GH - NASDAQ

Good afternoon. Thank you for attending today's Guardant Health Q4 2024 Earnings Call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I would now surpass the conference over to your host,

Thank you. Earlier today, Guardant Health released financial results for the quarter and year ended December 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 specified items. Additional information regarding material risks and uncertainties, as well as the non-GAAP 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 except as required by law. The information in this conference call is accurate only as of the live broadcast. With that, I would like to turn the call over to Helmy.

Thanks,

Thanks, Helmy. Turning to a Slide 15, our goal has always been to identify and catch many cancer attacks early when they are most treatable. We developed our Shield assay as a platform capable of multi-cancer detection across a range of indications. We selected CRC as our first indication for Shield given it has – regulatory and reimbursement pathway. We’ve made incredible progress in 2024, with Shield becoming the first FDA approved on Medicare covered blood test for primary CRC screening. Turning into Slide 16. Upon our FDA approval, Shield was covered for 45 million Medicare beneficiaries that accolades risk of CRC. We are very pleased that Shield was recognized as an important new class of CRC screening and received a favorable Medicare price of $920. We recently received a unique CLA code for Shield and expect that upon securing advanced diagnostic laboratory tests or ADLT status designation for Shield, the Medicare rates will increase to an even more favorable price of $1,495. Moving on to the Slide 17. In early August, just a few days after CRC approval, we are thrilled to launch our Shield IVDS assay they are seeing the outstanding reception from physicians and patients that are excited that thousands of patients have been screened using our test. We are looking forward to scaling our impact quickly. Our strategy is to focus on the conversation population to drive a high mix of covered free immersible test. We delivered $4.1 million of Shield testing revenue in Q4, driven by a majority of samples coming from covered Medicare beneficiaries. In addition, I'm happy to report that in our first full quarter of launch, we achieved gross margin breakeven with Shield with heightened ASP of approximately $600. With the current rate of improvement, we are expecting Shield to be gross margin positive in its first full year are post-launch much sooner than we originally anticipated. This gives us flexibility to reinvest in our commercial infrastructure in 2025, while we maintain our annual screening cash burn target of $200 million. Turning now to Slide 18. While we are focused on scale up in us, we are exploring some strategic international interest in our screening platform. Recently, we were excited to announce that the Abu Dhabi Department of Health selected Shield to be a part of their screening program. Currently, the overall compliance to colorectal cancer screening in the region with the current screening modalities including FIT and Colonoscopy is less than 10% and the majority of colorectal cancers are getting diagnosed at later stages. The introduction of a non-invasive blood test as a more pleasant option may encourage greater participation in screening and boost early detection of CRC. This program initially in its first year aims to screen approximately 10,000 patients would that be on the surrounding regions in UAE and may scale to approximately 100,000 annual tests in the later phases. Moving on to Slide 19. We recently announced that Shield has been selected through a highly competitive process by NIH for the Vanguard Multi-Cancer Detection or MCD study. NIH’s decision to select Shield recognizes Guardant as a leader in the field of MCD and validates our technology. Then MCD test needed to detect the presence of disease across a variety of cancer types with good sensitivity, especially for the detection of early-stage, cancers, as well as accurately predicted cancer site of origin. We are pleased to announce that the performance data of Shield MCD in approximately 800 patients across ten cancer types will be presented in a scientific conference in the second quarter of 2025. Looking ahead, we are excited about our upcoming milestones in 2025, including presentation of our multi-cancer data, the potential inclusion of Shield in American Cancer Society or ACS guidelines and securing ADLT status, which enables improve ASP. We are also planning to operate our CRC screening test with Shield V2. With that, I will now turn the call over to Mike for more detail on our financials.

Thanks, AmirAli. Turning to Slide 20. I'll now discuss some select financial highlights for the quarter and year ended December 31, 2024. I’ll refer to year-over-year growth rates unless otherwise noted. Fourth quarter, total revenue grew 30% to $22 million, primarily driven by precision oncology revenues, which also increased 30% to $185 million. Precision Oncology revenue from clinical tests increased 35% to $146 million. Clinical tests volumes grew 24% to a record 57,300 tests in Q4 2024 and was primarily driven by Guardant360 which grew sequentially in the mid-single-digits. We continue to see very strong uptake of our upgraded Guardant360 Liquid, which we launched in our Smart Liquidity Biopsy platform at the start of Q3. We also saw continued strong growth of Reveal and tissue during the fourth quarter of 2024. Guardant360 ASP in the fourth quarter of 2024 was approximately $3,000. As we have seen throughout the year, we also had very strong commercial payer collections in the fourth quarter, which led to an after period revenue upside of approximately $8 million above our expectations. Once again, our Biopharma business performed incredibly well in the fourth quarter with Precision Oncology revenue from Biopharma Tech totaling $39 million, increasing 15%. This strong growth was fueled by another record quarter of tests in the fourth quarter, 11,050, which was up 16%. Finally, development services and other revenue totaled $17.2 million in Q4 2024 and includes $4.1 million screening revenue generated from the 6,400 Shield tests that we reported in the quarter. 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. Precision Oncology revenue from clinical tests increased 34% to $543 million. Clinical test volume in 2024 was 206,700, which represents growth of 20%. As Helmy mentioned, clinical volume growth was largely driven by an increasing Guardant360 test volumes which grew double-digits in 2024. We saw continued strong growth of Reveal throughout the year, which despite this managing volumes ahead of Medicare surveillance reimbursements was our fastest growing clinical test in 2024. Finally, tissue also grew stronger throughout 2024. Clinical tests revenue growth was also driven by significant improvements through our Guardant360 ASP which increased from approximately $2,750 in the fourth quarter of 2023, to approximately $3,000 in the second half of 2024. In addition to this tailwind, the significant improvement in reimbursement trends throughout the year, that is to collect more cash for our tests than we have previously accrued for, which resulted in after period revenue upsides throughout the year. For the full year 2024, revenue recorded for tests performed in prior years was approximately $35 million. Of this $35 million, approximately $13 million was consistent with our expectations based on the historical experience in payment trends. However, the remaining $22 million was the result of better than expected cash collections and we view this as a non-recurring after period revenue upside for 2024 Turning to Biopharma. As mentioned earlier, our biopharma business performed incredibly well during 2024, with Precision Oncology revenue from Biopharma tests circling $145 million, increasing 31% and Biopharma test volume growing 35% to 40,500 tests during the full year 2024. Finally, development services is and other revenue totaled $51.1 million for the full year 2024 and includes $5.1 million of screening revenues generated from Shield tests that were reported between the IVD launch at the start of August and the end of the year. Moving on to Slide 21. Our non-GAAP gross margin continues to be very strong and was 63% in the fourth quarter of 2024, compared to 61% in the fourth quarter of 2023. We also saw an improvement on an annual basis with 2024 non-GAAP gross margin of 62% compared to 61% in 2023. Excluding screening, non-GAAP gross margin 64% for both the fourth quarter and full year 2024, an improvement from 63% in the prior year period and above the full year guidance range of 61% to 63% that we provided on our Q3 year earnings call. Non-GAAP operating expenses were $215 million in the fourth quarter of 2024, an increase of 17% and $757 million for the full year 2024, an increase of 4%. 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. Firstly, we incurred significant litigation expense related to the November false advertising trial of which the jury unanimously found in favor of Guardant Health on all its claims and awarded us $293 million. Secondly, in Q4, we increased the full year accrue for the 2024 company bonus plan in line with the Board approved pay out level, which reflects a successful year with respect to bonus performance components such as top and bottom line financial measures, the FDA approval of Shield and the launch of new products. With the results of our increased revenue, gross profit at an operating leverage both our adjusted EBITDA and free cash flow improved year-over-year and full year 2024. Adjusted EBITDA loss was 258 million for the full year 2024 an improvement of $86 million, compared to a loss of $344 million in 2023. We continue to be focused on cash and materially reduced our burn in 2024. Free cash flow burn 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 $70 million compared to $345 million in 2023. I'm also pleased to report that our core Therapy Selection business was free cash flow positive in 2024 and that we successfully managed our cash burn for screening to be in line with our guidance target of approximately $175 million. Turning to the balance sheet on Slide 22. We ended the year with approximately $944 million in cash, cash equivalents, restricted cash and marketable debt securities. Earlier this month, we successfully completed a private convertible debt 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, while at the same time provides greater optionality to optimize our capital structure in the future. The $600 million of new convertible debt is now due in 2031 and comes with a 1.25% annual coupon and a 35% conversion premium, which represents a conversion price of $62.22. As a result of the transaction, our total debt was reduced from $1.15 billion to $1.09 billion, of which $491 million is our zero coupon convertible debt, which is due in November 2027. We also structured a concurrent stock repurchase of $45 million to help mitigate dilution. Following these transactions, our pro forma cash position was approximately $887 million. We continue to expect that we will reach cash flow break even in 2028 with cumulative free cash outflows of $450 to $550 million over the next three years. Turning to Slide 23, before discussing our outlook and assumptions for 2025, we want to take a moment to preview how we intend to present our revenue going forward. Rather than splitting revenue into Precision Oncology and development services and other, we are changing the presentation to better reflect our different business lines and to provide clarity on the performance of Shield. AS such, for 2025 was about to break out revenue to four components which as shown in this slide with 2023 and 2024 full year numbers. In summary, the new revenue components are Oncology which represents Clinical Therapy Selection, and MRD testing revenues, which we've previously reported as clinical testing revenues within the Precision Oncology line. Biopharma and data, which represents the total revenue we generate from our biopharma customers 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 as development services. Licensing and other, which was previously reported as other revenue and finally screening, which will represent Shield testing revenues. Moving to Slide 24 for our Outlook and assumptions for full year 2025. We expect full year 2025 revenues to be in the range of $850 million to $860 million, representing growth of approximately 15% to 16%, compared to 2024. Excluding the $22 million non-recurring out of period upside in 2024, this range implies total revenue growth of 19% to 20% in 2025. Now, breaking down the key assumptions in our revenue guidance. We expect oncology revenue to grow approximately 15% year-over-year in 2025, again, excluding the non-recurring out of period upside in 2024. This represents oncology revenue growth of approximately 20%. Given the positive traction we're seeing from our launch of Guardant360 LDT or Smart Liquid Biopsy, our recent Medicare CRC surveillance coverage for Reveal and the upgrades we're making to our tissue tests, we expect volumes across all oncology clinical products to accelerate in 2025 and total oncology clinical volume growth to be approximately 25%. We expect our biopharma business to continue to perform well in 2025 and are forecasting low-double-digit growth for biopharma and data revenues. Finally, although it's still very early into the launch, we want to provide some initial guidance for screening revenues, which we expect to be in the range of $25 million to $30 million driven by 45,000 to 50,000 Shield tests. We expect this full year volume 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. Also, our guidance does not include any ASP impact from receiving ADLT designation, we continue to expect this to occur in 2025 and we'll update our guidance accordingly at the appropriate time. We've made great progress in reducing our COGS over the last few months. With both Reveal and Shield, reaching gross margin breakeven, for 2025, we're confident that we can deliver full year non-GAAP gross margins in the range of 62% to 63% despite the impact of changes in product mix that we expect during the year. We expect total non-GAAP operating expenses to be in the range of $815 million to $825 million, representing an 8% to 9% increase compared to 2024. We will continue to gain significant operating leverage during 2025 and expect R&D and G&A expenses to be relatively flat compared to 2024 with the increase in operating expense coming mainly from investments in screening sales and marketing as we continue to ramp up our commercial efforts for Shield. Lastly, we continue to be committed to reducing our cash burn each year in order to reach companywide cash flow break even in 2028. For full year 2025, we expect free cash flow burn to be in the range of $225 to $235 million, an improvement, compared to $275 million for 2024. Our burn in 2025 will consist of approximately $200 million related to screening as we scale our Shield business and maximize our first mover advantage. Significantly, excluding screening, we expect the remainder of the business to burn approximately $25 million to $35 million during the year, and to reach cash flow break even in the fourth quarter of 2025. Finally, turning to Slide 25. We have a rich pipeline of catalysts across our business segments and are excited about the opportunities ahead. With that, we will now open the call to questions.

Thank you. [Operator Instructions] The first comes from Puneet Souda with Leerink Partners. You may proceed.

Yeah. Hi guys. Thanks for taking my questions. First one on screening and I’ll try to wrap one on Reveal as well. Shield guide of $25 million to $30 million was well ahead of us and I believe the street, as well. I appreciate it’s second half loaded, but could you talk about the sales force expansion that you expect is 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 on the upper end? And maybe what - what are you contemplating for the lower end? And on Reveal, congrats on the surveillance coverage. But can you square the NCCN? Unfortunately, NCCN 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.

Thank you, Puneet. Maybe I’ll start with the Shield question and I give it to Helmy me about Reveal. So the question to be very pleased with what we are hearing in the field physician response, patient response. Now connecting it to our guidance, I make a few points. One is we launched it back in August with 50 reps in the field. We increased it to 100 as we ended the last year of 2024. Vast majority of the people we added they came late, very late in 2024, in fact it's going to take them some time contributing productivity. As a result, we are, we believe that actually our ramp rate is going to be more back-ended Yeah, I think to consider is this is our first full year of launch. So, obviously in the launch years, this kind of growth is always when you look at just numerically it's more back-ended too. In terms of total number of reps that we are going to have, we mentioned at our Investor Day follow ‘23 that we are planning to have about maybe 150 people in the field by end of 2025. Some stuff much better than what we expected mainly the Medicare pricing. As a result, we will add maybe a little bit more people in the field. But again, bunch of these newly hired reps are not going to contribute meaningfully till like three, six months after their hire day. Maybe I will turn leave it and turn to Helmy for Reveal.

Thanks, Puneet. Yeah, good question and we actually were fairly encouraged when we saw the update in NCCN guidelines. I think on the whole, it's actually a step forward in terms of recognizing the value of ctDNA testing, really in the sort of adjuvant setting and this is not too dissimilar from the sort of cadence we saw with NCCN guidelines for 360 in terms of Liquid Biopsy testing. The guidelines tend to be a little bit behind where clinical practices, but I think, 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, we'll get to the right place in the coming years from a guideline perspective.

Thank you. The next question comes from Bill Bonello with Craig-Hallum Group. You may proceed.

Hey guys. Thanks for the call. Another one on Shield. I'm just curious if you are having any kinds of preliminary discussions with payers outside of Medicare commercial payers about Shield. I mean, obviously, the thinking there has been, well, you have to wait on USPSTF and whatnot, but I wasn't sure if there was activity you might be trying to accomplish ahead of that.

Yeah, Bill, we are in very kind of early conversation with some mainly in terms of like having advisory reports getting some initial feedback from them. We are planning to ramp up some of those engagements after we go into guidelines and right after ACS guideline inclusions that we are optimistic hopefully it could happen in 2025. We will ramp up those activities.

Thank you. The next question comes from Tycho Peterson with Jefferies. You may proceed.

Hey thanks. A couple on Shield. So, you're getting 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 Abu Dhabi and maybe subsidized samples? And can you maybe just confirm whether the Shield volume guide includes Abu Dhabi? And then any risk to ADLT 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 guidance.

Yeah. So Tyco, thanks for the great questions. We are very pleased with the ASP that we printed for Q4. We just don't want to get ahead of our SKU that was really the first full quarter data that we had. And we want to be very thoughtful with the ASPs that we are going to put in the first full year of the launch. We are going to - we are continuing to monitor our payer mix that would impact the ASP. I think, again I emphasize that this bump of ADLT improved Medicare rates is not kind of embedded in our guide. We are going to get to that point and then, look at our payer mix at a time and then revise the guidance accordingly. Based on everything that we know we are very confident about this ADLT process we know how it works. It's just a matter of the mechanics of the timing. It's a quarterly process. When exactly, it's going to get activated for us, it's something that not very clear. So we just want to make sure we do risk it before we include that upside to our guidance and our ASPs. And Abu Dhabi, very quickly it's not that dilutive for our ASPs. So without going into more details of it, we are very pleased with the engagement that we have with Department of Health there.

Thank you. The next question comes from Dan Brennan with TD Cowen. You may proceed.

Great. Thanks for - thanks for the questions. I'm going to focus on Reveal. Can you help us think through, kind of what stays in for ’25? We show you guys did like 35,000 tests in ‘24, 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? And then B, when you think about the additional indications breast and monitoring, could you just give us some color about timelines of when we might hear back on that? Thank you.

Maybe I'll start and maybe Mike go on some of the sort of cadence there and 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. And certainly we're very pleased with how the sort of year has started not just for Reveal but for all our products. That being said, in terms of kind of additional indications as we said, we submitted data for publication for both breast and monitoring late last year and as soon as those are published and accepted in respective journals, we’ll be submitting that to more dx. And so we are thinking sometime second half of this year. Or at the earliest, we could see potential indication expansion for Reveal.

Yeah, maybe I I'll ask yes, Helmy mentioned, we expect to Reveal volume acceleration, you are right, and we're not breaking out the Reveal volumes on all the volumes that we saw a big clinical oncology lines. But yeah, we expect Reveal is going to accelerate. It'll take some time and we think this will be more, again, back-end loaded for the acceleration increase during the year. And that's really because, we are just sort of getting the feel now, ramped up to be very much focused on CRC. So, we had a national sales meeting kick off just 2 or 3 weeks ago. The team is very excited and energized to go out and sell Reveal CRC. But it's going to take time for that traction to take hold, but yeah, we we're looking very much forward to accelerating the volumes throughout the year.

Thank you. The following question comes from Subbu Nambi with Guggenheim. You may proceed.

Hey guys. Thank you for taking my questions. Two questions. On Shield, the Shield COGS reductions have already been impressive. Is it fair to assume that you're achieving the Shield COGS reduction via a similar approach, like Reveal? And what is embedded in the 2025 guide? And for Reveal, what ASP is embedded in your guidance with respect to ramp, mix, ADLT timing? Thank you.

Yeah. So actually a bunch of R&D activities that we are doing at Guardant is highly leveraged and especially for the platforms that are based on epigenomics mainly. There's a lot of synergy. So, on Reveal, which is a LDT product, you guys have seen what we have achieved by reducing the COGS for some of the improvements and technologies stack and process improvements that we had. Shield is an IVD product, so implementing some of these changes takes a bit longer, but there is bunch of synergy at across learning, across deployment as we are doing across both Shield and Reveal.

Yeah, and maybe I'll take the uh reveal ASP. Yes, so of course we were very pleased to get the CRC Medicare - CRC Surveillance Medicare coverage at $1,644 starting - at the start of the year. So that's going to have a positive impact on ASP. We ended 20204 with an ASP roughly between $400 and $500. And so we're going to have an impact - positive impact of the Medicare coverage. Then there is a big sort of mix impacting all of Reveal, because we have CRC Surveillance – CRC adjuvant and then we have breast and lung and then of course, there's Medicare Medicaid advantage in commercial. So there's a lot that we have to sort of deal with from a mix perspective. But yeah, we would expect that ASP in our guide is roughly to increase to something like $600. We haven't included any impact for ADLT in that $600. Where it's our intention to apply for ADLT rate and so similar to Shield, if and when we get that, we would expect an increase on the Medicare rates and we would change our guidance in line with receiving that.

Thank you. The next comes from Mark Massaro with BTIG. You may proceed.

Hey guys. Thanks for the questions. Congrats on a strong 2024. The first one is for you, Helmy. I think about a year ago, there was probably an investor misconception that your G360 business was either saturating or about to go into decel. But in your prepared comments today, you indicated you plan to accelerate volumes across all your products this year. So, I was curious, if you could just give us some anecdotes about what you're seeing in the field with the upgraded G360 liquid product? And then one for AmirAli, I recognize that the majority of your revenue came from Medicare in Q4. But I would be curious about what level of interest you're seeing build from a non-Medicare population. And whether or not you think you will be well addressed to equip those orders when the commercial payer coverage comes in?

Thanks Mark, I appreciate your question. I can tell you, international sales meeting, 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 and Smart Liquid Biopsy with 360 and Reveal and then some of the ones that we have upcoming especially with Tissue. And so, we are seeing that momentum. We saw that momentum sensory launched 360 and Smart Liquid Biopsy. There has really nice uptake from existing physicians and new physicians alike. 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 the last year ended that 360 Liquid will continue to do well, and there's a lot of room for growth over the next two years in this market. I outlined, some of the growth drivers. It's not just sort of increased penetration. Its more applications going in sort of the long tail of tumor types, they are only really epigenomics can address. Some of the new findings we have, as well as where the field is going in terms of testing patients in each progression. And so there - we are really at the sort of very early innings in terms of where Liquid Biopsy for therapeutic self-selection can grow.

And regarding Shield, Shield on the younger patient or commercial side, our experience during Shield that'll be Q1 we didn’t have proactive work. So I just want to really focus on cohort patient. We're experiencing that in fact, this 65 and above was a minority of our ordering and payer mix. And our work so changes actually as works that’s that fast as retailer volume coming on this cohort patients. But total of the – of that market feedback and data that wants to coverage get expanded and access get expanded to younger patient population. There is a huge demand on opportunity for Shield to go to younger patients. Right now, I just focus on reimbursable coverage kits like Medicare and some of our initiatives that we have internationally in Abu Dhabi I maybe take those opportunity there was an earlier question, I progressively answered about what’s the level of assumption of contribution at this Abu Dhabi partnership. That program in the first one year the expectation of the Department of Health there is to test about 10,000 patients Having said that, since the program need to go through a ramp, logistics, we don’t know exactly how quickly they are going to ramp. At this time, we are just assuming a fraction of those patients would just tested by Shield to we get more visibility over that data.

Thank you. The next question comes from Patrick Donnelly with Citi. You may proceed.

Hey guys. Thanks for the questions. Helmy Maybe one on Reveal. Just I know before the reimbursement maybe hold it back a little bit kind of pursuing the volumes. Can you talk about just the change in strategy? How that will go and as Mike mentioned, maybe a little more of a second half ramp as we go through that. And then a quick one for AmirAli just on V2 for Shield. Can you just talk through what the expectation there should be on the catalyst centered for V2? Thanks guys.

Yeah, we have said before, we’re sort of limiting in some ways how much we are servicing the demand that was out there from our sales team and one of the big sort of kind of exciting initiatives we had at our National Sales Meeting this year was really training on Reveal really getting the sales team sort of I think motivated and they were very excited in terms of being able to now offer this product a lot more robustly, a lot and it’ll accelerate our efforts there. So yeah, there's a lot of room to grow. Especially with tissue free MRD, it's really the surveillance setting where 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 that we didn’t have reimbursement there. And so, the team is ready to go and you very, very excited for what this means for oncology business.

Regarding Shield V2 it’s an active program for us right now. Stay tuned. We are planning to have – both to approve, our launch of that version of the test by end of the year.

Thank you. The following comes from Dan Arias with Stifel. You may proceed.

Hey guys. Thanks. Helmy, on MRD and maybe just piggybacking up your last comment there. The way that the field is evolving here as companies increasingly shooting for both tumor informed and tumor naïve approaches. As you think about your own portfolio and just the way to best serve the community, how interested are you in that idea and having both? And then just quickly and early I had someone ask for a clarification on Tycho’s question whether Abu Dhabi volumes are considered in the 45 to 50K outlook for test volumes? Thanks.

Yeah, I mean, we ultimately think that tissue for MRD is going to be the largest portion of the market. The simplest from a product market fit to you, that addresses the 12 million cancer survivors that are more than five years out, out of the 18 million in the market. But that doesn't mean that a tumor informed product would at some point and not be part of our portfolio, as well. We have to listen to the market. Understand what the needs are of our customers and we'll continue to do that. We obviously launched Guardant360 tissue next a couple years ago. We have a 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 required.

And at Abu Dhabi, so yeah, the contract and the program aim is to approximate these tests 10,000 patients within the first year. Having said that, since we don't have really visibility over how quickly they can ramp it up and keep adults, they catch screen is approximately 10,000 patients who are not. At this time, we are just assuming, it's a fraction of that, so effectively not really material part of our guide. It's just fraction of that 10,000 is included.

Okay. Thank you.

Thank you. The next question comes from Tejas Savant with Morgan Stanley. Your line is open.

Hey guys. Good evening. So just a quick follow-up there on one of Tycho’s earlier questions. Is ACS guideline inclusion of second half ‘25 catalyst for use phenomenally? And then, with that Supreme Court case looming here, I know there's offsets via ACS states and the Medicare opportunities, obviously escalated from that situation. But what's the decision require any sort of rejigging on your commercial effort on Shield? Or perhaps, need in the past you've talked about this activation energy sort of phenomenon. Will that be sort of a bigger gating factor for you will that decision to go against USPSTF?

Okay, so maybe I start with ACS about something. So maybe to clarify it a little bit more, Tejas. So in terms of ACS, we are pleased with the conversation that we continue to have with that team. And we are optimistic that they would consider Shield and the CRC guidance review that they started working on. So, exact timing we are not sure. But, we are confident based on what we know it should be sometime in 2025. In terms of the Supreme case, we are right now focused mainly on Medicare patient population and the covered patient population, which is not going to get impacted by that case. We are monitoring it actually very closely. It’s kind of good for the field that the fact that Trump Administration is continuing to kind of be on the opposite side and kind of work against the sections of that law case. But we'll see what happens. There's a lot of business actually for us on Medicare to mine. While we are waiting for building that pathway access for younger patient population in future. I'm not sure if I got the last question. Maybe we just move on.

Thank you. The following comes from Rachel Vatnsdal with JPMorgan. You may proceed.

Well, thanks, good afternoon and thanks so much for taking the questions. So I wanted to dig into ASP assumptions this year, specifically on G360. So given the traction that you saw throughout 2024, can you walk us through your assumptions embedded for 2025? And what are the levers this year that you can see for continued growth in ASP on that front for Therapy Selection? Thanks.

Yeah, Rachel, it’s Mike. I’ll take that one. Yeah, just to reiterate, we had a very, very impressive increase in our ASP in Guardant360 in 2024. The main driver at the start of the year was increasing the Guardant360 LDT rate from 3,500 to 5,000. And then throughout the year, we saw sort of the Medicare advantage flow through bringing them up to that rate. And so, yeah, Guardant360 ASP went from $2,750 At Q4 2023 to $3,000, in the back half of ‘24. And also, on top of that, we have these out of period upsides just because we were getting – receiving a lot more cash when we previously accrued for. I think when we look at 2025 definitely the $3,000 ASP we believe is here to stay. 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 for Guardant360. So, we've got very good coverage now. All the national payers cover Guardant360, but they don’t cover every time that we run the test. So, some cohort for their LDT version, some for the CDX only vice versa. And in certain cases, only for certain cancer types like lung or breast FDA approved indications. And so, yeah, that’s really going to be the focus for us to expand the coverage over time. What's built into our guidance is really just the $3,000 ASP for Guardant360. So, if we can accelerate that and the expansion of the coverage, that'll be upside, if we continue to get any more of these out of period upsides above our expectations, then again, that would be an incremental to our guidance. But yeah, we’re feeling bullish about, when we've got to with our Guardant360 ASPs and looking forward.

Thank you. The next question comes from Kyle Mikson with Canaccord. You may proceed.

Hey guys. Thanks for the questions. Helmy, could you talk about the contribution for G360 tissue in 2025? And how important that’s going to be longer term in the portfolio, just given that extended opportunity enhances it to better position and maybe lengthen the roadway for that G360? And secondly, AmirAli, could you just clarify the volume for Shield this year in terms of demographics of the patients and their insurance around ’24? Thanks.

Yeah, I mean, we've seen that, I think pretty strong growth from our tissue franchise over the last few years since we launched it. But this is going to be - I think a significant upgrade for the tariffs and we think it will be sort of bar none of the most competitive offerings in this space from a capabilities point of view. And one that is really going to resonate with the physicians. And so, yeah, we are expecting that this is a product that is going to be a very important pillar for our Therapy Selection business and a major contributor over the next couple years. And, I think it's really important to as a sort of pillar of what physicians use when they are saving a patient. Really doing both tests up front and then continuing to sort of monitor the patient with 360 going forward.

And share volume Q4 was that majority from Medicare beneficiaries and what we are assuming 2025 is still majority of the volume would come from the targeted covered patients meaning Medicare beneficiaries. So, the commercial insurance like younger patients are minority volume.

Thank you. The next question comes from Mason Carrico with Stephens. You may proceed.

Hey. Thanks. Sorry if this has been asked. I am jumping between a few tonight, but on the growth you're seeing for G360 in the US, I did see with 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 or penetration was lower with new accounts any color there would be helpful.

I would say it’s largely from greater depths from existing accounts. As you know, we have majority of US oncologists order Guardant360 today and so it's a lot more getting greater depth. So some of it is sort of taking back share from some of the competitors out there. But it's also just greater utilization as well. There's still a lot of physicians that don't test all of their patients. So with a comprehensive genomic profiling test having a test like this that has capabilities that go beyond just the standard genomic test I think has been exciting and has been resonating with a lot of physicians. And we see a lot more of that to come as we roll out these applications and these apps onto the platform.

Thank you. Our final question comes from Matt Sykes with Goldman Sachs. You may proceed.

Thanks for taking my questions. Maybe just quickly, AmirAli, 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 a year or two ago, you talked about gating factors that you have considered in a given point in terms of building that out. Could you just maybe kind of walk through what those gating factors today are? Is it ACS guidelines? Competitive launches in the future? Just how you are thinking about sizing that investment over this year and maybe into ’26?

Yeah, everything that we are talking about in terms of Shield investments gated like continued execution and continue to believe this brand is going to have a huge opportunity for us at Guardant Health. So that remains constant. The other part, which is constant is like what we mentioned now for some time that our annual net burn is going to be ring fenced at around this $200 million. So we are executing – we are continuously executing based on that financial discipline.. So what's embedded there is continued execution on the commercial, trying that the volume is coming. The P&L unit economics makes sense. And the point I made earlier about commercial expansion was just based on the fact that unit economics is more favorable today than what we assumed a year and a half ago, because of multiple reasons the main factor, we didn’t expect Medicare pricing to be $920 year and a half ago as what we are going to expect the – carry 1495 versus a year after it was lower cash pay price. So this would give us some additional gross profit that we can reimburse in this commercial infrastructure.