Q4 2024 Guardant Health Inc Earnings Call
Good afternoon.
Tamiya: Thank you for attending today's Garden Health Q4 2024 earnings call. My name is Tamiya and I will be your moderator for today's call.
Tamiya: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Tamiya: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: I would now like to pass the conference over to your host, Zeya Khurshid, VP of Investor Relations. You may proceed.
Zeya Khurshid: Thank you. Earlier today, Garden Health released financial results for the quarter and year ended December 31, 2024.
Speaker Change: Joining me today from Garden are Helmiel Tukey, Co-CEO, Amir Ali-Talassaz, Co-CEO, and Mike Bell, Chief Financial Officer.
Speaker Change: Before we begin, I'd like to remind you that during this call, management will be making 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 specified items.
Speaker Change: More information on whether or not these modules were indeed, metastatic or oncologist ordered a noninvasive gardened reveal test the test came back positive for CTG in a it was automatically reflex to a garden food 60 test Garden's resets you identified a pathogenic <unk> mutation then agile has also confirmed to be metastatic triple negative breast cancer.
Speaker Change: And the patient is being considered for a PARP inhibitor gardener would be it was crucial in confirming her cancer recurrence and the ability to accurately reflects the gardens 60 helped her oncologist moved quickly to determine the next steps in her treatment.
Speaker Change: Turning to the topline performance on slide four we had an excellent finish to the year with Q4 revenue growing 30% year over year to $202 million, bringing our total full year revenue to $739 million, an increase of 31% year over year.
Turning to slide five this performance was driven by incredibly strong clinical revenue, which grew 34% year over year supported by a S b and reimbursement tailwind.
Speaker Change: Total oncology clinical volumes in the fourth quarter increased 24% year over year, bringing our total clinical volume growth to 20% for the full year of 2024. This was largely driven by garden 360, which saw double digit volume growth in 2024.
Speaker Change: Turning now to slide six let's take a closer look at the reimbursement tailwind supporting therapy selection, we saw significant ASP improvement over the course of the year at our Investor Day in September of 2023, We stated our goal is to reach an ESP of $3000 regarding 360 by 2028.
Speaker Change: You'd see physical roughly four years ahead of target due to a number of reimbursement wins, including the increase of our garden 360, <unk> Medicare rate from $3500 to $5000. We also saw significant improvements in both the amounts we have been paid for our tests and the speed at which we have been paid by commercial payers.
Speaker Change: In addition to Windsor Gardens, 60 tissue Medicare price increase from $3100 to $3500 effective January 1st of this year, creating another important tailwind for our therapy selection business.
Speaker Change: Looking ahead. This year, there are additional opportunities or state biomarker laws and continued commercial coverage expansion to further improve the ASB for therapy selection products.
Speaker Change: Moving on to slide seven.
Speaker Change: Last July we transitioned our garden piece <unk> onto our smart liquid biopsy platform, representing the most significant upgrade to our flagship precision oncology product.
Speaker Change: The upgraded test called Garden, 360, liquid reinforces garden 360, <unk>, leading position in liquid C. G. P burn through 60 liquid expands the number of genes by nearly tenfold, including all guideline recommended genomic markers for solid tumors and improve the sensitivity for tumor burden detection by a factor of 10 Garden City.
It is resonating incredibly well and is helping to drive greater depth of ordering and increased testing frequency as physicians experience capabilities upgraded platform firsthand.
Speaker Change: Importantly, we have a rich pipeline of additional features leveraging our smart platform, which we believe will generate a limitless number of differentiated applications.
Speaker Change: These apps will allow garden's resets illiquid to help identify more patients for existing therapies that are undetectable by current CGP tests that console adverse effects of chemotherapy and provide detailed phenotypic information about the tumor such as histology subtype and much much more.
Speaker Change: Given the positive traction we are seeing from gardens, who are supposed to be liquid we expect to continue to see an acceleration in gardens <unk> volume growth in 2025.
Speaker Change: Turning to slide eight where there are major product upgrades growing use cases in both early and late stage settings and opportunities for international expansion I'm more confident than ever that the therapy selection unfortunate part oncology business will continue to see very strong growth over the next few years.
Speaker Change: Now shifting gears to reveal in slide nine where we are the leader in tissue free M. O D. We were thrilled that garden's reveal which runs on a smart liquid biopsy platform recently received Medicare coverage for CRC children's testing after curative intent treatment per stages, one through four Medicare reimbursement for reveal is 16.
Speaker Change: Hundred and $44 per test consistent with prior expectations utilizing CTD testing the surveillance setting alongside standard of care monitoring such as Cte scans and see a testing has the potential to identify molecular recurrence of CRC ahead of traditional imaging.
Speaker Change: Now reveal will be more widely available to patients that support oncologist and make more informed therapeutic decisions. We're encouraged to see the recent N CCM guideline updates related to them or do they.
Speaker Change: The changes are beginning to reflect what we are seeing in clinical practice and represent an increasing recognition of the value of C. T DNA testing and returns monitoring.
Speaker Change: The N PCM guideline updates only further reinforces our view of the correctness of the opportunity as well as of our commercial strategy.
Speaker Change: Turning to slide 10 beyond CRC surveillance, we have an extensive pipeline of clinical cohorts to further support validity and utility for garden and reveal.
Speaker Change: The recently submitted data for publication supporting potential Medicare reimbursement for coverage in breast cancer and therapy monitoring.
Speaker Change: Looking ahead, we have a number of ongoing clinical validity studies for additional cancers, and we look forward to sharing updates on their progress throughout the year.
Speaker Change: Moving on to slide 11 during the course of 2024, we made critical progress to reduce the Cogs reveal and achieve more than a 50% reduction exiting the year.
Speaker Change: This reduction will save tens of millions of dollars in 2025 and was largely supported by the transition towards smart liquid biopsy platform. This is an incredible accomplishment and a testament to our team's ability to execute well.
Speaker Change: Turning to slide 12 reveal is on track to reaching an important inflection point in 2025.
Speaker Change: As a reminder, despite very strong demand we had been managing reveal volumes ahead of Medicare reimbursement in order to manage our cash burn now with CRC surveillance reimbursement in place improving ISP and achieving a meaningful reduction to our Cogs, making the test gross margin positive we'll be leveraging our robust commercial channel in oncology push ahead with reveal two.
Speaker Change: The market demand for tissue free M. R. D test this long awaited milestone unlocks a key commercial market for us this year and our team is focused and executing at a high level.
Speaker Change: Turning to slide 13.
Speaker Change: We had a very strong year for Biopharma with 'twenty 'twenty four revenue growing 31% year over year. This was fueled by a growing number of Biopharma partnerships now above 180, and the growing mix of our smart liquid biopsy platform, which now represents more than 50% of reported samples and new contracts are smart liquid biopsy products offer improved performance.
Speaker Change: As well as key applications, such as novel Biomarker discovery and signature development that's all.
Speaker Change: The offering was a major growth catalyst in 2024, and its supporting strategic partnerships with top 20 global Biopharma companies.
Speaker Change: Looking more closely at some of the recent highlights within our Biopharma and data business on slide 14.
Speaker Change: Recently announced a collaboration with Boehringer ingelheim to develop a companion diagnostic for the detection of specific mutations in advanced lung cancer, and we have a robust pipeline of other companion diagnostic partnerships positioning us well for this year well. If you go onto data in early January we announced the collaboration with concert AI to create a differentiated data as a service plan.
Speaker Change: From that integrates comprehensive patient EMR records with both genomic and epigenomics tumor profiling data.
Speaker Change: This platform augments garden inform with insights from concert AI as a national database of $5 5 million clinical records and our profiling data across more than 60 tumor types there.
Speaker Change: Real World evidence platform will help to accelerate cancer therapy research and development for our Biopharma partners our.
Speaker Change: Our mission is to conquer cancer with data and this collaboration brings us one step closer to achieving this goal with that I will now turn the call over to Amir I'll leave for an update on screening.
Speaker Change: Tell me turning to slide 15, our goal has always been to identify an attached for many cancer types of early when they are most treatable.
Speaker Change: Have a look or feel that there's a platform capable of multi cancer effects that across a range of indications.
Speaker Change: I like this he or she has a first indication for sale.
Speaker Change: Fabulous regularly throughout the reimbursement pathway.
Speaker Change: Made incredible progress in 'twenty, 'twenty, four which shield, becoming the first FDA approval and Medicare coverage blood test for primary CRC screening.
Speaker Change: Turning to slide 16.
Speaker Change: Our FDA approval shield, what's covered for 45 million Medicare beneficiaries about operational risk of CRC.
Speaker Change: Very pleased that she was recognized as an important new class of CRC screening and received a favorable Medicare price of $920.
Speaker Change: We recently received a unique CLA call it four shield.
Speaker Change: That upon securing iPad diagnostic laboratory fat or ADL status designation of course shield.
Speaker Change: Medicare rates will increase even more favorable price of $1495.
Speaker Change: Moving on to slide 17.
Speaker Change: In early August just a few days after approval, we were thrilled to launch our share by VEB assay, you're seeing outstanding reception from physicians and patients.
Speaker Change: Thousands of patients have been screened using outside.
Speaker Change: Looking forward to scaling our impact quickly.
Speaker Change: Our strategy is to focus on the conversation populations would drive the high mix of corporate Reimbursable path.
Speaker Change: We delivered $4 1 million of shelf type thing revenue in Q4, driven by a library of samples coming from covered Medicare beneficiary.
Speaker Change: With that I'm happy to report that in our first full quarter of launch we achieved gross margin breakeven for COPD.
Speaker Change: I guess do you have a price for that.
Speaker Change: $600.
Speaker Change: With the current rates of improvement we are expecting show could be gross margin positive.
Speaker Change: First 40 are post launch much sooner than we originally anticipated this gives us flexibility to reinvest in our Congress shall infrastructure in 'twenty quantified wildly and maintain our annual screening cash burn target of 200 million.
Speaker Change: Turning now to slide 18, while we are focused on a scale up in the U S.
Speaker Change: Flooring sounds drive if you can sort of not selling interests in our screening platform.
Speaker Change: He was very excited to announce that the other guys with your partner felt like it doesn't feel to be a part of their screening program.
Speaker Change: Currently the overall compliance of colorectal cancer screening in the region with the current screening modalities, including full time colonoscopy.
Speaker Change: 10 per cent and imaginary kept colorectal cancers are getting diagnosed at later stages.
Speaker Change: The introduction of a non invasive blood tests is a more pleasant hotshot may encourage greater participation in the screening and boost early detection of C. Diff.
Speaker Change: This program initially in its first year emphasis crane, approximately 10000 face thinned out with that down that surround angry kind of thing.
Speaker Change: And they scale to approximately 100000 annual test.
Speaker Change: Later phases.
Speaker Change: Moving on to slide 19.
Speaker Change: We recently announced that they selected through a highly competitive process by and I ask for a design guard multi cancer detection or as to the study.
Speaker Change: And ice decisions to sell like shell recognizes gartner as a leader in the field that's M C D.
Speaker Change: Validates our technology.
Speaker Change: Status of your tests needed to detect the presence of disease across a variety of cancer types of export capacity.
Speaker Change: Especially for the detection of early stage cancers, as well as accurately predicted cancerous side of origin.
Speaker Change: We are pleased to announce that the performance data shows that approximately 800 patient I caught pan cancer test.
Speaker Change: It would be presented at a scientific conference in the second quarter up 25.
Speaker Change: Looking ahead right.
Speaker Change: About our upcoming milestones and 25, including three that tastes of our multi cancer data.
Speaker Change: Selling crews that are fields in Iraq, and cancer society, or Acs guidelines, and securing a DLT status, which enables them to FASB. You're also planning to operate our CRC screening test, which feel free to it with that I will now turn the call over to Mike for more detail on our financial.
Speaker Change: Thank him a rally.
Speaker Change: Turning to slide 20, I'll now discuss some select financial highlights for the quarter and year ended December 31 2024.
Speaker Change: Our pets, a year over year growth rates unless otherwise noted.
Speaker Change: Fourth quarter total revenue grew 30% to $202 million, primarily driven by precision oncology revenue, which also increased 30% to $185 million.
Speaker Change: Precision oncology revenue from clinical tests increased 35% to $146 million.
Speaker Change: Clinical test volume grew 24% to a record 57300 tests in Q4, 2024 and was primarily driven by 360, which grew sequentially in the mid single digits.
Speaker Change: We continue to see very strong uptake of our upgraded garden free 60, liquid, which we launched in a smart liquid biopsy platform at the start of Q3.
We also saw continued strong growth of revealing tissue during the fourth quarter of 2024.
Speaker Change: Got it at 360 S. P in the fourth quarter of 2024.
Approximately $3000.
Speaker Change: We have seen throughout the year. We also had very strong commercial pay collections in the fourth quarter, which led to an active periods revenue upside.
Speaker Change: $8 million above our.
Speaker Change: Patients.
Speaker Change: Once again, our Biopharma business performed incredibly well in the fourth quarter.
Speaker Change: Precision oncology revenue from biopharmaceutical.
Speaker Change: Totaling $39 million.
Speaker Change: Increasing 15%.
Speaker Change: This strong growth was fueled by another record quarter of tests in the fourth quarter, 11050, which was up 16%.
Speaker Change: Finally development services and other revenue totaled $17 $2 million in Q4 2024.
Speaker Change: Includes $4 1 million Dulles screening revenue generated from the 6400 chipset that we reported in the quarter.
Speaker Change: For the full year 2024, total revenue grew 31% to $739 million with growth again, being primarily driven by precision oncology revenue, which increased 34% to $688 million.
Speaker Change: He's been on calls your revenues from critical tests increased 34% to $543 million.
Speaker Change: Clinical test volume and 2024 was 206700, which represents growth of 20%.
Speaker Change: As Hemi mentioned clinical volume growth was largely driven by an increase in government 360 tests volume, which grew double digits in 2024.
Speaker Change: We saw continued strong growth of reveal throughout the year, which despite its managing volumes ahead of Medicare advantage reimbursement without fastest growing clinical testing in 2024.
Speaker Change: Finally tissue also grew strongly throughout 2024.
Speaker Change: Clinical test revenue growth was also driven by a significant improvement to our golf and 360 ISP with.
Speaker Change: With the increase from approximately $2750 in the fourth quarter of 2023 to approximately $3000 in the second half of 2024.
Speaker Change: In addition to this tailwind the significant improvement in reinvestment trends throughout the year that is to collect more cash for our tests and we had previously accrued for which resulted in a superior revenue upsides throughout the year.
Speaker Change: For the full year 2020 full revenue recorded for test performed in prior years was approximately $35 million.
Speaker Change: Of this $35 million approximately $13 million was consistent with our expectations based on historical experience in payment trends.
Speaker Change: However, the remaining $22 million was the result of better than expected cash collections.
Speaker Change: We view this as a nonrecurring after period revenue upside to 2024.
Speaker Change: Turning to Biopharma as mentioned earlier, our Biopharma business performed incredibly well during 2024.
Speaker Change: Precision oncology revenue from biopharmaceutical totaling $145 million increasing 31%.
Speaker Change: Biopharma test fully grown 35% to 40500 tests during the full year 2024.
Speaker Change: Finally development services and other revenue totaled 51 $1 million for the full year 'twenty is when people and includes $5 $1 million of screening revenues generated from shield tests.
Speaker Change: Ported between the IBD launches as possible because at.
Speaker Change: In the end of the year.
Speaker Change: Moving on to slide 21.
Speaker Change: Our non-GAAP gross margin continued to be very strong almost 63% in the fourth quarter of 2020 full.
Speaker Change: 61% in the fourth quarter of 2023.
Speaker Change: We also saw an improvement on an annual basis with 2024, non-GAAP gross margin of 62%.
Speaker Change: That's a 61% in 2023.
Speaker Change: Excluding screening non-GAAP gross margin was 64% for both the fourth quarter and full year 2024.
Speaker Change: An improvement from 63% in the prior year period, and a book the full year guidance range of 61% to 63% that we provided on our Q3 earnings call.
Speaker Change: non-GAAP operating expenses were $215 million in the fourth quarter 2024, an increase of 17% and $757 million for the full year 2024, an increase of 4%.
Speaker Change: Our full year non-GAAP operating expense was above our guidance range of $720 million to $730 million due to a couple of one time items in the fourth quarter of 2024.
Speaker Change: Firstly, we incurred significant litigation expense related to the November false advertising trial.
Speaker Change: Which the jewelry unanimously found in favor of Guardant health on all these claims and the water does $293 million.
Secondly in Q4, we increased the full year accrual for the 2020 full company bonus plan in line with the board approved to pay out level, which reflects the successful year with respect to bonus performance components, such as top and bottom line financial measures.
Speaker Change: S P a approval shield and the launch of new products.
Speaker Change: But the results of our increased revenue gross profit and operating leverage.
Speaker Change: Adjusted EBITDA and free cash flow improved year over year and full year 2024.
Speaker Change: Adjusted EBITDA loss was $258 million for the full year 2024.
Speaker Change: An improvement of $86 million compared to a loss of $344 million in 2023.
Speaker Change: We continue to be focused on cash and materially reduced output in 2024.
Speaker Change: Free cash flow of 275 million for the full year 2024 was in line with the guidance. We provided on our Q3 earnings call and represents an improvement of $17 million compared to $345 million in 2023.
Speaker Change: I'm also pleased to report that our cool therapy selection business was free cash flow positive in 'twenty 'twenty four and that we successfully managed our cash burn for screening to be in line with our guidance target of approximately $175 million.
Speaker Change: Turning to the balance sheet on slide 22.
Speaker Change: We ended the year with approximately $944 million in cash cash equivalents restricted cash marketable debt securities.
Speaker Change: Earlier. This month, we successfully completed a private convertible exchange, where we extended the maturity on $600 million of convertible debt with favorable terms, which we believe helps to mitigate potential balance sheet risk.
Speaker Change: Same time provides greater optionality to optimize our capital structure in the future.
Speaker Change: The $600 million of new convertible debt now, giving 2031 and comes with a 1.25% annual coupon and a 35% conversion premium which represents a conversion price of $62.22.
Speaker Change: As a result of the transaction our total debt was reduced from 1.15 billion to.
Speaker Change: 1.09 billion of which $491 million is a zero coupon convertible debt, which is due in November 2027.
Speaker Change: We also structured a concurrent stock repurchase of about $45 million.
Speaker Change: Mitigate dilution.
Speaker Change: Following these transactions our pro forma cash position was approximately $897 million.
Speaker Change: We continue to expect that we will reach cash flow breakeven in 2028 with cumulative free cash outflow of $450 million to $550 million over the next three years.
Speaker Change: Turning to slide 23.
Speaker Change: Before discussing our outlook and assumptions for 2025, we want to take a moment to preview of how we intend to present, how revenue going forward.
Speaker Change: Rather than expecting revenue its a precision oncology and development services in Nevada.
Speaker Change: We are changing the presentation to better reflect how different business lines and to provide clarity on the performance of shield.
Speaker Change: As such for 2025, we'll start to break out revenue to four components, which is shown in the slides with 2023 and 'twenty 'twenty four full year numbers.
Speaker Change: In summary, the new revenue components.
Speaker Change: Oncology, which represents clinical therapy selection and MLP testing revenue, which were previously reported as clinical testing revenues within the precision oncology line.
Speaker Change: Biopharma and data, which represents the total revenue we generate from our biopharma customers.
Speaker Change: Namely Biopharma sample testing revenue that we previously reported in precision oncology as well as Biopharma companion diagnostic and data services revenue that we previously reported development services.
Speaker Change: Licensing and other which was previously reported in other revenue and finally screening which will represent shield testing revenue.
Moving to slide 24 for our outlook and assumptions for full year 2025.
Speaker Change: We expect full year 2025 revenue to be in the range of basically 250 $860 million representing growth of approximately 15% to 16% compared to 2024.
Speaker Change: Excluding the $22 million nonrecurring acid period upside in 2020 full this range implies total revenue growth of 19% to 20% in 2025.
Speaker Change: Now breaking down the key assumptions in our revenue guidance.
Speaker Change: We expect oncology revenue to grow approximately 15% year over year in 2025 again, excluding the nonrecurring after period upside in 2024. This represents oncology revenue growth of approximately 20%.
Speaker Change: Given the positive traction were seeing from our launch of <unk> 360, LDC bought liquid biopsy, a recent Medicare csc's debated this coverage for reveal.
Speaker Change: And the upgrades, we're making to our tissue tech.
Speaker Change: We expect volumes across all oncology clinical products to accelerating 2025, and total oncology clinical volume growth to be approximately 25%.
Speaker Change: We expect our Biopharma business to continue to perform well in 2025 and are forecasting low double digit growth for biopharma and data revenue.
Speaker Change: Finally, although it's still very early into the launch we want to provide some initial guidance for screening revenue, which.
Speaker Change: We expect to be in the range of $25 million to $30 million driven by 45000 to 50000 shields him.
Speaker Change: We expect this full year to be significantly back end loaded due to the time it will take to ramp up the productivity of newly hired reps throughout the year.
Speaker Change: Also our guidance does not include any ASP impacts from receiving a DLT designation.
Speaker Change: We continue to expect this to occur in 2025, and we will update our guidance accordingly at the appropriate time.
Speaker Change: We've made great progress in reducing our Cogs over the last few months with both who will be able to shield, reaching gross margin breakeven.
Speaker Change: 25, we're confident that we can deliver full year non-GAAP gross margin in the range of 62% to 63%. Despite the impacts of changes in product mix that we expect through the year.
Speaker Change: We expect total non-GAAP operating expenses to be in the range of $850 million to $825 million.
Speaker Change: Representing an 8% to 9% increase compared to 2024.
Speaker Change: We will continue to gain significant operating leverage during 2025, and expect R&D and G&A expenses.
Speaker Change: Compared to 2020 full with the increase in operating expense coming mainly from investments in screening sales and marketing as we continue to ramp profile commercial assets shield.
Speaker Change: Lastly, we continue to be committed to reducing our cash burn each year.
Speaker Change: Company wide cash flow breakeven in 2028.
Speaker Change: For full year 2025, we expect free cash flow, but it's been the range of $225 million to $235 million and.
Speaker Change: <unk> compared to $275 million for 2024.
Speaker Change: And in 2025 will consist of approximately $200 million.
Speaker Change: Related to screening as we scale, our field business and maximize our first mover advantage.
Speaker Change: Significantly excluding screening we expect the remainder of the business, but approximately $25 million to $35 million during the year.
Speaker Change: To reach cash flow breakeven in the fourth quarter of 2025.
Speaker Change: Finally, turning to slide 25, we have a rich pipeline of catalysts across our business segments.
Speaker Change: Talking about the opportunities ahead.
Speaker Change: With that we will now open the call to questions.
Speaker Change: Thank you.
Speaker Change: Now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason at all you would like to move that question. Please press star followed by two again to ask a question. Please press star one we ask that you. Please limit yourself to one question only.
Speaker Change: The first comes from Puneet <unk> with Leerink partners you May proceed.
Speaker Change: Yes, hi, guys.
Speaker Change: Thanks for taking my questions first one on screening.
Speaker Change: Ill.
Speaker Change: Try to wrap one on.
Speaker Change: Reveal as well.
Speaker Change: She'll guide of $25 million to $30 million was well ahead of us and I believe the street as well.
Speaker Change: I appreciate it a second half loaded but could you talk about the sales force expansion.
Speaker Change: You expect it was going to contribute here for the for the second half any other drivers and the feedback that you're getting from the field that gives you confidence in this $30 million.
Speaker Change: The upper end and maybe what what are you contemplating for the lower end.
Speaker Change: And on reveal congrats on the surveillance coverage.
Speaker Change: But can you square the end CCN. Unfortunately N CCN recommended against surveillance. So could you balance those two I know it's still early days of this market. How do you expect the adoption and reveal to go as a result of that thank you.
Speaker Change: Thank you for names, maybe I'd start with that question that I can give it to.
Foundry deal so.
Speaker Change: It seems to be very pleased.
Speaker Change: Thanks, a lot you are hearing in the field physician response patient response now connecting it to our guidance I make two points. One as you know we launched it back in I guess, we've seen that.
Speaker Change: The increase into behind that as we add that to last year, it's finding plenty of floor.
Speaker Change: Not sure. If you have the people you added they can't late very late in 'twenty 'twenty four and <unk>.
Speaker Change: Got it takes them some time to contribution productivity.
Speaker Change: The results we are a.
Speaker Change: People need to actually Iran. Right is kind of be more backend that they always seem to cause serious. This is our first full year of launch. So you know obviously in the launch year.
Speaker Change: Kind of growth is always when you look at just numerically it's more backend it too.
Speaker Change: In terms of total number of reps that we're gonna have we mentioned at our Investor day follow up 23 that we are planning to add about maybe 150 people in the field by end of 'twenty to 'twenty five.
Speaker Change: Some stuff widespread there that would be I expect that mandate that Medicare pricing.
As a result.
Speaker Change: Maybe we'll have maybe a little bit more.
Speaker Change: People in the field, but again you know a bunch of these newly hired reps.
Speaker Change: Yes, our NASDAQ contribute meaningfully scale like three to six months after their higher day.
Speaker Change: Maybe I'll leave it like that and give it to them.
Speaker Change: Yeah.
Anthony: Anthony Yes.
Speaker Change: Yeah. Good question I mean, we actually were fairly encouraged when we saw the updated <unk> guidelines I think on the whole.
Speaker Change: It's actually a step forward in terms of recognizing the value of DNA testing.
Really in the sort of adjuvant setting.
Speaker Change: This is not too dissimilar from the sort of cadence we saw within CCM guidelines for 360 in terms of liquid biopsy testing the guidelines tend to be a little bit behind where clinical practices.
Speaker Change: All in all we're encouraged in terms of this moving in the right direction and we're very confident given the utility we see with surveillance testing as a whole and especially with reveal that.
Speaker Change: We'll get to the right place.
Speaker Change: A couple of years from a guideline perspective.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Thank you. The next question comes from Bill <unk> with Craig Hallum Capital Group You May proceed.
Bill <unk>: Hey, guys.
Speaker Change: Thanks for the call.
Speaker Change: Another one on shield and I'm just curious if you are having any kind of preliminary discussions with.
Speaker Change: Payers are outside of Medicare commercial payers about shield I mean, obviously the thinking has been well you have to wait on USPS, TF and and whatnot, but I wasn't sure. If there was activity you might be trying to accomplish ahead of that.
Speaker Change: Yeah.
Speaker Change: We are in very kind of early conversation with some early in terms of lifestyle, having advisory boards getting some initial feedback from that you're planning to wrap ups off those engaged about after we go into guidelines on right. After Acs guideline inclusion we are optimistic hopefully without paying 2025.
Speaker Change: It will ramp up those activities.
Speaker Change: Okay.
Speaker Change: Thank you. The next question comes from Tito Petersen with Jefferies. You May proceed.
Speaker Change: Hey, Thanks, a couple of on field, so youre guiding for Asps to move a little bit lower here 580 at the midpoint versus 625% in the fourth quarter is that just Medicare fee for service dynamics or is that you know Abu Dhabi and maybe you know a subsidized samples and can.
Speaker Change: Can you maybe just confirm whether the shield volume guide includes Abu Dhabi, and then any any risk to a DLP status and then lastly, just Acs guidelines do you expect that in the second quarter and how do you think about the lift that could come I assume that's not baked into the guide.
Speaker Change: Yeah. So.
Speaker Change: Thanks for a great question you know we are very pleased with the ASB that'd be Princess for Q4.
Speaker Change: Just don't want to get ahead of our Skus that was really the first full quarter of data that we had.
Speaker Change: Just to be very thoughtful with asp's that youre going to put in the first full year of the launch we are gonna are unchanged and monitor our payer mix that would impact the ASP.
Speaker Change: Hi, Thanks.
Speaker Change: Again I emphasize that.
Speaker Change: This bump up a DLT.
Speaker Change: Improved Medicare rates is not kind of embedded in our guidance. We are kind of get to that point that that looks at our payer mix at a time and revise the guidance accordingly.
Speaker Change: Based on everything that I mean, it'll be a very confidence about this ALC process. We know how it works. It's just matter of the mechanics of the timing, it's a quarterly process when exactly it's going to be activated for us it's something that it's not very clear.
Speaker Change: So we just want to make sure we derisk it before b.
Speaker Change: And cooked at upsides to our guidance ASC.
Speaker Change: And I believe that would be very quickly, it's not that dilutes, if our asp's. So.
Speaker Change: Without going into more details of it we are very pleased with the engagement that we have great.
Speaker Change: Our golf helped there.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thank you.
The next question comes from Dan Brennan with TD Cowen You May proceed.
Speaker Change: Great. Thanks for thanks for the questions I'm going to focus on reveal.
Speaker Change: Could you help us think through kind of what's baked in for 25.
Speaker Change: We we show you guys had like 35000 tests in 'twenty four maybe ramping like 55, and 25, I know you're not going to give us specifics, but how do we think about what the impact of surveillance could be.
Speaker Change: And then B when you think about the additional indications breast and monitoring could you just give us some color about timelines on when we might hear back on that thank you.
Speaker Change: Maybe I'll start and then maybe Mike wants to fill in some of the sort of cadence there on volumes, but as we said in the prepared remarks, we see acceleration across each of our product lines on oncology in terms of volume growth.
Speaker Change: And certainly we're very pleased with how the sort of euro started not just Brazil, but for all our products.
Speaker Change: That being said.
Speaker Change: In terms of kind.
Speaker Change: Kind of additional indications as we said we submitted the data for publication for both breast and monitoring.
Speaker Change: Late last year and as soon as those are published and accepted in the respective journals will be submitting that to mol Dx and so we think sometime second half of this year.
Speaker Change: The earliest we could see potential indication expansion for a deal.
Speaker Change: Yes.
Speaker Change: Maybe I'll ask.
Speaker Change: Yeah. So we mentioned, we expect toribio volume acceleration Youre right.
Speaker Change: Breaking out.
Speaker Change: The reveal volumes are the volumes across all of the clinical oncology lines.
Speaker Change: But yes, we expect reveal is going to accelerate.
Speaker Change: And it'll take it'll take some time.
Speaker Change: We think this will be more backend loaded for the for the acceleration increase during the year and that's really because you know, we just sort of get in the field now ramped up to be very much focused on CRC. So you know we had a national sales meeting kick off just two or three weeks ago.
Speaker Change: The team is very excited.
Speaker Change: And energized to go out and so reveal CRC, but it's going to take time for that stretch into.
Speaker Change: Take hope, but yeah. We we were looking very much forward to acceleration of volumes throughout the year.
Speaker Change: Thank you. The following question comes from Susan <unk> with Guggenheim You May proceed.
Susan: Hey, guys. Thank you for taking my question two questions on shooting.
Speaker Change: Michigan Cogs reductions have already been in Russia is it fair to assume that you are in achieving the shale production via assimilate approach like the view.
Speaker Change: What is it made it into 2025 guide and of course, we deal what ASB is embedded in your guidance with respect to that mix ADM detailing.
Speaker Change: Thank you.
Speaker Change: Yes, so actually a bunch of R&D activities that would be I think I saw it and is highly leverage, especially important platforms that aren't based on epigenomics, mainly there is a lot of synergy.
Speaker Change: So on <unk>, which is a L. D. C products you guys have seen what we have achieved by reducing the highest resolved any improvements on technology stack kind of processing <unk> shield as an IV product implementing some of these changes takes a bit longer but there is buying shops.
Speaker Change: Synergy and cross learning project deployments that we're doing across both shield batteries yet.
Speaker Change: Yeah, maybe I'll take the reveal ASP, yes.
Speaker Change: So of course, we will.
Speaker Change: Very pleased to get the CLC Medicare.
Speaker Change: Crc's advantage Medicare coverage.
Speaker Change: 16 44, starting.
Speaker Change: The start of the year. So that's going to have a positive impact on ISP. We ended 2024 with an ASP roughly between 400 and $500.
Speaker Change: And so we're going to have an impact a positive impact of the Medicare coverage. There is a big sort of mix impacts in all of Brazil, because we haven't CRC surveillance CLC adjuvant and then we have breast and lung and that of course is Medicare or Medicare advantage and commercial so it does.
Speaker Change: Not that we have to sort of deal with.
Speaker Change: From a mix perspective, but yes, we would expect the asps.
Hi, guys.
Speaker Change: Fleet to increase to something like 600 $600.
Speaker Change: We haven't included any impact for <unk>.
Speaker Change: In that $600, which is our intention to.
Speaker Change: To apply for ALC right and so similar to shield, if and when we get that.
Speaker Change: We would expect.
Speaker Change: An increase on the Medicare rates and we would we would change our guidance in line with our with receiving that.
Speaker Change: Yeah.
Mark Massaro: Thank you. The next comes from Mark Massaro with <unk> you May proceed.
Speaker Change: Yeah.
Speaker Change: Hey, guys. Thanks for the questions. Congrats on a strong 2020 for the first one is for you help me.
Speaker Change: I think about a year ago, there was probably an investor misconception that Youre <unk> hundred 60 business was either saturating or about to go into diesel.
Speaker Change: But your prepared comments today, you indicated you plan to accelerate volumes across all your products. This year. So I'm just curious if you could just give us some anecdotes about.
Speaker Change: What youre seeing in the field with the upgraded <unk> hundred 60 liquid product and then one for Amira leaf I recognize that the majority of your revenue came from Medicare in Q4, but.
Speaker Change: But I would be curious about what level of interest you're seeing build from the non Medicare population and whether or not you think you'll be well addressed to equip.
Speaker Change: Those orders when commercial payer coverage comes in.
Mark Massaro: Thanks, Mark I appreciate the question.
Speaker Change: I can tell you.
Speaker Change: National sales meeting.
Speaker Change: <unk>, obviously been going to them every year. This is probably the most excited I've seen the team given the sort of products. We have out there in the smart liquid biopsy with 316 reveal and then some of the ones that we have upcoming especially with tissue and so.
Speaker Change: We are seeing that momentum we saw the momentum since we launched 360 and smart liquid biopsy it's been.
Speaker Change: Really nice uptake from existing physicians in new physicians alike.
Speaker Change: And we really haven't even turned on a lot of the exciting features yet and so we have extremely high confidence just given how this year has started how's the last year and.
Speaker Change: That 360 a liquid.
Speaker Change: It continued to do well and there's a lot of room for growth over the next few years in this market I outlined some of the growth drivers it's not just.
Speaker Change: Sort of increased penetration as lora applications going in sort of the long tail of.
Speaker Change: Tumor types that only really epigenomics can address some of the new findings, we have as well as.
Speaker Change: Where the field is going in terms of testing patients at each progression and so there.
Speaker Change: We're really at the sort of very early innings in terms of where liquid biopsy for therapy selection and grow.
Speaker Change: And regarding shale shield on the younger patient or commercial side.
Speaker Change: Our experience during shale that'll be T Y and we didn't have watched it works. So I just mentioned really focused on the covered patients.
Speaker Change: Very interesting that in fact is 65 and it was a minority of our ordering and payer mix.
Speaker Change: And our work so it changes actually it's as works that not vast vast majority of our volume coming from these covered patient on but short term it would be at that market feedback.
Speaker Change: <unk> data that once there.
Speaker Change: Congress get expanded access get expanded to a younger patient population. There is a huge theme add on opportunity for shell to go to a younger patients right now, though we are just focused on reimbursable covered case like Medicare and some foreign sourcing initiatives that we have internationally in Abu Dhabi, Yeah, maybe it takes us.
Speaker Change: Operationally there is there in your question I forgot to answer about what's their level of that assumption up contribution up this <unk> partnership.
Speaker Change: That program in the first one year.
Speaker Change: The expectation.
Speaker Change: The good part about out there is to test about 10000 patients having said that the program needs to go through to the Rand logistics, we don't know exactly how quickly they are going to wrap at this time, we are just actually I mean get fraction.
Speaker Change: Those patients would get tested by shale till we get more visibility over that's right.
Thank you. The next question comes from Patrick Donnelly with Citi. You May proceed.
Patrick Donnelly: Hey, guys. Thanks for taking the questions maybe one on Brazil, just and I know before the reimbursement you're holding back a little bit kind of pursuing the volumes can you talk about just the change in strategy. How that will go I know, Mike mentioned, maybe a little more of a second half ramp as we go through that and then a quick one for Amira Lee you just don't need to.
Patrick Donnelly: For shield could you just talk through what the expectation there should be a catalyst that prompted me to thank you guys.
Patrick Donnelly: Yes.
Patrick Donnelly: Said before.
Patrick Donnelly: We're sort of limiting.
Patrick Donnelly: Some ways.
Patrick Donnelly: How much we are servicing the demand that was out there from our sales team and.
Patrick Donnelly: One of the big sort of.
Patrick Donnelly: The exciting initiatives, we had at our National sales meeting. This year was really training on reveal I'm really getting the sales team sort of.
Patrick Donnelly: And motivated and they were very excited in terms of being able to now offer this product a lot more robustly.
Patrick Donnelly: And really accelerate our efforts there. So yes. There is there's a lot of room to grow, especially with tissue free or D. It's really the surveillance setting.
Patrick Donnelly: Where are you sort of get most of the juice out of the market, where most of the opportunity is and that's not really been an area that we've been targeting given the fact, we didn't have reimbursement there and so.
Patrick Donnelly: The team is ready to go and I'm very very excited for what this means for our oncology business.
Patrick Donnelly: Regarding Shelby two acts.
Patrick Donnelly: Big program for US right now stay tuned.
Patrick Donnelly: And you know we are planning to have both.
Patrick Donnelly: Hopefully <unk> robot launch of that version of the test by end of the year.
Speaker Change: Thank you the following comes from Dan Arias with Stifel. You May proceed.
Dan Arias: Afternoon, guys. Thanks tell me on MLR D and maybe just piggybacking off your last comment there the way that the field is evolving here.
Speaker Change: He is increasingly shooting for both tumor informed and tumor nave approaches.
Speaker Change: As you think about your own portfolio and just the way to best serve the community. How interested are you in that idea.
Speaker Change: Having both and then just quickly early I had someone asked for a clarification on tyco's question weather.
Speaker Change: With Dolby volumes are considered in the 45 to 50 K outlook for test volumes.
Speaker Change: Yeah, I mean look we ultimately think that tissue for MLD is going to be the largest portion of the market.
Speaker Change: Simplest.
Speaker Change: From a product market fit to use that addresses a $12 million.
Speaker Change: Cancer survivors that are more than five years out out of the $18 million in the market.
Speaker Change: But that doesn't mean that the.
Speaker Change: Tumor informed product, but at some point and not be part of our portfolio as well we have to listen to the market understand what the needs are for our customers and we'll continue to do that.
Speaker Change: Obviously launched garden to 60 tissue next a couple of years ago.
Speaker Change: Major upgrade of that test this year and so we're going to continue to listen to the needs of the market and adapt as as required.
Speaker Change: And your about Abu Dhabi.
Speaker Change: So.
Speaker Change: On track on that program and its proximity as 10000 patients.
Speaker Change: In their first year, having said that since we don't have really visit fell by T. Over how quickly they can ramp it up and keeps Idaho they chat screen.
Speaker Change: Braxton I say 10000 patients who are not at this time, we are just a fraction of that so effectively not to.
Speaker Change: Really a material part of our guidance. It's just a fraction of that 10000 is included.
Speaker Change: Okay. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. The next question comes from <unk> <unk> with Morgan Stanley. Your line is open.
Speaker Change: Hey, guys.
Speaker Change: So just a quick follow up there on <unk>.
Speaker Change: Tycho So to your question is Acs guideline inclusion second half 'twenty five catalysts for Houston nominally in men.
Speaker Change: Would that Supreme Court case looming here I know there's offsets.
Speaker Change: ECS states in the Medicare opportunities, obviously insulated from that situation, but what the decision require any sort of rejigging on your commercial effort on shield or perhaps need.
You know in the past you've talked about this activation energy sort of phenomenon will that be sort of a bigger gating factor for you would that decision too.
Speaker Change: Go against USD Sts.
Speaker Change: Okay. So maybe I start with Acs about softness may be clarified a little bit more.
Speaker Change: Yeah, Joe So in terms of Acs we are.
Speaker Change: Please read the conversation that's been constantia have with that team and we are optimistic that David was currency their shield and the CRC guidance review that they started working on.
Speaker Change: So exact timing we are not sure, but we are confidence based on what we know it should be sometime in 2020 five.
Speaker Change: There's some frame case.
Speaker Change: We are right now focused mainly on a Medicare patient population that they're covered patient population. That's just not going to get impacted by that case, we are monitoring and get back to you very closely.
Speaker Change: It's kind of good toward a field that fact that Trump administration is continuing to kind of be on the opposite side then.
Speaker Change: Uh huh.
Speaker Change: Work against the effects of that law case, but we will see what happens there is a lot of business actually for us on Medicare to mine, while we are waiting for building that actually access for younger patient population.
Speaker Change: And future I'm not sure if I got that last question.
Speaker Change: Maybe just mobile.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Following comes from Rachel <unk> with Jpmorgan you May proceed.
Speaker Change: Okay. Good afternoon, and thanks, so much for taking the question I wanted to dig into at P. Assumptions. This year, specifically on <unk> just given the traction that you saw throughout 2024 can you walk us through your assumptions embedded for 2025 I wanted to elaborate this year that you can see for continued growth in ESP on that transfer for therapy selection.
Thanks.
Mike: Yes, it's Mike.
Speaker Change: I'll take that one yes, no I think just to reiterate we had.
Speaker Change: We had a very very impressive increase in ASP gone in 360 and in 2020 for the the main driver at the start of the year was increasing that got a 360 L. D. G rate from 3500 to 5000 and then throughout the year, we saw sort of the Medicare advantage pull through bringing them up to bring it up to that rate.
Speaker Change: 360, ISP went from <unk>.
Speaker Change: <unk> thousand 750 at Q4, 'twenty three to $3000.
Speaker Change: In the back half of 'twenty four.
Speaker Change: And also on top of that we have these.
Speaker Change: Out of period upsides, just because we were getting receiving a lot more cash than we previously accrued for I think when we look at 2025.
Speaker Change: Definitely the $3000 ASP, we believe is here to stay.
Speaker Change: And the opportunity for us over the next sort of 12 months and longer is really to focus on the commercial payers and expanding the coverage that we have forgotten in <unk>. So we've got very good coverage now all the national payers cover gotten 360, but they don't come every time that we run the test so some cover for.
Speaker Change: L D T version <unk> vice versa.
And in certain cases, only for certain cancer types like lung or breast FDA approved.
Indications and so that's really going to be the focus for us to expand coverage.
Speaker Change: Overtime.
Speaker Change: What's built into our into our guidance is really just the $3000.
Speaker Change: Asps for dine in precinct.
Speaker Change: If we can accelerate that.
Speaker Change: The expansion of the coverage that will be upside if we continue to get any more of these out of period upsides above our expectations, then again that would be incremental to our guidance, but yes. We are feeling bullish about where we've got to with our gone at 360, Isps and looking forward.
Speaker Change: Thank you. The next question comes from Paul mixing with Canaccord you May proceed.
Speaker Change: Hey, guys. Thanks for the questions. How many could you talk about the contribution from the <unk> hundred 60 tissue in two or three fives and how important that's going to be longer term in the portfolio just.
Speaker Change: Given that quick Sandra opportunity enhance your competitive position and they'd be lengthened the runway for that franchise and <unk> hundred 60, and second lien early could you just clarify the volume of <unk>. This year in terms of demographics of the patients in their insurance is that going to different around the 24. Thanks.
Speaker Change: Yes, I mean, we've seen I think pretty strong growth from our tissue franchise over the last few years since we launched it.
Speaker Change: But this is going to be I think it's significant.
Speaker Change: Great so that to us.
Speaker Change: It'll be sort of bar, none one of the.
Speaker Change: Most competitive offerings in this space from a capability point of view.
Speaker Change: That it's really going to resonate with our physicians and so yes, we are.
Speaker Change: We're expecting that this is a product that is going to be.
Speaker Change: Very important pillar for therapy selection business and a major contributor over the next.
Speaker Change: Couple of years and.
Speaker Change: I think it's really important to us.
It's sort of pillar support physicians use when they're seeing the patient truly doing both tests upfront and then continuing to sort of monitor the patients with 360 going forward.
Speaker Change: And share volume in Q4 was fast imaginary Chi from Medicare beneficiaries, and what you're asking I mean 20 to 25 is still majority of the body language from the target is covered patients, meaning Medicare beneficiaries. So they come in.
Speaker Change: Our shop insurance like year on year patients are.
Speaker Change: A minority.
Speaker Change: Our volume.
Speaker Change: Thank you. The next question comes from Nathan <unk> with Stephens you May proceed.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks.
Speaker Change: Sorry, if this has been asked in jumping between a few tonight, but on the growth Youre seeing for <unk> 60 in the U S.
Speaker Change: Could you just give us some insight into where exactly that incremental growth is coming from is it capturing incremental share from competitors is it higher utilization in tumor types, where penetration was lower that new accounts.
Speaker Change: Any color there would be helpful.
Speaker Change: I'd say it's.
Largely some greater depths from existing accounts as you know we have <unk>.
Speaker Change: Majority of U S oncologists older Garden 360.
Speaker Change: Today, and so it's a lot more about getting greater depth. So some of it is.
Speaker Change: Sort of taking back share from some of the competitors out there.
Speaker Change: But it's also just greater utilization as well, there's still a lot of physicians.
Speaker Change: Don't test all of their patients.
Speaker Change: Comprehensive genomic profiling test and having a test like this that has capability that goes beyond just the standard genomic test I think it's been an exciting has been resonating with a lot of physicians and we see a.
Speaker Change: A lot more of that to come as we rollout. These applications these apps onto the platform.
Speaker Change: Okay.
Speaker Change: Thank you. Our final question comes from Matt <unk> with Goldman Sachs. You May proceed.
Matt <unk>: Thanks for taking my questions.
Speaker Change: Maybe just quickly just.
Speaker Change: Just on sales force expansion for shield, you talked a little bit earlier in the call about maybe being a little bit bigger than what you originally expected but.
Speaker Change: A year or two ago, you talked about gating factors that you would consider at any given point in terms of building that out could you just maybe kind of walk through what those getting factories today ours at Acs guidelines competitive launches in the future just how youre thinking about sizing that investment over this year and maybe into 'twenty six.
Speaker Change: Yeah, everything that'd be worth talking about in terms of shale investment is gated by content secures Shan.
Speaker Change: And conscientious bleed. This brand is going to have a huge opportunity for us at guardant health. So that's remains constant.
Speaker Change: The other part of it is cost saves like what we mentioned now for some time.
Speaker Change: At our annual.
Speaker Change: That's fair and it's gonna be ring fenced sat around this 200 million severe executed via content interested here based on that financial discipline.
Speaker Change: What's the embedded there is continued execution on the commerce shops trying that that volume is coming the P&L of the unit economics make sense.
Speaker Change: The point I made earlier about commercial expansion. It was just based on the fact that UNFI comex is more favorable today than what we assumed a year and half ago.
Speaker Change: Because of multiple read that the main factor, we didn't expect Medicare pricing to be 900 winding down their ear in Africa as.
Speaker Change: And what we are kind of expecting <unk> 14, 95 versus here and a half ago as lower cash paid price. So this would give us some additional gross profit that we can reinvest in that.
Speaker Change: Building the commercial infrastructure.
Speaker Change: Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect your line.