Guardant Health ((GH)) has held its Q1 earnings call. Read on for the main highlights of the call.
Guardant Health’s recent earnings call conveyed a generally positive sentiment, marked by robust revenue growth across various segments, improvements in gross margins, and an upward revision of the full-year guidance. Despite these positive developments, the company acknowledged challenges such as high cash burn and limited commercial payer reimbursement for its Shield product.
Strong Revenue Growth
Guardant Health reported a significant 21% year-over-year increase in Q1 revenue, reaching $203.5 million. This growth underscores the company’s expanding market presence and successful strategies in capturing new opportunities.
Oncology Business Performance
The oncology segment demonstrated impressive performance with a 20% year-over-year revenue increase, totaling $150.6 million. The volume of oncology tests rose by 25%, with approximately 59,000 tests conducted, highlighting the segment’s strong demand and operational efficiency.
Gross Margin Improvement
Both the Reveal and Shield products achieved gross margin positivity in Q1 2025. This improvement was driven by strategic cost reductions and enhanced average selling prices (ASPs), reflecting the company’s focus on operational efficiency.
Expansion in Screening with Shield
Shield testing revenue reached $5.7 million in Q1, with around 9,000 tests conducted. The product received ADLT status, which increased the Medicare price from $920 to $1,495, indicating a positive trajectory for future revenue growth.
Biopharma & Data Growth
The Biopharma & Data segment experienced a 21% year-over-year revenue growth, bolstered by strategic collaborations, including a new agreement with Pfizer. This growth highlights the segment’s potential and strategic importance to Guardant Health.
Raising Full-Year Revenue Guidance
Guardant Health increased its full-year 2025 revenue guidance to a range of $880 million to $890 million, up from the previous $850 million to $860 million. This revision reflects the company’s confidence in sustained growth and market expansion.
Screening Revenue Still Small
Despite the strong growth trajectory, screening revenue remains relatively small at $5.7 million, indicating the need for further market penetration to realize its full potential.
High Free Cash Flow Burn
The company reported a Q1 2025 free cash flow burn of $67 million, highlighting ongoing challenges in reducing cash burn despite revenue growth. This remains a key area of focus for future financial health.
Limited Commercial Payer Reimbursement for Shield
Currently, Shield faces limited commercial payer reimbursement, which impacts its ASP and revenue growth potential. Addressing this challenge is crucial for maximizing the product’s market impact.
Forward-Looking Guidance
Guardant Health’s forward-looking guidance for fiscal year 2025 is optimistic, with a raised revenue forecast of $880 million to $890 million, representing a 19% to 20% growth over 2024. The company anticipates oncology revenue to grow by 18% year-over-year, driven by increased volumes and improved ASPs. The Biopharma & Data business is expected to achieve low double-digit growth, while Shield revenue guidance was increased due to higher ASPs and test volumes. Guardant Health aims for full-year non-GAAP gross margins between 62% and 63%, with a strategic focus on reducing cash burn and achieving cash flow breakeven by 2028.
In summary, Guardant Health’s earnings call highlighted a positive outlook with strong revenue growth and strategic initiatives across its business segments. While challenges such as high cash burn and limited reimbursement for Shield remain, the company’s upward revision of its full-year guidance reflects confidence in its growth trajectory and market strategy.