Guardant Health at Barclays Conference: Strategic Expansion in Diagnostics

On Wednesday, 12 March 2025, Guardant Health (NASDAQ: GH) participated in the Barclays 26th Annual Global Healthcare Conference, providing a strategic overview of their recent achievements and future plans. The company highlighted the positive impact of the Advanced Diagnostic Laboratory Test (ADLT) status for SHIELD, while also addressing challenges in market penetration and operational efficiency.

Key Takeaways

• Guardant Health’s SHIELD test received ADLT status, expected to increase its average selling price (ASP) significantly.
• The company anticipates substantial growth for Reveal, especially with expanded Medicare coverage.
• Strategic investments are being made to enhance commercial infrastructure and optimize sales force productivity.
• The 2025 outlook is positive, with expectations of accelerated growth and market penetration.

Financial Results

Shield Financial Performance:

• Initial ASP for SHIELD was approximately $600 per test, with an increase to $800 expected due to ADLT status.
• Medicare rate for SHIELD is projected to rise to $1,500 starting April 1.
• SHIELD is anticipated to achieve a positive gross margin this year.

Reveal Financial Performance:

• A 50% reduction in the cost of goods sold (COGS) was achieved in 2024.
• Expanded Medicare coverage for CRC surveillance is expected to drive revenue growth.
• Reveal is now gross margin positive, supporting future financial health.

Operational Updates

Shield Launch and Commercialization:

• Fourth quarter SHIELD volume exceeded expectations with 6,400 reported cases.
• Annual volume guidance for SHIELD is set between 45,000 to 55,000 tests.
• A focus on Medicare beneficiaries has resulted in a majority of SHIELD volume coming from Medicare patients.
• The sales force is expanding, with plans to reach 150 representatives by year’s end.

Reveal Commercialization:

• Reveal is utilizing Guardant360’s commercial channel to reach oncologists nationwide.
• The company is strategically managing the launch of Revealed breast until coverage is confirmed.

Future Outlook

Shield:

• Guardant Health is expanding its commercial infrastructure, with plans to grow the sales team to 700 in anticipation of USPSTF guidelines.
• The current SHIELD version is expected to meet market demand effectively.

Reveal:

• Expanded CRC surveillance coverage is expected to enhance Reveal’s market penetration.
• The goal is to achieve multiple tests per patient for MRD testing.

Q&A Highlights

Shield Guidance:

• The company considered sales team size and efficiency in setting volume guidance.

Commercial Strategy:

• Investments are strategically aligned with milestones like ADLT status and ACS guidelines.

Market Dynamics:

• Surveillance testing market growth is anticipated to accelerate in 2025.
• Efforts are underway to increase the proportion of CRC tests within the Reveal volume.

In conclusion, Guardant Health remains optimistic about its strategic direction, with significant advancements in SHIELD and Reveal expected to drive future growth. For a deeper dive into the details, readers are encouraged to refer to the full transcript below.

Full transcript - Barclays 26th Annual Global Healthcare Conference:

Luke Sergide, Analyst, Barclays: All right. Let’s get started. Good afternoon, everybody.

My name is Luke Sergide. I cover the Life Science here at Barclays. With me, I have Amir Ali from the CEO of Guardant Health and Mike Bell, the CFO. Thank you guys for making it down. First time meeting you and doing this fireside and hopefully not the last, right?

Amir Ali, CEO, Guardant Health: Thanks for inviting us. It’s great to hear.

Luke Sergide, Analyst, Barclays: Great. So, let’s start off with the topical news. The ADLT that you guys just received, walk through how that matched up with what you were expecting from a timing perspective. The reimbursement rate is in line, I’d say. And then from a broader question that it’s more on as Shield continues to ramp and this obviously doesn’t mandate a certain volume uptick, but talk about how you’re able to use the ADLT status to kind of drive your commercialization or to pull some of those levers to get more volumes out of SHIELD?

Amir Ali, CEO, Guardant Health: Yes. We are very excited with this new development. It’s something that actually we expected. This test is addressing a big unmet need. It’s FDA approved.

So it’s qualified to be advanced diagnostic laboratory test for people who are newer to this story and actually what this means. This enables a pathway to get a more favorable Medicare pricing for innovative tests and services. And then actually the pricing would be matched with the market based pricing. So, we are very excited that we got to this news. Now, the Medicare rate for Shield is going to go to about $1,500 starting April 1.

It gives us a lot of actually opportunities. This was something that we didn’t expect to get it this early in the year. It was not part of our guide. I asked Mike to go into some of the details of financial impact momentarily, but at the high level like what it would enable us to do is bunch of this additional gross profit that we are going to have with this more favorable pricing would give us opportunity to bring this innovative solution to the patient coast to coast more aggressively to maximize the benefit of this test. And effectively, we can be more aggressive in build out of our commercial infrastructure.

That in turn, like as we go to ’twenty six and beyond, this additional investment and more accelerated build out would give us upside in the outer years.

Mike Bell, CFO, Guardant Health: Maybe Mike? Yes. Maybe just how this impacts our guide. So at the start of the year when we put our guide out, we were confident that we would get ADLT. We just didn’t know the timing.

So our guidance excluded that. Now we have it we can quantify the impact. Our assumption for our ASPs for Shield for the year in our initial guide was approximately $600 per test. And that’s what we’d seen in Q4. And so as we look out now with this new ADLC rate starting in the April 1, we expect to get something like a $200 increase in the ASP from the April 1.

So our ASP is going to move to something like $800 per test. Obviously, throughout the year following that, it’s going to be dependent on the mix, the mix between Medicare fee for service, Medicare Advantage and commercial payers. But yes, we’re very confident that ASP will be in the $800 range. And as AmirAli mentioned then that’s going to add to the top line, add to our gross profit, and we can reinvest that back into the SG and A line.

Luke Sergide, Analyst, Barclays: Got you. And as you think about the ASP and kind of the approach here from commercialization, obviously, the blend between the different type of coverage that you guys are getting. So, talk about between going for the fee for service on the Medicaid versus the big commercial and how the progress there and really how that kind of fit into with your the blended on the 800 now that you’re talking about?

Amir Ali, CEO, Guardant Health: We’re very excited with actually the very early innings of launch of SHIELD post FDA approval. You may remember that before FDA approval, we had SHIELD in the market for some experiences market shaping activity as a lab developed test. During those days, Medicare patients were a minority of the volume that we were processing. There are a lot more opportunities in the younger patient population. What we decided to do after we got FDA approval and we got this Medicare coverage was really try to target the patients that would have coverage for this test.

So through some of the workflow adjustments that we made in terms of the ordering process and educating the physician, educating the patient about do you have coverage, you don’t have coverage, Effectively what we saw in the first full quarter of the launch of the test which was Q4 of last year, we saw vast majority of the reported SHIELD volume became samples with for patients who are Medicare beneficiaries, both Part B and Part D in terms of fee for service or MA. The way we achieve that is through a bunch of again education. The physician knows where the coverage is for this test. The patient knows that if they are younger patient they may have financial responsibility. So that suppression of the demand and volume of younger patient population gave us this opportunity that even in the first full quarter of the launch we had SHIELD with breakeven gross margin.

And we expect that for this year for gross margin to be positive and now with this ADLT designation in fact we would be even in a better shape. So we are very excited about the early data of how this targeting is effectively working for us.

Luke Sergide, Analyst, Barclays: Okay. That makes sense. And then, so sticking with Shield, you have you guys started at $45,000 to $55,000 for volumes for the year. And I’d say the biggest pushback that we’ve gotten is that you had Cologuard, if you kind of match up to where they were ahead of the USPSTF, they were doing they finished somewhere around like $135,000 and you guys are targeting $45,000 to $55,000 like why what led you to settle out on that level? And like what do you what is an internal metric for you guys is like, hey, this is actually like accelerating better than what we were expecting?

Amir Ali, CEO, Guardant Health: Yes, sure. Actually, the 4Q data that we reported was much better than what internally we expected, 6,400 reported case last quarter. And there are multiple elements that was considered when we put our guidance out there for Shield. This is the first guidance that we are putting for full year. And we want to be very thoughtful about it.

On the other side, I think this is a number which is very reasonable and it’s not very conservative because of the following. This is a brand new market. It’s not that PCPs know about SHIELD and the promise of blood based CRC screening. So, the demand is a function of investment in the SNM and the number of people that we are going to have in the field. So, when we look at the number of people that we have when we launch the test, our hiring plans that we had late last quarter and throughout 2025 and what the other competitor had in their first full year, it’s almost like we are going to have about half size of the team in the throughout the whole year.

So, we are mindful of the reality of the size of the team that we are going to food that we are going to have in the field. The other element is quality score and quality metrics he does score is a real consideration for a good fraction of the market. We are very excited with how progressive CMS has been in making sure patients would get access to SHIP. But today, it’s not a heated score qualifier. The way quality scores are entrenched in the health system now is much deeper than the way it was ten years ago.

So we are very thoughtful about the potential impact of this quality score. On the other side, there are many things which are very good with blood testing. There are 50,000,000 onscreen patients. When we activate an account, we are seeing higher depth of ordering for SHIELD versus what historically has been seen for stool based testing. And when the physicians are ordering the test ninety four percent of the patients are completing that test.

So, SNM efficiency is pretty high too. So, when we balance all these factors, we came up with this guidance of 45,000 to 50,000 versus what Stull Compare there did about 100,000 in their first full year launch.

Luke Sergide, Analyst, Barclays: And then as you sorry, do you have something else or?

Amir Ali, CEO, Guardant Health: No, that’s it.

Luke Sergide, Analyst, Barclays: Okay. And then as version two comes on, what’s the update that is the material update from version one to version two? And how does this help with the what you’ve talked about is like the back half weighted ramp with this with the launch? And outside of that, as you build out the sales force, how much education still needs to be done within that PCP market for the liquid biopsy on the CRC screening?

Amir Ali, CEO, Guardant Health: We’re very excited about the potential of the pipeline activities that we have at Guardant. We’ve shown it already for other brands, Guardant360 then Reveal and now most recently Shield. So, I think just over time Shield is just going to get better and better. That’s probably what we should assume. Like three sixty got better about 10 times throughout the last ten year cycle that it had in the market.

Shield is IVD. The bar of evidence is higher, so we should not expect like once a year kind of adjustment, but we are going to update its performance. We are going to try to update the performance around CRC indication and also other cancer attacks. SHIELD is built has been built as a multi cancer detection device right off the bat. So for SHIELD V2 what we are expecting is to generate that data, submit to FDA if the data is positive to hopefully get to that upgrade and launch it by end of the year.

And it’s an active program for us right now. In terms of product market fit, based on what we’ve seen, we are very confident that the current version of SHIELD is more than enough to really support the demand and really support the penetration of screening on the screen patient population in the market. Why we are doing SHIELD V2 and adding other cancer type in the same test is to continue to make it just even a better test. And mainly some of it is just competitively we want to make sure we have the best test in the market. So, we are going to continue to leverage the data advantage that we have, 2.5 time advantage that we have to make sure SHIELD remains best in the class.

So, it’s the back half loaded component of our volume expectation. It’s not because of Shield V2, it’s really based on the productivity expectation of the newly hired reps that we added really late Q4 of last year.

Luke Sergide, Analyst, Barclays: And on that productivity ramp, I mean, how are those reps that you’ve added? I know it’s only March right now, but give an update on how that productivity has ramped from are you guys measuring this in number of docs reached per rep? Or is it test per rep? Like how what are the internal metrics there as you track their productivity and push them?

Amir Ali, CEO, Guardant Health: So, something that we learned as this investment that we did with Shield LDT to be in market for two years is bunch of these infrastructure and KPIs that we have developed in terms of registering, activating doctors, the churn rate and actually what we are going to hear and how many samples we can expect from new accounts and so forth. So, we effectively have a productivity care for newly hired reps, which is valuable as a function of the productivity of each territory that we are adding the new rep, which is effectively part of our commercial operation and forecasting. Standard stuff, but it’s just got learned throughout two to two point five years of commercial data that we captured. And there is a productivity care we expect initially in diagnostics within the first three months post hiring. You can’t really count on any contribution.

It takes maybe six to nine months for a material contribution and it takes like twelve to eighteen months to get to the productivity you have in mind. So, our productivity curve is respecting what historically has been seen diagnostics as well.

Luke Sergide, Analyst, Barclays: Okay. And then as you continue to add from your reps from 4Q and you can build out to, I guess, 150 by the end of the year, you guys are talking about are you seeing or expecting any of that productivity time to reaching that material ramp to improve and take your learnings from what you got from your reps in the 4Q? I mean, it’s just like the natural learning curve there should be pretty acute.

Amir Ali, CEO, Guardant Health: So, some of the stuff which are getting over time is, for instance, our training programs, just based on it’s a feedback cycle of what’s working, what’s not working, and it’s just getting better. And we are very proud of what we’ve built. And hopefully, it to show its result in how fast maybe some of these new reps are going to become productive in the market. It’s always continuous improvement, continuous kind of adjustment based on what we learned, but so far so good so far. We are happy with what we did in Q4.

We see how Q1 would shape and we are very excited about what we can do in 2025. Okay.

Luke Sergide, Analyst, Barclays: And then, I guess, from a cost and OpEx perspective, you guys have been sticking to from your OpEx needs there. Update us on what how that path and investment continues to go, especially ahead of USPSDF and ACS expected this year as well?

Mike Bell, CFO, Guardant Health: Yes. We’ve always said that really on the screening side. The main investment that we need to make now over the next few years is on the commercial side and the commercial ramp. And even as far back as two years ago when we had our Investor Day or eighteen months ago, we said that commercial ramp, that increase in commercial spend would be gated on milestones. First one being FDA approval at that point, then we sort of over the next few months doubled the field sales team.

The next milestone we talked about was getting ADLT status. So we’ve got that now and that’s again with the additional gross margin allowing us to ramp up further our commercial spend. And so I think we’ll continue to do that. Getting into ACS guidelines will be a next milestone and we’ll continue to build the team then until we get to our USPSTS timeline. And then we’ll be we aim to have a field sales team of around 700 people.

And so over time, we’re going to be increasing that and investing. So but that’s the real focus of the investment. Of course, we still in the OpEx line have a healthy R and D line on Shield. It’s focused on multi cancer, focused on V2 and CRC, but also on just improving our workflow and our automation. So, I think we’re making all of the right investments on the screening side, but at the right pace as well.

Luke Sergide, Analyst, Barclays: Great. And I guess, if we shift gears quickly here on the last third, let’s talk about the MRD and REVEAL. This has had really good momentum and you’ve talked about kind of keeping the reins on the commercial force until you get gross margin breakeven and then also your ADLT there. And there’s been some pushback whether or not you can get the ADLT given that there’s already MRD test. And I guess the real question is like do you is that gating that you guys are thinking about from pushing the commercial?

Is that just an internal thing for ADLT? Because you’re already pretty close to gross margin breakeven for RAVIEL as it is. Is it something that has to have that ADLT? Or can you once you hit that, can you just kind of let the reins go?

Amir Ali, CEO, Guardant Health: 2025 is an inflection year for Rebuild. In fact, we are very excited about 2025 because a bunch of the stuff we’ve done historically, all of them are coming to the harvesting period now in 2025. So for Rebuild 2024, we had a gross margin negative test. We ended the year and started this year with a reveal that the cost of goods reduced by 50% and then we got expanded Medicare coverage by getting the CRC surveillance favorable MOLDI X decision, which we’re very excited about. So effectively today, Revill is now in the territory of being gross margin positive for us.

So the capping that we’ve done and engineering the volume that we’ve done, we effectively uncapped it. So we are not waiting for any other catalyst to really drive the growth of REVEAL. Even if we try to cap the growth just based on the momentum in the MRD market, REVEAL was the fastest growing oncology product that we had in terms of year over year growth. This year, we are expecting that to even be more accelerated and we are excited to see what we can do in 2025. Mike, do you want to add anything?

Mike Bell, CFO, Guardant Health: No, I think.

Luke Sergide, Analyst, Barclays: Fair enough. And I guess when you’re thinking about the VIVEO and the ASP, again, gross margin breakeven pretty close to it. You guys are going to be above that there this year. Talk about kind of the leverage that you guys have to pull from a coverage perspective. It’s kind of the same question from Shield and the rest of the test, right, as you depending on your coverage mix.

But as this continues to ramp and you build that momentum, how’s that going?

Mike Bell, CFO, Guardant Health: Yes. I mean, now we’ve got CRC surveillance coverage. Really the drive for us and the push is going to be on the cover testing that CRC. So we’re covered by Medicare in the adjuvant setting and the surveillance setting. So I think there’s the opportunity for us to really drive CRC.

If we can make that a higher proportion of their overall test volume, then that can also help the ASP, it can help the gross margin. And again, we can look to reinvest that. Also, we have available breast and lung. We look at breast, which is the next the biggest piece of the pie after CRC in the mix. We look at that as being the next up for reimbursement.

We’ve submitted data for publication. Once that’s published, it’s going to allow us to submit to MolDX. And then hopefully, the processes can be relatively streamlined given that we’ve got CRC. But again, that will give us another lever to really push hard on breast volume. It will give us an increase in ASP and can help again drive the whole MRD franchise for us.

Luke Sergide, Analyst, Barclays: And then I guess from as that MRD market evolves and you’re seeing the the CRCs, like you talked about the market that’s now, breast coming online, talk about what you’re seeing from an actual surveillance versus the adjuvant and the volume there. Depending on the checks and kind of the assumptions, it ranges anywhere from you could be doing three tests a year per surveillance patient versus one. What are you guys seeing there from your side, if you’re even seeing the surveillance starting to become a material driver yet?

Amir Ali, CEO, Guardant Health: So, the reality of the MRD market is they are more in continuing testing the same patient versus getting new patients tested just based on the way the guidelines are written multiple time points in the early years for testing. We didn’t have surveillance coverage. So in fact any kind of surveillance testing for us would be a negative contributor right off the bat. As a result, we really tried to suppress the amount of surveillance testing that we are doing. Having said that, there were a material fraction of our CRC volume that we were doing with REVEAL.

That was just a strong pull from the market that we are seeing. Now again, as I mentioned that kind of issue is gone. We uncapped it and we are very optimistic of bringing new patient into the pipeline of reveal testing, but also getting that annuity of the patients that are already in that journey by getting them tested multiple time points in

Luke Sergide, Analyst, Barclays: their journey. And how are you thinking about that multiple test time point? Is that I mean, when you guys think about this market shaking out like from a volume, is it going to be twice a year, three times a year? Just as we think about building that waterfall

Amir Ali, CEO, Guardant Health: from your adjuvant moving into surveillance? So, based on guidelines actually in initial years, sometimes you need to test these patients three to four times and then over time the frequency drops in some of the market comparable is sometimes getting about four, four point five tests per patients when the patients are getting tested by MRD. And for us, it was just a little bit north of one test per patient. So and that was again based on this lack of reimbursement for surveillance and what the way we were managing our MRD demand. We are very excited about what we can do with REVEAL and that gave us confidence in the guidance that we put out there that everything including REVEAL is going to see an accelerated growth in 2025.

Luke Sergide, Analyst, Barclays: Okay. That’s fair. And then from the ASP driver there on REVEAL itself, kind of talked about the coverage. But as breast comes on and you’re thinking about that CRC market, what are differences in how you’re going to approach the breast market? And like because that’s a different treatment paradigm from breast cancer than you actually have from CRC, right?

I mean, it’s different call point for you as well. So, talk about developing that market and how you see it playing out?

Amir Ali, CEO, Guardant Health: So, the good thing because of Guardant360 brand, we have a very deep nationwide commercial channel that’s addressing all the oncologists across United States. So, already we have that channel which we are leveraging for REVEAL. So we have all those oncologists in our call point and community breast and CRC are overlapping, but even within the specialized kind of academic centers we have a very high usage of Guardant360 in the breast indication. Now it’s offering we are going to actually offer revealed breast to them. It’s already in market for them, but definitely again we are trying to manage how much revealed breast is getting utilized before we get the coverage.

Luke Sergide, Analyst, Barclays: Yes. It’s fair.

Amir Ali, CEO, Guardant Health: And I

Luke Sergide, Analyst, Barclays: guess here the last thirty seconds, I mean, you’ve talked about it earlier, ’25 is definitely feels like an inflection year for you guys. You guys have a lot of moving pieces, a lot of momentum building. But as this continues to go, like talk about the how things are progressing versus your internal plans and if they’re kind of coming you’re seeing a little bit more levers that you

Amir Ali, CEO, Guardant Health: can pull to kind of accelerate that even more from what you guys were expecting to exit from 2025? We’re super excited. I think we had a blockbuster 2024. We were firing in all cylinders across everything that we were doing. And I believe 2025 would be even a better year for us.

So, let’s see what happens. We’re very excited.

Luke Sergide, Analyst, Barclays: Great. All right. Thank you guys. Thanks, Luke.

Amir Ali, CEO, Guardant Health: Thanks for having

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