner. Now shifting gears to Reveal on Slide 9, where we are the leader in tissue-free MRD. I’m excited to share that our COSMOS CRC data [ph] from our COSMOS colon study, looking at stage 2 and 3 patients has been submitted for publication and is under review at a peer reviewed journal. Looking ahead to the remainder of the year, we anticipate publications that will support submissions to Medicare for a potential additional coverage in colon and breast cancer. Next year we have important clinical validity studies for additional cancers, such as lung, pancreatic and gastric that’ll support advancements with additional reimbursement. We are excited by the demand we are seeing in the market fueled by the fact that are greater than 12 million cancer survivors more than five years out from surgery; a tissue-free MRD solutions such as Reveal will be key to addressing this significant market. That said, we are not only the clear leader in this enormous market segment, but the only tissue-free MRD option in the market today. Despite our excitement, we believe it is important at this time to manage volumes very closely and hence minimize cash burn until Reveal is gross margin positive. Even ahead of divisional Medicare reimbursement with the impact of biomarker bills, we are starting to see improvements with the Reveal ASPs. 17 states have now passed biomarker bills with several other states on-deck for possible announcement this year. We are still early in the process but are starting to see some tailwinds that will bode well for future commercial coverage of our tests. We’re also making very good progress in our COGS [ph] reduction initiatives for Reveal. As a result, we expect that with significant lower COGS [ph] and with improved ASPs, Reveal will be gross margin positive in 2025. This will be an important milestone in minimizing MRD cash burn, and enable us to greatly accelerate volume expansion. Furthermore, over the long-term, we are confident that we can achieve greater than 60% gross margins for our MRD business. On April 29, the FDA issued it’s final rule related to defined oversight of LBTs. While our regulatory team continues to work through the details of the rule, it is consistent with our expectations. The rule outlined an exemption from pre-market Reveal with tests approved by New York State. Given the fact that our key tests are New York State approved, we would expect this exemption to allow us to continue to operate largely as we do now. As a reminder, Guardant360 CDx was first FDA approved liquid biopsy test for CGP across solid tumors. Our proven track record with FDA positions us to continue to offer high quality tests when the final rule goes into effect. We look forward to the follow on FDA guidance documents to help clarify the numerous aspects of the final rule. With that, I will now turn the call over to AmirAli for an update on screening.

AmirAli Talasaz: Thanks, Helmy. We are making remarkable strides with our Shield blood tests as we lead the way in establishing a new category within the CRC screening market. Shields continues to be the best-in-class blood test with significant first-mover advantage, and at this time we do not see any credible competitor in our line of sight. Turning to Slide 10. Since our last earnings call, the data from our pivotal equip study was published in The New England Journal of Medicine, the world’s leading peer reviewed medical journal. This publication was a major milestone for Shield and a strong endorsement of the quality of the clinical data. This data meets the benchmark for Medicare reimbursement, positioning us to potentially become the first FDA approved Medicare reimbursed CRC screening blood test. Turning to Slide 11. Following a publication in The New England Journal of Medicine, we were very excited to see such an enthusiastic response from media, consumer advocacy groups and opinion leaders. With attention from outlets such as The Associated Press, NPR, The New York Times, Colon Cancer Coalition and many others, the interest and potential value of this blood test is evident. Many recognize the significance of this publication as it brings us one step closer to providing a new choice for patients and helping to close the screening gap. Moving on to Slide 12. Our interactive review process with FDA continues to be collaborative and positive, and we continue to make steady progress. The advisory committee panel meeting will be the next milestone of the review process, and will take place on May 23. Our team has worked incredibly hard to get ready and we are well prepared for this panel meeting. In parallel, we are eagerly anticipating the launch of Shield IVD in 2024, shortly after expected FDA approval. Armed with two years of commercial experience from Shield LBT, we have fine-tuned our operations including enhancements of customer experience, seamless digital ordering and access to national [indiscernible] networks. After years of research and development, it’s so exciting to prepare, to make this test broadly available. Turning to Slide 13. There are 120 million average risk individual between the age of 45 to 84 which includes 50 million unscreened individuals. Approximately 75% of CRC related deaths occur within this unscreened population. And this is with having a broad — many of stool-based [ph] tests available for over a decade. We believe that reaching this group is the most important opportunity to transform the CRC screening paradigm. And real world evidence clearly shows that the blood modality is best positioned to capture the on-screen opportunity. We believe screening these 50 million individuals is addressable by a blood test because nearly 87% of people aged 50 and above have been seeing their doctor during the last 12 months based on findings from an Annual National Health Interview Survey. Interestingly, 91% of that group has had a blood drop in the last 12 months. This tells us that the majority of the unscreened population is in fact engaged with the healthcare system and routinely getting blood drops, making a blood-based CRC screening test, an obvious fit into their existing care. More importantly, our re-rolled [ph] LBT experience with Shield for over 20,000 tests over the past two years confirms that PCPs are enthusiastically ordering this test. And when they do, patients complete the test. We are content to send [ph] incredibly strong adherence rates of more than 90% for Shield LBT. Moving on to Slide 14. A randomized prospective study results from Kaiser Permanente showed significant improvement in CRC screening rates when participants had a choice of a Shield test alongside other standard-of-care modalities. Through telephone outreach to more than 2000 previously unscreened individuals, participants were randomized into two groups. One group was offered citro-colonoscopy [ph], and the second group was given the added option of Shield. This study demonstrated that screening compliance significantly increased by nearly triple when the many of screening options was expanded to include the blood test. This shows that blood has the opportunity to dramatically increase the screening rate at levels that exceeded even our initial expectations. We continue to be very excited about the near-term opportunity for Shield to transform the CRC screening paradigm, and eventually address the broader cancer screening landscape with the addition of more tumor attached to our Shield assay. With that, I will now turn the call to Mike for more detail on our financial thanks.

Michael Bell: Thanks, AmirAli. Turning to Slide 15, I will start by reviewing our financial results for Q1 2024. All growth rates provided will be on a year-over-year basis, unless otherwise noted. Total revenue grew 31% to $168.5 million driven by very strong precision oncology testing revenue, which includes 38% to $156.2 million due to significant growth in both, clinical and biopharma revenue. Precision oncology revenue from clinical tests increased 37% to $125.7 million. We were very pleased with our first quarter clinical test volume which grew 20% to 46,900 tests, in line with our expectations. For Guardant360, with saw solid year-over-year volume growth across all cancers in the US, as well as volume contribution from Japan and the UK. We also saw continued strong volume growth for both, Reveal and TissueNext. Precision oncology revenue from biopharma tests in the first quarter totalled $30.5 million, up 40%. Biopharma test volume was particularly strong totaling 8,450 tests, up 37%, which reflects the strong pipeline we entered the year with. We continue to expect our biopharma business to perform well and conservatively forecast biopharma revenue to grow in the low-teens for the full year 2024 with potential upside, assuming no adverse changes to biopharma macro environment. Finally, development services and other revenue was in line with our expectations, and totalled $12.3 million. Turning to Slide 16. Since May 2023, we’ve seen consistent improvements to clinical reimbursement and ASP and have an incredibly strong start for the year. Firstly, on January 1, our Guardant360 LBT Medicare rates increase to $5,000 following the CMS [indiscernible] posted last year. Secondly, we’re now seeing the impact of the Guardant360 commercial coverage wins we had in 2023. In Q1 2024, cash collected for tests performed last year was significantly higher than we had previously accrued, which resulted in an approximate $8 million revenue upside in the quarter. In addition, due to this improved commercial reimbursement trend, we increased our Guardant360 ASP for Q1 to be in the range of $2,900 to $2,950, which is higher than the forecasted range $2,050 to $2,900. We expect the Guardant360 ASP for the full year will be in this new higher range. Finally, we also received better than expected commercial reimbursement for Reveal, TissueNext and Response in the first quarter of 2024. While we still need to see a more consistent reimbursement trends for these tests, the reimbursement received in Q1 points to potential ASPs [ph] in future quarters. Although it’s still early days, we feel we are on-track to achieve the long-term ASP targets we presented at our Investor Day earlier than originally anticipated. This year we [ph] achieved our top line targets, as well as potentially to bring forward our timeline to reach company-wide cash flow breakeven. Moving on to non-GAAP financial measures on Slide 17. Our non-GAAP gross margin excluding screening, which reflects our focused [indiscernible] was 64% in the first quarter of 2024, an improvement compared to 63% in Q1 2023. As Helmy mentioned, we are carefully managing Reveal test volume ahead abroad reimbursement as it currently carries a negative gross margin. Even with a larger proportion of testing in Q1 2024 compared to Q1 2023, we were able to improve our non-GAAP gross margin driven by strong guidance received to ASPs and reimbursement we received in the first quarter of 2024. Non-GAAP operating expenses was $176.5 million, a reduction of $11.8 million compared to the prior quarter. This decrease was primarily driven by lower clinical studies costs following the completion of Eclipse [ph] enrolment in Q3 last year. With increased revenue, improved gross margins and lower operating expenses, our adjusted EBITDA improved significantly from a loss of $101.0 million in Q1 2023 to a loss of $61.1 million in Q1 2024. Moving on to Slide 18, cash burn [ph]. Free cash flow for the first quarter of 2024 was negative $37 million, which improved significantly year-over-year compared to negative $82 million in Q1 2023. As you’ll see from the slide, we revised our free cash flow guidance for the full year 2024 to bring in a range of negative $275 million to $285 million, which represents an improvement of $60 million to $70 million compared to the 2023. They key drivers of this revised 2024 guidance are the improved commercial reimbursements we are receiving for Guardant360 and the reduction in screening spend. As we’ve mentioned many times before, our [indiscernible] will be guided by major milestones; the next milestone being FDA approval. While we continue to expect FDA approval on commercial launch of Shield in 2024, the delay to the advisory committee panel meeting means that we’ve revised our operating plan, and as a result, now expect maximum screening cash burn this year to be $175 million, lower than our previously stated $200 million. On this slide we have also included a breakdown of the screening cash burn from full year 2024 to provide additional color on the level of investments we’re making in screening. As you can see, as well as the SG&A expense were recurrent costs and a gross loss to ensure tests falls in Medicare reimbursement coverage. And we are continuing to invest in screening, research and developments including our Shield lung clinical study, making technology and automation improvements, and continuing to make progress in multi-cancer early detection development. We expect the screening test profile to change in 2025 as the gross loss will become a gross profit following the ADLC [ph] reimbursement. And our Shield lung clinical study expense will reduce significantly once enrolment is completed. This will enable us to increasing investment in our commercial operations, while not exceeding the maximum net screening of 200 million per year. As we look ahead to the next few years, we’re confident that by continuing to generate positive cash flow from focused selection, driving MRB to profitability and carefully managing the investment into screening, we can continue to lower our cash burn this year, so that we reach cash flow breakeven by 2028, or potentially earlier, which is achievable with our current cash balance of $1.1 billion. Now, turning to our outlook and assumptions for the full year 2024 on Slide 19. We’re pleased to be able to make improvements across all guidance metrics. We now expect full year 2024 revenue to be in the range of $675 million to $685 million, representing growth of approximately 20% to 21% compared to 2023. This increase is primarily due to the commercial reimbursement upsides we had in the first quarter, and the increase in Guardant360 ASPs that we expect for the remainder of the year. As a reminder, this guidance doesn’t include any revenue contributions from screening, which are dependent on the timing of Shield FDA approval and medical reimbursements coverage. We will update our revenue guidance range which includes screening revenue, when appropriate. We expect non-GAAP gross margin excluding screening to be in the range of 61% to 63%, an improvement from our previous guidance of 60% to 62%. Again, this is due to improved clinical commercial reimbursement. We’ve lowered our non-GAAP operating expenses to be in the range of $720 million to $730 million, representing a flat to 1% year-over-year decline. This decrease is due to the reduction of screening operating expenses as I just outlined. Finally, as previously mentioned, we expect free cash flow to be in the range of negative $275 million to $285 million in 2024. Finally, turning to Slide 20 to review our catalyst. As we look ahead to the rest of 2024 and beyond, we have a number of upcoming milestones in each of our key business areas including the smart liquid biopsy upgrade for Guardant360 therapy selection, data publications and [indiscernible] submission for MRD, and Shield FDA approval and launch. With that, we’ll now open the call to questions. Thank you.

Operator: [Operator Instructions] The first question comes from the line of Mark Massaro with BTIG.

Mark Massaro: To limit myself to one question, obviously, we’re 2 weeks away from the FDA ad-com [ph]; I think a lot of people are expecting the conversation to focus on the safety and efficacy, as well as some of the other benefits of Shield like the patient compliance or patient adherence. But I think there are some questions in the investor community that are focusing on the labelling and the topic of advanced adenomas. Do you guys have a sense for whether or not you think a labelled conversation will be much of a focus of this meeting? And how are you thinking about the setup and the tone of questions ahead?

AmirAli Talasaz: We are excited to get to this point of the review process. In terms of the topic and agenda, all those matters actually get published by HSE [ph] a couple of days prior to the meeting, and we are just two weeks away from it. So hopefully those [indiscernible], put it in the federal registry and become public provided some more detail insight about your question. And if you’re going to that meeting with high confidence about the quality of the study that we’ve done, quality of the device performance that we reported and published. And our team has been working very hard to get ready. To get to this point, and go through this battle [ph], we are excited to see how that panel conversation would go.

Operator: Thank you. The next question comes from the line of Jack Meehan with Nephron Research.

Jack Meehan: Good afternoon. On the focus on G360 here, I have two questions. The first is on ASP; so $2,900 to $2,950, I think that was about $50 better than you were guiding. I was curious if there was anything that stood out there or if it was kind of everything tracking the right way? And then on the volume side, I was wondering if you could peel back some of the drivers to start the year, were there any cancer indications that stood out? And just — how you’re feeling about the durability of growth? Thank you.

Michael Bell: I can start on the ASP. Jack, it’s Mike. Jack, you know, I think we had really strong ASP and commercial reimbursements in the quarter, so we’re really pleased with that. We knew that we were going to get the uplift from the Medicare, increased to $5,000 for Guardant360 LBT. But we also saw really strong reimbursement and payments from commercial payers, not just for Guardant360, but also across all of the portfolio. So that had a really positive impact on our ASP. As we said in the prepared remarks, we’ve now increased our expected Guardant360 ASP to the range of $2,900 to $2,950; so you’re right, it’s about $50 per test increase. We also said in the prepared remarks, we had approximately $8 million upside in Q1, and that was related to commercial reimbursement that we received in the quarter; that was really our period, so it was for tests performed in the second half of last year. So — but even if you strip that $8 million out, you know, still really strong ASP performance. And the increase that we now think for Guardant360 will flow through for the rest of the year.

Helmy Eltoukhy: And some of the volume I think as we said in the prepared remarks, we saw good growth across G360. We saw growth in terms of both, breast and — and breast [ph] was — I would say was not as a bigger percentage of the growth given essentially how widespread that G360 is but — and we’ve been very pleased with the start of the year. We’ve had a fantastic quarter and I think it bodes well, especially for the second half as some of our initiatives that are just getting started looks to be really taking off in the right way. International volumes are picking up, we have the NHS sort of engagement with the 10,000 lung cancer patients. And then, all the EMR work we’ve been doing is really just getting started. We’re seeing — I think considerable increase in those accounts as they start getting engaged with our EMR integration. So we’re picking up the pace of some of that. And I think it’s going to be a really nice growth driver for the next couple of minutes.

Operator: The next question comes from the line of Dan Arias with Stifel Financial (NYSE:).

Daniel Arias: Thanks for the questions here. Mike on MRD, what do you have as a revenue target for Reveal at this point for 2024? And then, can you or help me maybe talk to the extent to which you’re holding back on Reveal because of the cost headwinds that come out of that? Is it possible that you get to the point where opening up the spigot [ph] a bit and getting the test use becomes at least as important as safeguarding ASP and COGS, especially since it sounds like you’re making some COGS improvement there?

Michael Bell: I can start on MRD revenue. We’re not breaking that out for the 2024. We said last year that the revenue for Reveal was in the sort of low double digit millions, and obviously, we expected to grow this year where we are growing the volume, and we are seeing nice traction with the ASP. So that revenue will grow but I think we don’t particularly want to be breaking out the revenue by all the different products. I don’t know, Helm, if you want to…

Helmy Eltoukhy: Yes, no. I mean, I think we see I think tremendous volume out there. As I said in the prepared remarks, there are 12 million cancer survivors that are 5 years out from surgery. And so there really are a untapped population. We’re seeing so much latent demand out there, especially in that population that there really are no tests that are suitable for them today. Really the major sort of impediment to getting that volume has really been kind of — sort of where ASPs are and where the cause is. And other that we’ll likely be much, much improved once we get the surveillance CRC indication and once we’re through some of these COGS reduction initiatives. And so we see the gross margin profile looking really, really nice in 2025 and beyond. And once we’re a gross margin positive, we’ll be taking into [indiscernible] really putting the pedal to the metal in terms of that volume. And — but yes, we feel very good in terms of our positioning now, in terms of where our volumes are. And so, right now we don’t see a need to necessarily burn more cash.

Operator: The next question comes from the line of Patrick Donnelly with Citi.

Patrick Donnelly: Tell me — maybe one of the clinical volumes, I am going to follow up there. Nice 20% growth in the quarter. Can you talk about what you’re seeing there? Just the volume expectations, you work our way through the year, I am certainly curious in terms of the MRD impact and where you guys are taking some volume off, at the same time holding back a little bit — just giving not profitable volumes at the moment. So, it would be great if you could just talk through the MRD balance, and again, just that clinical volume — what you saw in the quarter and the outlook as we work our way through the year?

Helmy Eltoukhy: Yes. No, I mean we were very pleased with the start for the year in terms of our clinical volumes across the board. We’re seeing growth across all tumor types, all product lines; and so we’re very pleased with where that’s going. I think that mix is getting nice for us, just in the sense we’re managing some of those Reveal volumes. And you know, and so like — I think the major thing for us is, I think some of the growth initiatives we have which are — as I said EMR integrations, some of the international stuff. And then I think what we’re very excited about — I think second half of this year is the smart liquid biopsy transition. We are seeing that — even before that we’re doing really well in the market, obviously there is competition that has been closed but we’re still seeing as the current products we have are really best-in-class from a sensitivity, from turnaround time, and that is really the major differentiator in terms of what liquid biopsies need to do to save patients’ lives. But as we start transitioning to smart liquid biopsy, we’ve seen from the pharma demand that has been really exciting and really strong, from the conversations we’ve had at ACR with some of the new data around smart liquid biopsy and epigenomics, that we’re really going to raise the bar considerably in terms of what physicians expect from their test in terms of the capabilities and doing things that are even difficult to do in tissue as I highlighted in the call. And we think that sort of put us into sort of overdrive once all of that is out in the market. Especially in tumor types where this comprehensive genomic profiling, really haven’t — hasn’t been that useful outside of breast, lung and colorectal. And so we think epigenomics and smart liquid biopsy will sort of catalyze a lot of that volume that is still out there and still in its early innings.

Operator: The next question comes from the line of Sanjit [ph] with Scotiabank.

Unidentified Analyst: So one of your peers mentioned yesterday that the USPSTF update timing is more likely to come in 2027. Would you have additional insight into that? And would a delay in timing there materially impact your commercial strategy for Shield following FDA approval?

Helmy Eltoukhy: No. Actually we heard about that. We finally tried to actually see if we can find a confirmation and thankfully, USPSTF has given no indication that they are intending to delay their process to think their draft research or CRC screening should come out sometime this year. So I keep looking at their website during last few weeks, coupling their research, draft — draft research class, but actually published on their website. But we are not [indiscernible] try to field in terms of their roadmap that we talked about in terms of our expansion. We’re going to look at actually some of the milestones before we go through some of the expansion. And one of the milestones for 2026 is getting to the USPSTF guidelines. I also want to maybe take the opportunity to announce through the importance of American Cancer Society guidelines that we are expecting hopefully sometime in 2025. That would be a good catalyst in this field, open up much additional adoption of this test and also reimbursement ASP stories in states that they have some state level mandates to cover CRC screening tests recommended by ACS.

Operator: The next question is from the line of Subbu Nambi with Guggenheim.

Unidentified Analyst: This is Brandon [ph] on for Subbu. In terms of Therapy Selection, we got some feedback that some competitors are offering a combination of immunohistochemistry or IHC in addition to NGS capabilities for other markers besides PDL1. Do you anticipate offering this kind of combined approach at the protein level with GuardantINFINITY? And just any kind of general comments around the outlook there? Thanks.

AmirAli Talasaz: Yes. I mean that is not a difficult thing to add to the menu; it’s something that is requested. And I think the exciting thing about INFINITY is that it works in blood, obviously IHC [indiscernible]. What we can do with INFINITY in terms of some of the applications we’re seeing, or even difficult to do in tissue, frankly. And so we’re — you know, what you’re talking about this commodity things that anyone in the world can do, we’re talking about breakthroughs things that only Guardant can do in terms of what we’re adding to the platform. But just like with added tissue, that is PDL1, we can add some of those base layers, if and when, the markets needs it. So, fairly simple exercise.

Operator: The next question comes from the Kyle [ph] with Canaccord Genuity.

Unidentified Analyst: One quick question. So, obviously there is some release there Form 10 [ph], and what Form 10 kind of revealed pretty extensive historical information regarding revenue growth overtime. Just one point here, can you just discuss besides the obvious multi-cancer versus single cancer, how you differentiate yourself between these different multi-cancer tests in Shield? And also, do you do the gallery [ph] in a way, a proof point that blood based screening could in fact be successful on a wider scale?

Helmy Eltoukhy: Okay. So, it’s hard to comment on other kind of companies 10-Q filing by in general, in terms of the landscape, scientifically, technologically, with a simple blood test we can do multi-cancer screening and early detection. But what we do believe is an entire pathway to make sure those innovation would be accessible for a wide set of population to really open up those markets. And I think over time, we just got more confidence about our strategy to start with a single cancer like colon cancer that are pathways for approval, pathways for Medicare reimbursement, pathways for task force review, and then expand from that leading indication into other cancer types like we’re doing a lung cancer screening study and we are working on some multi-cancer early detection kind of applications. But CRC is going to be our really entrance and a pillar point of getting to this market and really making the test accessible. I think for other tests [ph], FDA had reimbursements — there are many, many barriers and we’ll see overtime how that strategy would pan out.

Operator: The next question comes from the line of Tejas Savant with Morgan Stanley.

Unidentified Analyst: Hello, this is Hugo [ph] on the call for Tejas. Thank you for taking my questions. The recently finalized LBT regulation notes the FDA generally expect compliance with pre-market review for currently marketed LBTs if there are certain modifications that may affect to have basic safety and effectiveness profiles. Given to us like G360 go through multiple versions improving performance overtime; would changes in algo [ph] constitute a modification under this finalized rule? And then quick follow-up. Also, as we think about future test development, would it be fair to same 100 or 200 bips headwind to medium term gross margin as the rules go into effect?

Helmy Eltoukhy: I think that rules that came out from the FDA are something that I think was largely expected and if anything, maybe the bar was a little bit lower than what was telegraphed [ph]. Where are is, we have Guardant360 CDx which has been sort of under the framework of FDA, we’ve done multiple upgrades, software upgrades to Guardant360 CDx under sort of that FDA framework. So we have those capabilities, we’re very familiar with it, we’ve successfully operated under that. And so yes, this is really not a change in almost any way in terms of our business. It has very minimal impact.

Operator: The next question comes from the line of Dan Brennan with TD Cowen.

Daniel Brennan: Maybe just zooming in on Mike, Guardant360 clinical for a moment. Could you just give us a sense, you know, overall clinical lines came in a little bit above our expectations. And we felt like after really strong growth last year, like you guys had set a reasonably conservative bar. Just wanted to — can you speak to any color on how Guardant360 clinical volumes did in the quarter? And kind of what you’re seeing in the marketplace? And kind of how we think about the progression throughout the rest of the year?

Michael Bell: Yes. I can talk about that. Probably, it’s for the growth [ph], I mean. We said the overall clinical volume of 20% came in with our — in line with our expectations. The same is true for Guardant360. So yes, it came in very nicely. And Q1 was a difficult comp for us because in February of last year we had ESR1 [ph] approval, and we saw an immediate uptake in the price volume for Guardant360. And we know for Q2 we’re going to have an even more difficult term; so I think we were really pleased with our G360 volume came in the first quarter. Q2 is going to be hard come, but we still think we can get to see continued sequential growth. And I think we’re looking at higher year-over-year volume growth for G360 in the back half of the year.

Helmy Eltoukhy: Yes, no. I mean, like — I think we’re excited with the second half because we’re just seeing little bit initiatives. We have — I think our other than stick [ph] in terms of — as I said, EMR integration under national and [indiscernible] transition. So yes, we started off I think better than expected, and I think it’s going to be a good year in general.

Operator: The next question comes from the line of Eve Burstein with Bernstein Research.

Unidentified Analyst: This is Alberto [ph] on for Eve. Thank you for taking my question. I wanted to ask more of a long-term question. You have more than $1 billion in convertible debt due in 2027, and we already have seen some other companies to be penalized. But with that during your Investor Day your shared that you don’t plan to be cash flow positive before 2028. We were assuming that you will need to raise money for that. So what are the options you are considering? Are you having this discussion now? And are you thinking about — whether thinking more of your expense profile ahead of that?

Helmy Eltoukhy: Yes. I mean, I think the first thing we would say is, our cash balance at the end of this quarter was over $1.1 billion. And I think we’ve been pretty consistent in saying that over the next few years our cash burn is going to come down every year. And to get to that sort of breakeven level in 2028, the cash that we’ve got is more than sufficient to get us around. And in fact, you know, with the traction that we’re seeing with ASPs, and actually reduction in cash burn that we’ve just brought down for the full year just now; I think there is potential that we can get to that breakeven level for the company, potentially earlier than 2028. So, we’re really focused on how quickly we can drive to profitability. As far as debt convertible; yes, I mean we’re well aware of that. At the moment, it’s got to 0% coupon in its maturity than of 2027. And so, we’re feeling relatively comfortable with having that on the balance sheet at the moment. But we’re continually looking at what our options are, we’re talking to a lot of people, we want to make the right decision and do the right thing. But I think we’ve got the advantage of time on our side. But yes, it’s something we’re aware off. And we’ll know we need to address it at some point in the future.

Operator: The next question comes from the line of Puneet Souda with Leerink Partners.

Puneet Souda: So, I know you’re not providing much on the advisory committee but just wondering is frequency will be — frequency of assay would be a consideration there? And then maybe just looking competitively across the landscape, we have seen some readouts; there are some expected readouts that are coming as well later this year. Does that change your view at all in terms of how the field is positioned competitively in the marketplace if there is a competitor that has — maybe a larger commercial presence, introducing an asset down later this year? Does that change any thinking on your end as to how you’re progressing with Shield?

Helmy Eltoukhy: Yes, Puneet. So in terms of the ad comm [ph], we are going to that meeting very confident and excited, and in terms of really the final toolkit [ph], final agenda; like it’s kind of released by a couple of days before the meeting by agency, and the potential changes that could happen any time by then. So, we are going to have all the final information very soon; we are just literally two weeks away thought that ad comm [ph] right now. In terms of actually competitor data, Shield is the best-in-class technology, the best-in-class performance. And now we further expanded kind of a first-mover time advantage. And frankly, I think I’m not sure if you’re seeing any credible competing blood tests at this time. So we are going to continue to monitor this field. But with this time advantage performance that we have here in this very late inning of FDA approval, and we feel very comfortable with where we are competitively, and we’ll see if anybody else is going to have anything at the end of the day. So, we are even more excited about the opportunity right now than even a few quarters ago.

Operator: The next question comes from the line of Rachel [ph] with JPMorgan.

Casey Woodring: Great, thank you. This is Casey Woodring on for Rachel [ph]. So biopharma had a strong quarter, test volume through up 37%, I think revenue was up 40%. 1Q was obviously a strong quarter from the biopharma funding perspective. So can you just walk us through the rational for reiterating your 2024 revenue forecast there for low teens growth? And maybe how much upside there would be to that number if funding would have hold at current levels or even continue to improve here relative to where funding levels were when you initiated the guide? Thank you.

Helmy Eltoukhy: Yes, I can take this. We at Biopharma came in incredibly strongly. Of course, in the first quarter we had a strong pipeline coming into the year, and so that came through. Looking at that pipeline now, it’s still very strong. I think we said in that prepared remarks, we’re sort of maintaining our overall guide for Biopharma, just — really, we want to be conservative and we want to just ensure that there is no adverse impacts for the biopharma funding. So the macro environment that might cause a potential reduction in perhaps DSO [ph], definitely those upside in the back half of the year for Biopharma. To clarify that is difficult. I think if you sort of back into our guide, we’re almost sort of guiding to sort of flat year-over-year in the back half of the year. So I think we feel hopeful that we can have upside development. Again, it’s difficult to quantify but the pipeline is looking strong for us in the near-term.

Operator: The next question comes from the line of Matthew Sykes with Goldman Sachs.

Unidentified Analyst: This is Will Meyer [ph] on for Matt. Great to see the gross margin raise at the start of the year, it sounds like the higher ASP was probably a big driver there. But can you give us some more color on any other drivers or moving pieces you’re seeing? And what are your expectations for phasing on gross margin for the rest of the year? Thank you.

Helmy Eltoukhy: Yes. No, we were really pleased on the gross margin. The real driver of this cause was the ASP impact. And so — as we said in the prepared remarks, we raised our expectation of ASP for Guardant360 for the remainder of the year. We also saw good commercial reimbursement on Reveal and TissueNext as well. So, if that was to continue through the year in this potential upside there on the gross margin, we — we sort of do want to offset that a little bit by the mix. We’re managing our Reveal volume mix — if we were to take the foot off the brake on Reveal, that could have had an impact. And those are the different mix impacts as well that we tried to manage but — overall, we’re really pleased gross margins are improving. We see a line of sight, IRA [ph] is potentially even higher than gross margin. So I think we started the year very well from that perspective.

Operator: The next question comes from the line of Doug Schenkel with Wolfe Research.

Doug Schenkel: Thank you so much. Appreciate you taking my questions. So, I want to I want to talk about two things. One is Shield and then two is, really R&D spend and prioritization as we look ahead. On Shield, maybe asking an earlier question in a different way. What do you think the realistic range of outcomes is for ad comm later this month? Two, recognizing that you’ve consistently said you believe this is a 3 year testing interval product; if you happen to be wrong, and this is every 1 year test, do the economics work? And then, what is your expectation for USPSTF timing? As we sit here today, there has been some commentary from others that this is seemingly being pushed out a little bit. And then I’ll come back and ask about R&D in a second.

Helmy Eltoukhy: Yes. So in terms of ad comm, several questions, yes. So in terms of ad comm, you know, probably the typical question in terms of safety, efficacy and benefit/risk is going to be discussed in the panel and the range of outcomes as advisors are now looking into our data, everything and decide what they want to vote on in terms of those questions. But we are very confident with all the profile of the data that we have to study that we’ve done and the reported device performance that we reported and published, and that the same kind of performance is kind of presented there. So we will see in terms of how that ad comm [ph] goes. We feel great about it. In terms of USPTF, in terms of the interval and three years testing, I mentioned this before, if — you know, the interval test for Shield becomes even more frequent than every three years, in fact, it’s going to be an offside process. So in a land that FDA approved diagnostic test, pricing is going to get set, Medicare price is going to set in ABLT [ph] process. Every year testing frankly, would be even an offside in terms of our P&L. We believe based on the modeling that we’ve done, it’s over utilization of Shield. But annual testing is an upside, not a down side. The last one was what? That’s it. Okay. Yes.

Operator: The final question will come from the line of Mason [ph] with Stephens.

Unidentified Analyst: Sorry, if this has been discussed; jumping between a few tonight. So in terms of your expectations for Shield, you’ve talked about how a second label is still big opportunity. Your commitment to screening continues to fall in line with your expectations of the opportunity. So assuming you get a second line label, you know, as we look into next year, what is a realistic adoption hurdle for you guys? Exact to the 100,000 cologuard tests [ph] I believe in their first year. After FDA approval. Maybe you guys are in a bit of a better position commercially than they were at that time, maybe you’re not. But is there any sort of hurdle or framework you can give for expectations next year where volumes may fall?

Helmy Eltoukhy: In general, our expectation going through [indiscernible] is as follow on, a conversation with FDA is to take Shield to the finish line and get FDA approval. That would be the definition of success for Shield from our perspective; to have a huge opportunity in front of us. And a fair gauge [ph] obviously is, if we cannot convince FDA to approve this test. It would be very unexpected but we’ll see what happens. In terms of second line, we got the opportunity for blood based CRC screening, and the biggest opportunity in general for non-invasive CRC screening is this 50 million unscreened patient population which are out there right now. And that market segment is completely over for a second line indication. So that’s why we got a chance to be excited, to go to market which Shield, even with the second line indication. Having said that, we have milestones, we have some assumption in terms of volume graph [ph] and revenue contribution. And we are going to monitor the commercial execution and if still the market is as exciting as what we think it is right now. In terms of savings a specific guidance for our next year; we would talk about it at the right time. It depends on the timing of FDA approval and some other factors. I am pretty sure we would talk about it in future, sometime in 2024.

Operator: Thank you. That is all the time we have for questions today. I will turn the call back over for any final concluding remarks.

Helmy Eltoukhy: Thank you so much for everybody’s interest. Have a good day and night.

Operator: That concludes today’s call. Thank you all for your participation. And you may now disconnect your lines.

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