GH Q2 Deep Dive: Strong Volume Growth and Product Expansion Amid Profitability Challenges

Diagnostics company Guardant Health (NASDAQ:GH) announced better-than-expected revenue in Q2 CY2025, with sales up 30.9% year on year to $232.1 million. The company’s full-year revenue guidance of $920 million at the midpoint came in 3.9% above analysts’ estimates. Its non-GAAP loss of $0.44 per share was 14.5% above analysts’ consensus estimates.

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StockStory’s Take

Guardant Health’s second quarter results reflected robust demand across its core oncology and screening businesses, yet the market responded negatively. Management highlighted the rapid adoption of Guardant360 Liquid and Reveal, and emphasized the expansion of its biopharma partnerships. Co-CEO Helmy Eltoukhy attributed volume growth to the “steady cadence of new app introductions” and improvements in test capabilities, while Chief Financial Officer Michael Bell noted a significant turnaround in gross margins for Reveal and Shield products, driven by operational efficiencies and reimbursement improvements. Despite these tailwinds, the company’s continued operating losses and reinvestment strategy appeared to weigh on investor sentiment.

Looking ahead, Guardant Health’s raised guidance is supported by expectations for sustained oncology volume growth, commercial acceleration of Shield, and investments to scale its sales force. Management remains focused on expanding guideline inclusion for Shield and driving broader payer adoption. Co-CEO AmirAli Talasaz said, “We are very confident about guideline inclusion,” while Bell underscored the intent to reinvest gross margin gains to “accelerate our commercial infrastructure build-out.” The company’s outlook also factors in ongoing R&D activity for new product versions and continued focus on cost management to progress toward long-term profitability goals.

Key Insights from Management’s Remarks

Management attributed the positive revenue performance to broad-based adoption of its oncology and screening tests, driven by new product features and commercial execution. Improved gross margins in core products and progress in biopharma partnerships also contributed.

• Oncology test momentum: Guardant360 Liquid’s growth accelerated for the fourth consecutive quarter, attributed to expanded clinical applications and technical enhancements through the Smart Liquid Biopsy platform. The introduction of 11 new applications helped drive higher utilization among oncologists.
• Reveal adoption and reimbursement: Reveal, Guardant’s tissue-free minimal residual disease (MRD) test, emerged as the fastest-growing oncology product, with management citing expanded clinical data and Medicare coverage for colorectal cancer surveillance as key to higher volume and improved margins.
• Shield screening traction: The Shield blood test for colorectal cancer screening maintained high patient adherence and strong physician uptake, supported by the recent National Comprehensive Cancer Network (NCCN) guideline inclusion. The company also reported significant improvements in Shield’s average selling price and gross margin due to changes in Medicare reimbursement and payer mix.
• Biopharma and data growth: Guardant’s biopharma and data segment delivered a record quarter, benefiting from new companion diagnostic deals and increased demand for methylation analysis. Management sees this as a robust pipeline for near-term and long-term growth.
• Operational leverage and reinvestment: While gross margins improved, Bell highlighted ongoing investments in commercial and R&D infrastructure, particularly in sales force expansion and Shield commercialization. Operating expenses rose as a result, consistent with management’s strategy to prioritize growth over short-term profitability.

Drivers of Future Performance

Guardant Health’s outlook is driven by continued expansion of oncology and screening test adoption, investments in commercial infrastructure, and the pursuit of broader payer and guideline inclusion.

• Sales force expansion: Management plans to grow its Shield commercial team to over 250 representatives by year-end to deepen penetration in colorectal cancer screening and support broader physician adoption. This investment is expected to accelerate Shield volume growth but will increase sales and marketing expenses.
• Guideline and payer inclusion: The company is prioritizing efforts to secure additional national guideline endorsements and commercial payer coverage for Shield and Reveal. Management believes that inclusion in guidelines such as the American Cancer Society (ACS) and U.S. Preventive Services Task Force (USPSTF) could unlock significant incremental demand, though timing remains uncertain.
• Product pipeline and regulatory milestones: Ongoing R&D activity for Shield V2 and multi-cancer early detection (MCED) tests is expected to provide future growth opportunities. However, management indicated that timelines for regulatory submissions and approvals could shift as the company balances commercial momentum with development priorities.

Catalysts in Upcoming Quarters

Looking forward, our analysts will be closely monitoring (1) the pace of Shield’s commercial adoption and the effectiveness of the expanded sales force, (2) progress in securing additional national guideline endorsements and broader payer coverage for Shield and Reveal, and (3) the pipeline of new product launches and regulatory milestones, including Shield V2 and multi-cancer early detection. Continued improvements in operating leverage and cost management will also be key areas of focus as Guardant Health executes its growth strategy.

Guardant Health currently trades at $54.10, up from $45.23 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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