GRAIL - Earnings Call - Q3 2025

Executive Summary

• Q3 revenue grew 26% year over year to $36.2M, with screening revenue up 29% to $32.8M and U.S. Galleri revenue up 28% to $32.6M; adjusted EBITDA improved to $(71.7)M and adjusted gross profit rose to $20.0M.
• The company delivered a modest revenue beat versus consensus and a significant EPS beat: revenue $36.19M vs $35.40M consensus (+$0.79M, +2.2%), and EPS $(2.46) vs $(3.48) consensus (+$1.02); consensus coverage remains thin (3 estimates)*.
• Guidance tightened and de-risked: FY25 U.S. Galleri revenue growth refined to the midpoint of the prior 20–30% range, and cash burn guidance lowered to ≤$290M; PMA submission timeline accelerated to Q1 2026.
• Strategic and financing updates extend runway: $325M private placement in October and planned $110M Samsung investment support cash runway “into 2030” and international expansion in Asia; Canada commercial intro with Medcan/Manulife.
• Fundamental narrative strengthened by positive clinical evidence: PATHFINDER 2 showed 61.6% PPV, 99.6% specificity, and seven-fold higher cancer detection when added to recommended screenings; SYMPLIFY follow-up PPV increased to 84.2%.

What Went Well and What Went Wrong

What Went Well

• Volume and revenue growth: Galleri tests sold grew 39% YoY to “more than 45,000,” with total revenue +26% and screening revenue +29% YoY; CEO: “We remain very pleased by Galleri’s commercial uptake”.
• Margins and efficiency: Non-GAAP adjusted gross margin improved to 55% (from 41% in Q3’24) driven by variable cost reductions and lab efficiency at higher volumes; CFO highlighted platform throughput and fixed-cost leverage.
• Clinical validation and regulatory progress: PATHFINDER 2 and SYMPLIFY updated results bolster evidence; PMA timeline clarified to Q1 2026; CEO: “We anticipate completing our PMA submission… in the first quarter of 2026”.

What Went Wrong

• ASP pressure and reprocessing: CFO noted decreased ASP and higher sample reprocessing costs partially offset margin improvements, a watchpoint for sustainability as promotional pricing ($150 off) was used to drive prescribing depth.
• Development services softness: Development services revenue was $3.4M, up slightly YoY but down from prior levels versus last year’s nine-month period decline; the mix remains heavily dependent on screening revenue.
• Continued GAAP losses: Net loss remained large at $(89.0)M, albeit improved YoY; GAAP gross loss of $(13.7)M underscores reliance on non-GAAP improvements and scale to reach breakeven.

Transcript

Operator (participant)

Good day, ladies and gentlemen, and welcome to the GRAIL Q3 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that this conference call is being recorded. GRAIL Investor Relations, please begin.

Alex Dobbin (Head of Investor Relations)

Thanks, Operator, and thanks, everyone, for joining us today. On the call are Bob Ragusa, our Chief Executive Officer; Aaron Freidin, Chief Financial Officer; Josh Ofman, President; Sir Harpal Kumar, Chief Scientific Officer and President International; and Andy Partridge, Chief Commercial Officer. We'll be making forward-looking statements on this call based on current expectations. It's our intent that all statements other than statements of historical fact, including statements regarding our anticipated financial results and commercial activity, will be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from those projected or discussed. All forward-looking statements are based upon currently available information, and GRAIL assumes no obligation to update these statements.

To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that GRAIL files with the SEC, including the risk factor section in GRAIL's most recent quarterly report on Form 10-Q. This call will also include a discussion of GAAP results and certain non-GAAP financial measures, including adjusted gross profit or loss, which are adjusted to exclude certain specified items. Our non-GAAP financial measures are intended to supplement your understanding of GRAIL's financials. Reconciliations of the non-GAAP measures to most directly comparable GAAP financial measures are available in the press release issued today, which is posted to our website. With that, we can turn to Bob.

Bob Ragusa (CEO)

Good afternoon, everyone, and thank you for joining us. On today's call, we will review Q3 results and discuss recent updates. These include Pathfinder II results shared at ESMO, updated SYMPLIFY data shared at EDCC, and recent strategic and financing activities. We remain very pleased with our commercial progress. Growth in Galleri volumes and revenue in Q3 of 2025 were 39% and 29%, respectively, as uptake continues to grow. From the launch of Galleri through September 30, approximately 420,000 Galleri commercial tests have been sold by more than 16,000 healthcare providers. We are continuing to progress our activities beyond the United States as well, recently announcing a strategic collaboration with Samsung to bring the Galleri test to key Asian markets. Subject to execution of definitive agreements, we and Samsung will work as exclusive partners to commercialize Galleri in South Korea and potentially other Asian markets, including Japan and Singapore.

In addition, we plan to explore other strategic and operational collaborations. Samsung has also agreed to make an equity investment of $110 million in GRAIL, subject to closing conditions. In October, we also introduced Galleri commercially in Canada in partnership with MedCan, a global leader in proactive health and wellness services. Eligible adults in Canada may now access the Galleri test at MedCan's clinics. In addition to these operational updates, we recently completed a $325 million private placement. This transaction strengthens our balance sheet as we progress through additional milestones. Galleri is the only MCED available which has demonstrated performance in people being screened in the intended-use population. This includes data from our registrational Pathfinder II study, where a pre-specified analysis was presented at ESMO last month. I'll ask Josh, then Harpal, to discuss recent results from Galleri's clinical program.

Joshua Ofman (President)

Thank you, Bob, and hi, everybody. We were really pleased last month to share very positive performance and safety results from the pre-specified analysis of the first 25,000 participants in our registrational Pathfinder II study. This study started in 2021, and Pathfinder II is a large prospective trial in a very broad and diverse enrolled group representative of Galleri's screening-eligible intended-use population. Releasing the first results of this study at ESMO was so exciting and a big milestone for our company and all of our partners and investigators, and it was a meaningful contribution to the evidence base for the effectiveness of multi-cancer early detection. As you'll recall, we found that adding Galleri to recommended screening for breast, cervical, colorectal, and lung cancer yielded a more than seven-fold increase in the overall cancer detection rate.

Approximately three-quarters of the cancers detected by Galleri have no recommended screening options, and more than half of the new cancers detected by Galleri were in stage one or two, and more than two-thirds were detected at stages one, two, or three. One of the most important clinical metrics, the positive predictive value, or PPV, which is the likelihood of receiving a cancer diagnosis following a positive test result, Galleri's PPV was 61.6%. Specificity was 99.6%, translating to a false positive rate of 0.4%, a critical safety metric. Galleri's ability to accurately identify where in the body the cancer is located also helped guide an efficient and effective diagnostic evaluation. Importantly, there were no serious study-related adverse events reported thus far. Diagnostic resolution, an important economic and patient-centered outcome measure, took a median of 46 days, and only 0.6% of all participants had an invasive procedure.

No serious study-related adverse events were reported. Invasive procedures were two times more common in participants ultimately diagnosed with cancer than in those who were ultimately not diagnosed with cancer. Pathfinder II and NHS-Galleri make up our registrational clinical program for Galleri. Our PMA submission will include these data from the first 25,000 enrolled in Pathfinder II to complete 12 months of follow-up, plus findings from the prevalent round of screening from the NHS-Galleri randomized clinical trial, as well as the results of a bridging study between the version of Galleri used in the two registrational trials to the updated version that we plan to submit to the FDA for pre-market approval.

As a reminder, we announced positive top-line results from the prevalent round of screening in the NHS-Galleri trial in May of this year, namely that data from the prevalent screening round showed a substantially higher positive predictive value than that was observed in the first Pathfinder study. Now, to review important new findings from our SYMPLIFY study, I'll hand it off to Harpal.

Harpal Kumar (Chief Scientific Officer and President International)

Thanks, Josh, and good afternoon, everyone. Working with the University of Oxford, we recently shared positive long-term results from an extended follow-up of the SYMPLIFY study at the Early Detection of Cancer Conference, or EDCC, in October. As a reminder, we conducted the observational SYMPLIFY study in symptomatic participants in the U.K. to understand whether our technology could play a role helping clinicians guide investigation and accelerate time to diagnosis when patients present with concerning but non-specific symptoms. Examples of these symptoms could include unexplained weight loss, fatigue, persistent abdominal pain, and others. The previous primary analysis from SYMPLIFY, published in The Lancet Oncology in 2023, followed participants until diagnostic resolution or up to nine months and demonstrated Galleri's PPV in this population was approximately 75%.

Patients determined to have a false positive Galleri result were followed for an additional 15 months in the National Cancer Registry for England and Wales. The updated analysis presented at EDCC includes the subsequent registry follow-up period for all 79 of the patients who were originally classified as false positives, and the data contained a number of important learnings. First, approximately one-third of the participants initially believed to be false positives were diagnosed with cancer during the full follow-up period. Second, of that group, a cancer signal of origin, or CSO prediction, from the Galleri test was correct in all but one patient. Finally, with a reduction in false positives in SYMPLIFY from 79 to 51, the updated PPV for Galleri in this symptomatic population increased to 84.2%. These findings reinforce the importance of proactive follow-up after a positive MCED test result and the value of the Galleri test's accurate CSO capability. Now to Aaron for a review of our financials.

Aaron Freidin (CFO)

Thanks, Harpal, and good afternoon, everyone. I'm pleased to present our results for Q3. Revenue for Q4 was $36.2 million, up $7.5 million, or 26%, as compared to Q3 of 2024. Total revenue for Q4 is composed of $32.8 million of screening revenue and $3.4 million of development service revenue. Development services revenue includes services we provide to biopharmaceutical and clinical customers, including support of our clinical studies, pilot testing, research, and therapy development. We continue to see demand for our Galleri test and sold more than 45,000 tests in Q4. We have historically observed seasonal fluctuations over the course of the year, in particular, relatively high volume in the second and fourth quarters and lower in the first and third. We would expect these seasonal trends to continue. Screening revenue of $32.8 million in Q4 was up 29%, as compared with Q4 of 2024.

US Galleri revenue was $32.6 million, up 28%, compared to Q4 last year. At the beginning of the year, we guided full year 2025 US Galleri revenue growth between 20%-30%. We are refining this growth guidance today to the middle of that range. Cost of screening revenue, exclusive of amortization of intangible assets, as a percent of screening revenue, decreased mainly due to lower variable costs of Galleri testing performed on our automated platform, partially offset by a decrease in ASP and higher sample reprocessing costs. Net loss for Q4 was $89 million, an improvement of 29%, as compared to Q3 of 2024. Gross loss for Q3 2025 and 2024 were $13.7 million and $22.2 million, respectively. Non-GAAP adjusted gross profit for Q3 of 2025 was $20 million, an increase of $8.2 million, or 69%, as compared with Q3 of 2024.

In Q3, we achieved a non-GAAP adjusted gross margin of 55%, compared to 41% in Q3 of 2024. This change was largely driven by improvements in variable costs on our updated Galleri platform that launched last year and by an increase in sample volume for Q4, as we ran a one-time batch of research and development samples for clinical validation, resulting in reduced fixed cost per sample related to higher lab efficiency at higher volumes. We do not expect similar clinical validation sample volume in future quarters, but the higher number of samples processed demonstrates the benefits we expect to see in lab efficiency as the sample volume grows. We ended the quarter with cash and investment position of $547.1 million. Including net proceeds from the $325 million private placement in October, we have approximately $850 million of cash and investments.

This does not include the recently agreed-upon investment in GRAIL by Samsung, which is subject to closing conditions. In August, we drew down our cash burn guidance for full year 2025 to be no more than $310 million from no more than $320 million. Today, we are updating our cash burn guidance further to no more than $290 million for full year of 2025, net of $13 million in placement fees from our recently completed financing. Expected full year burn represents a significant decrease of approximately 50% compared to 2024, as we remain focused on cost management. We believe our cash runway extends into 2030, enabling us to achieve major planned clinical and regulatory milestones. I'll hand it back to Bob for concluding remarks.

Bob Ragusa (CEO)

Thanks, Aaron. Our strategic priorities are seeking FDA approval of Galleri and pursuing broad reimbursement. We are advancing Galleri in the near and midterm towards key clinical and regulatory catalysts to achieve broad access while maintaining our disciplined cost management. As we move into 2026, our key milestones are the completion of our modular PMA submission to the FDA and full clinical utility results from our 140,000-participant NHS-Galleri study, which we expect to read out mid-year. This longitudinal data set will be reviewed by the NHS to determine Galleri's potential deployment within the U.K. population. Lastly, we look forward to welcoming many of you onsite tomorrow at our centralized labs in Research Triangle Park, North Carolina. A live webcast of our analyst day will begin at 11:00 A.M. Eastern Time and will also be available at the investor relations section of our website. Let's now go to Q&A.Operator, please go ahead.

Operator (participant)

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found in the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will hear your name called and receive a prompt to unmute. As a reminder, we are allowing analysts one question and one related follow-up today. We will wait one moment to allow the queue to form. Our first question will come from Subu Nambi with Guggenheim. Please go ahead.

Subbu Nambi (Managing Director and Healthcare Equity Research)

Hey, guys. Thank you for taking my question. The FDA timeline is moved to Q1 instead of first half of 2026. What changed?

Bob Ragusa (CEO)

Yeah, Subu, thanks for the question. I think the main thing is, as we move forward in time, we've gotten more certainty in the range of when we'd be able to deliver that. We've been saying first half for a fair amount of time, and it looks like things are on track well enough where we're more confident to be able to put it out for the first quarter. It's really just kind of tightening the confidence intervals around the timeframe.

Subbu Nambi (Managing Director and Healthcare Equity Research)

Perfect. You're currently running a promotion on your website offering $150 off of Galleri for patients getting tested from October to year-end. What incentivized you to offer this promotion? How has the demand elasticity in response to this promotion been? Are you piloting a reduction to $800 moving forward? Could this impact ASPs moving forward? Thank you for that.

Bob Ragusa (CEO)

Yeah, maybe a couple of comments, and I'll turn it over to Andy Partridge, our CCO. So we've done a fair amount of work looking at the price elasticity on the test. And this is kind of a reflection of some of that work. We do know that there's significant price elasticity, and going into the end of the year is a good time to exercise some of that. Maybe to answer some of the other pieces, Andy, do you want to take that?

Andy Partridge (Chief Commercial Officer)

Yeah, thanks, Bob. As you saw, we have reduced the price on the website. The growth that we've seen in Q3 year-over-year has been predominantly driven by the provider channel, where we've seen improvements in both breadth of prescribing, bringing new prescribers onto using Galleri, and also depth of prescribing. Discounting has been a component of increasing that depth and breadth of prescribing. Also, the integrations we've done with companies like Quest and Athenahealth have also driven a lot of that breadth and depth. Finally, repeat testing, which price is also a component of that, has also driven that depth of prescribing as well. We're very pleased with what we've seen in the market.

Operator (participant)

Your next question will come from Kyle Mixon with Canaccord.

Kyle Mixon (Senior Analyst)

Hey, guys. Thanks for the questions. Congrats on the progress. You have obviously bolstered the balance sheet nicely. You should have over an additional $400 million by early 2026 with the Samsung investment. I was just curious how you plan to use the additional capital, and specifically, how does the commercial strategy change, especially in light of recent or upcoming competition? I would appreciate to hear Andy's thoughts on that as well. Thanks.

Bob Ragusa (CEO)

Yeah, so I think you hit some of it. Obviously, it gives us a lot more flexibility on the balance sheet. With competition emerging, it does give us more flexibility in how we think about flexing our commercial investments. We are looking at those things as well as any of the other areas that we need to really fortify as we continue to scale and expand our test footprint in the marketplace. I guess, Andy, do you want to also comment on that?

Andy Partridge (Chief Commercial Officer)

Yeah, I think, Bob, and I really covered it. I think the thing that I would emphasize is we feel like we've got a lot of momentum right now with customers for all of the reasons that I described, and definitely coming now off the back of the Pathfinder II data that we presented at ESMO, there's a palpable momentum that we have in our business.

Kyle Mixon (Senior Analyst)

Got it. That's helpful, guys. Thanks. Also, him and her has made an investment in the company recently. Consequently, there's been some speculation that means GRAIL is going to take a direct-to-consumer approach to Galleri at some point. Could you just comment on those plans or the potential to take that route over time in light of the increasing focus on longevity among consumers?

Bob Ragusa (CEO)

Yeah, no, it's a good question. As we just reiterated our timeline for our PMA, we're very committed to the PMA pathway. There's kind of no change in that. In fact, you saw a slight acceleration in the actual timeframe. Beyond that, we do also recognize that the digital health channel is an important channel out there more broadly in this sector as well as many others. We want to make sure that we're able to utilize all the channels that are available to bring—we've talked from the very beginning about how do we get broad access for Galleri, and that would be one other element to enable broad access. That also would not diminish, again, our push towards a PMA and broad access through that.

Operator (participant)

Your next question will come from Doug Schenkel with Wolfe Research.

Doug Schenkel (Managing Director and Senior Research Analyst)

Hi, good afternoon, and thank you for taking my questions. I want to actually talk about NHS England a little bit more, and then I have a COGS-specific question. Starting on NHS England, looking back to May 2024, when the statement was issued saying that early results were not compelling enough to justify a large-scale pilot, were they referring to any clinical utility data from year one or to test-level performance metrics such as PPV, sensitivity, and/or specificity? Can you share a little bit more on what prompted that decision? On the same topic, has anyone besides GRAIL and the NHS evaluation team seen the year-one NHS Galleri data? I'm just curious if anyone else has seen it, and then if not, at what venue do you anticipate releasing that data more broadly, keeping in mind that you've said the FDA module submission is expected to be, I think, completed in Q1? It would seem like that data would need to be released soon.

Bob Ragusa (CEO)

Yeah, Harpal, do you want to take that one up?

Harpal Kumar (Chief Scientific Officer and President International)

Sure. Thank you, Doug. On NHS England's decision last year, important to reiterate that what they would have wanted to see in order to initiate a pilot at that stage was very exceptional data. They looked at a few specific metrics, of which PPV was definitely one. To remind everyone, it is not possible to look at the sort of broad utility measure of stage three and four reduction with only one year of data. That has to come with three years of data. PPV was certainly one, and you will have seen our announcements earlier this year that the PPV in that first round was substantially greater than we saw in our first Pathfinder study, which, to remind everyone, was 43%. It gives you a sense of some of the information that was seen at the time.

To reiterate, what the NHS would have wanted to see was truly exceptional data in order to accelerate. The point is they were looking at an acceleration of an implementation rather than waiting until the final study results. What they said at the time was it was not exceptional enough to accelerate that implementation, so they wanted to wait for the final study results. In answer to your second question, no, only the NHS evaluation team have seen that data so far. To the third question, yes, it will be the data from the prevalent round, only from the intervention arm, that will be part of our FDA PMA submission package in Q1 next year. That does not mean it will be in the public domain at that point.There won't be any data in the public domain from NHS-Galleri until we have the final study results.

Bob Ragusa (CEO)

Yeah, and we're expecting that full readout in the mid-part of 2026.

Operator (participant)

Your next question is your final question, and will come from Bradley Bowers with Mizuho.

Bradley Bowers (VP and and Equity Research Analyst)

Hey, thanks for getting me in here. Just one on volumes and then maybe one a little high level. Just on volumes, acceleration here, outgrew some seasonality. Just wanted to hear what's kind of driving volumes here, what cohorts, and then how we should think about that into next year. And if international, we'll have a tangible contribution next year.

Bob Ragusa (CEO)

Yeah, Aaron, you maybe want to take the volume question and maybe dish off to Andy as well.

Aaron Freidin (CFO)

Yeah, I mean, I think Andy and I can tattoo that. Yeah, you're right. Volumes were up 39% for the quarter year-over-year. Andy's kind of touched on already where we're seeing more provider pull through and so on for the reasons that you stated. As far as international goes, there's very minimal international volumes today. It's an area that we're focusing on. As you see through the Samsung engagement and so on, we're being opportunistic there, and we're excited about what could be. It's probably a little too early right now to say what volumes will be next year. We're getting, as Andy said earlier, momentum internationally and lots of momentum domestically. Andy, anything you want to add? Nothing else to add. I think we covered it.

Bradley Bowers (VP and and Equity Research Analyst)

Thanks. If I could just double-click on the SYMPLIFY study, I think that's actually an interesting data point that going back and following up patients who were previously identified as false positives. I mean, were these patients, I guess, that went under typical protocols? Why were these cancers, I guess, kind of missed in follow-up? There are, I guess, some serious implications about the possibility to detect cancers even earlier than the current paradigm or what follow-up testing would be. I just wanted to hear your thoughts on that.

Bob Ragusa (CEO)

Yeah, Harpal, why don't you go through that?

Harpal Kumar (Chief Scientific Officer and President International)

Yeah. I mean, look, first of all, it is, as you say, a really interesting set of data, and it's relatively recent, so we're still examining some of the detailed information. I think one of the most significant points is that many of these patients are presenting with very nonspecific symptoms. These are the types of symptoms that could be indicative of cancer, and often they are, but they could also be indicative of many other conditions. Primary care physicians, when they see patients like this and they suspect cancer, will typically refer them to where they think that cancer is likely to be in the body. Given these nonspecific symptoms, many of them could be several different sites.

What happens is a patient gets referred to a particular type of clinic, and they get worked up in that clinic for that type of cancer. If nothing is found at that point, they may not be worked up any further. Because this was an observational study, we did not provide the CSO prediction to the clinician at the time. What we have subsequently determined from this further follow-up is, had we done so, it would have provided a directional investigation in all but one of the patients, which we think is a really encouraging development in terms of that CSO prediction capability. I would just add to Harpal's point the value of the CSO because what we have also seen in centers that have adopted Galleri in the U.S. is physician confidence growing in the value of that CSO.

We've seen real-world publications from both Mayo and Dana-Farber where their PPVs have been in excess of 70%. That physician confidence in the value of the CSO really means they really work that diagnostic workup to a final resolution. What we've seen there, therefore, is more cancers being diagnosed due to that guided diagnostic follow-up from the CSO.

Operator (participant)

We have time for one more question, so we'll return to Doug Schenkel with Wolfe Research. You may unmute.

Doug Schenkel (Managing Director and Senior Research Analyst)

Okay. Thank you, guys, for taking me back in the queue. I think it's an Aaron question. Cost of screening revenue, I think in dollar terms, it was down $3 million relative to Q2. That's kind of a mid-teens decline sequentially on a per-test basis. I think it was down 28% on a per-test basis year-over-year. I just want to make sure at least I'm in the right ballpark in doing the math. If so, that's pretty impressive and remarkable. Can you just share how you're getting there and the durability and the trajectory from here? Thank you.

Aaron Freidin (CFO)

Good. I'm sorry to jump up.

Bob Ragusa (CEO)

Yeah, and I was going to say Aaron talked a little bit about that in the preparatory marks. Yeah, Aaron, why don't you go into a little more detail on that?

Aaron Freidin (CFO)

Yeah. I mean, Doug, I think it's really an example of what we've been saying for a year now about the platform that we've built for high throughput, the capacity that we have to run a million samples a year, and just what higher volumes will show from a fixed cost leverage perspective. Comparing year-over-year, you've also got the variable cost impact that we've been talking about. We've kind of talked about that as a four- to five-times more samples per flow cell compared to the older version. It is really a demonstration of what more volume will do to our fixed cost leverage and why we're really focused on driving more volume, getting more access out there because we've got the infrastructure to handle it, and the margins are there for the take.

Operator (participant)

There are no further questions at this time. I will now turn the call back to GRAIL for closing remarks.

Bob Ragusa (CEO)

Thank you, everyone, for joining today's call.

Operator (participant)

Ladies and gentlemen, this concludes the call, and you may now disconnect.