Diagnostics company Guardant Health (NASDAQ:GH) announced better-than-expected revenue in Q1 CY2025, with sales up 20.8% year on year to $203.5 million. The company’s full-year revenue guidance of $885 million at the midpoint came in 3.2% above analysts’ estimates. Its non-GAAP loss of $0.49 per share was 17% above analysts’ consensus estimates.
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Guardant Health (GH) Q1 CY2025 Highlights:
- Revenue: $203.5 million vs analyst estimates of $190.3 million (20.8% year-on-year growth, 6.9% beat)
- Adjusted EPS: -$0.49 vs analyst estimates of -$0.59 (17% beat)
- Adjusted EBITDA: -$58.54 million vs analyst estimates of -$78.16 million (-28.8% margin, 25.1% beat)
- The company lifted its revenue guidance for the full year to $885 million at the midpoint from $855 million, a 3.5% increase
- Operating Margin: -54.6%, up from -59.2% in the same quarter last year
- Free Cash Flow was -$67.15 million compared to -$37.22 million in the same quarter last year
- Sales Volumes rose 28.1% year on year (19.9% in the same quarter last year)
- Market Capitalization: $5.12 billion
StockStory’s Take
Guardant Health’s first quarter results were driven by expanding adoption across its cancer diagnostics portfolio, particularly within its oncology and screening businesses. Management pointed to increased test volumes for both Guardant360 and Reveal, supported by product upgrades, Medicare reimbursement, and cost improvements. The company also highlighted growing demand for its Shield blood-based screening test, which achieved positive gross margin earlier than anticipated. Co-CEO Helmy Eltoukhy commented on the "strongest growth" seen in Guardant360 in several years, attributing gains to the upgraded smart liquid biopsy platform and new tissue product introductions.
Looking ahead, Guardant Health raised its full-year revenue outlook, reflecting higher expectations for oncology and Shield test volumes. The company’s guidance factors in incremental revenue from recently improved reimbursement rates, the expansion of its sales force, and the expectation of further gross margin improvements for new products. CFO Michael Bell noted that Shield’s new ADLT status and positive reception in new markets, such as the VA Community Care Network, underpin the higher forecast, while management remains focused on reinvesting incremental profits to accelerate commercial infrastructure.
Key Insights from Management’s Remarks
Guardant Health’s management attributed first quarter outperformance to increased oncology and screening test adoption, new product capabilities, and efficiency gains across its operations.
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Oncology test growth: Guardant360 volumes accelerated following last year’s upgrade to the smart liquid biopsy platform, with the product experiencing its strongest sequential growth in years. The new Guardant360 Tissue test, requiring 40% less tissue and integrating DNA, RNA, and methylome analysis, was introduced as the final major product to migrate onto this platform.
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Reveal momentum: Reveal, Guardant’s tissue-free MRD (minimal residual disease) test, continued to grow rapidly and reached gross margin positivity in Q1 due to a more than 50% reduction in cost per test and expanded Medicare coverage for colorectal cancer surveillance. Management expects additional clinical data and reimbursement for breast cancer applications later in the year.
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Shield screening traction: The Shield blood-based screening test generated increasing revenue and achieved positive gross margin ahead of plan. Key drivers included its inclusion under the VA Community Care Network and the acquisition of ADLT status, which increased Medicare reimbursement rates. Management noted strong physician and patient acceptance, especially among unscreened populations.
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Biopharma & data partnerships: The company reported another strong quarter for its Biopharma & Data division, highlighting an expanded collaboration with Pfizer and new real-world data partnerships with large pharma clients. These relationships support both companion diagnostic development and the use of Guardant’s methylation analysis.
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Commercial investments and cost discipline: Gross margin gains were offset by higher sales and marketing expenses as the company accelerated the Shield commercial rollout and expanded its sales force—expected to reach 200 by year-end. Management underscored a continued focus on cash management and progress toward achieving company-wide cash flow breakeven by 2028.
Drivers of Future Performance
Guardant Health’s outlook is driven by expectations for sustained volume growth in core oncology and screening products, continued reimbursement improvements, and expanded commercial reach.
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Oncology platform upgrades: Management believes expanded clinical utility, new product launches, and improved reimbursement across Guardant360, Reveal, and the new tissue test will continue to drive volume growth and market share gains in therapy selection and MRD applications.
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Shield screening expansion: Growth in Shield volumes is expected to accelerate as commercial infrastructure is built out, with contributions from new payor coverage, higher Medicare rates, and broader access through networks like the VA. Management cited inclusion in clinical guidelines and additional sales hires as potential upside drivers.
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Operational headwinds and reinvestment: While gross margin expansion is anticipated, higher operating expenses are expected as profits from successful products are reinvested to expand sales and marketing. Management also identified risks such as the timing of sales force productivity ramp-up and the pace of new account adoption.
Top Analyst Questions
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Mark Massaro (BTIG): Asked about the primary drivers of accelerating oncology volume and the relative contribution of EMR integration, competitive takeaways, and tissue product attachment. Management emphasized product upgrades and improved ordering simplicity as key contributors.
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Tycho Peterson (Jefferies): Inquired about the runway for further Guardant360 ASP (average selling price) improvements, guidance assumptions for tissue test pricing, and the steps needed to drive broader payer adoption for Shield’s multi-cancer detection. Management expects stable ASPs and continued payer engagement based on new data.
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Bill Bonello (Craig-Hallum): Questioned the impact of the new tissue test requiring less material and whether this could lead to higher market share or cannibalization of blood-based testing. Management expects both modalities to grow, with guidelines increasingly supporting dual testing.
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Subbu Nambi (Guggenheim Partners): Sought clarity on potential upside and downside drivers to Shield’s volume guidance, including the impact of guideline inclusion and the pace of sales force ramp. Management pointed to productivity gains and possible guideline inclusion as upside factors.
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Rachel Vatnsdal (JPMorgan): Pressed for specifics on the expected Shield volume ramp and whether sequential growth would accelerate throughout the year given the new sales hires. Management indicated growth would be weighted toward the second half as reps achieve full productivity.
Catalysts in Upcoming Quarters
As we look to the coming quarters, the StockStory team will monitor (1) the pace of Shield screening adoption as new sales hires reach productivity, (2) the impact of guideline updates and expanded coverage on test volumes, and (3) progress toward broader reimbursement for Reveal in breast cancer and other indications. Execution on sales force expansion and new product launches will be key to sustaining the company’s raised outlook.
Guardant Health currently trades at a forward price-to-sales ratio of 5.5×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.
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