GRAIL Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

GRAIL (GRAL) reported Q3 2024 financial results with total revenue of $28.7 million, up 38% year-over-year. Galleri revenue grew 52% to $25.4 million, with over 250,000 tests sold since launch. The company posted a net loss of $(125.7) million, including $34.6 million in amortization and $19.0 million in restructuring charges. Gross loss was $(22.2) million, while adjusted gross profit reached $11.8 million. The company maintains a strong cash position of $853.6 million, providing runway into 2028.

Positive

• Revenue growth of 38% YoY to $28.7 million
• Galleri revenue increased 52% YoY to $25.4 million
• Strong cash position of $853.6 million providing runway into 2028
• Net loss improved by 86% ($765.8 million) YoY
• Adjusted EBITDA improved by 14% YoY

Negative

• Net loss of $125.7 million in Q3
• Gross loss of $22.2 million
• Negative adjusted EBITDA of $108.2 million
• Restructuring charge of $19.0 million

Insights

Financial Analyst

The Q3 results reveal a mixed financial picture for GRAIL. While $28.7M in total revenue shows strong 38% YoY growth and Galleri's $25.4M revenue demonstrates robust 52% growth, the company still faces significant losses. The net loss of $125.7M, though improved by 86% YoY, indicates ongoing commercialization challenges. The $853.6M cash position provides substantial runway into 2028, but the negative adjusted EBITDA of $108.2M suggests continued cash burn.

The milestone of 250,000 Galleri tests sold demonstrates market traction, but the gross loss of $22.2M highlights the need for operational efficiency improvements. The restructuring charge of $19.0M signals management's commitment to cost optimization, which is important for achieving profitability. The focus on FDA PMA submission and reimbursement strategies will be pivotal for long-term commercial viability.

Medical Research Analyst

The clinical validation data from the REFLECTION study shows promising results with a 42.9% positive predictive value in the VA cohort, significantly higher than many existing cancer screening methods. The preferential detection of aggressive prostate cancers, particularly high-grade cases requiring intervention, positions Galleri as a potentially valuable tool in cancer diagnostics.

The early-stage detection rate (stages I-III) in over half of identified cases is particularly significant, as earlier detection typically correlates with better treatment outcomes. However, the 1.3% signal detection rate warrants further investigation to understand the test's sensitivity across different population demographics. The ongoing registrational studies will be important for FDA approval and widespread clinical adoption.

Galleri Revenue Grew 52% Year-Over-Year to $25.4 Million

Commercial Galleri Sales Surpassed 250,000 Tests Since Launch

Cash Balance of $853.6 Million Provides Runway Into 2028

MENLO PARK, Calif., Nov. 12, 2024 /PRNewswire/ -- GRAIL, Inc. (Nasdaq: GRAL), a healthcare company whose mission is to detect cancer early when it can be cured, today reported business and financial results for the third quarter 2024.

Revenue in the third quarter was $28.7 million, representing 38% growth year over year, and revenue for Galleri was $25.4 million, representing 52% growth year over year. Net loss for the quarter was $(125.7) million, which includes amortization of Illumina acquisition-related intangible items of $34.6 million and a restructuring charge of $19.0 million. Gross loss was $(22.2) million. Non-GAAP adjusted gross profit was $11.8 million and non-GAAP adjusted EBITDA was $(108.2) million.¹

"In our first operating quarter as a public company, GRAIL continued to deliver U.S. commercial growth, with more than 250,000 Galleri^® tests sold as of September 30. Over the quarter, we reduced our expense base and continued to advance our mission," said Bob Ragusa, Chief Executive Officer at GRAIL. "We will continue to focus on cost management as we work towards completing our registrational studies to support our U.S. FDA PMA submission and pursuing broad reimbursement."

For the three months ended September 30, 2024, as compared to the three months ended October 1, 2023, GRAIL reported:

• Revenue: Total revenue, comprised of screening and development services revenue, was $28.7 million, an increase of $7.9 million or 38%.
• Net loss: Net loss was $125.7 million, an improvement of $765.8 million or 86%.
• Gross loss: Gross loss was $(22.2) million, an improvement of $4.8 million or 18%.
• Adjusted gross profit¹: Adjusted gross profit was $11.8 million, an increase of $4.8 million or 68%.
• Adjusted EBITDA¹: Adjusted EBITDA was $(108.2) million, an improvement of $17.9 million or 14%.
• Cash position: Cash and cash equivalents totaled $853.6 million as of September 30, 2024.

Recent business highlights include:

• Published results of GRAIL's Galleri Multi-Cancer Early Detection Blood Test in prostate cancer in JCO Precision Oncology. The analysis of the study demonstrated that when Galleri detected prostate cancer, most were high-grade and clinically significant, and usually indicated an aggressive disease where additional diagnostic evaluation is necessary. These data, previously shared at AACR in March, build on earlier findings regarding Galleri's preferential detection of aggressive, deadly cancers.
• Presented early results from REFLECTION real-world experience study of Galleri at the Early Detection of Cancer Conference in October. This initial analysis included data from seven US Department of Veterans Affairs (VA) sites with 180 days of post-test follow-up. The signal detection rate for the veteran cohort was 1.3% and the positive predictive value (PPV) of the test was 42.9%. More than half of the cases were identified at early stages (I-III).

Conference Call and Webcast
A webcast and conference call will be held today, November 12, 2024, at 1:30 p.m. PT / 4:30 p.m. ET. Individuals interested in listening to the conference call may access it on the investor relations section of GRAIL's website at investors.grail.com.

A replay of the webcast will be available on GRAIL's website for 30 days.

1 See "Non-GAAP Disclosure" and the associated reconciliations for important information about our use of non-GAAP measures.

 

About GRAIL
GRAIL, Inc. is a healthcare company whose mission is to detect cancer early, when it can be cured. GRAIL is focused on alleviating the global burden of cancer by using the power of next-generation sequencing, population-scale clinical studies, and state-of-the-art machine learning, software, and automation to detect and identify multiple deadly cancer types in earlier stages. GRAIL's targeted methylation-based platform can support the continuum of care for screening and precision oncology, including multi-cancer early detection in symptomatic patients, risk stratification, minimal residual disease detection, biomarker subtyping, treatment and recurrence monitoring. GRAIL is headquartered in Menlo Park, CA with locations in Washington, D.C., North Carolina, and the United Kingdom. GRAIL's common stock is listed under the ticker symbol "GRAL" on the NASDAQ Stock Exchange.

For more information, visit grail.com.

About Galleri® 
The Galleri multi-cancer early detection test is a proactive tool to screen for cancer. With a simple blood draw, the Galleri test can identify DNA shed by cancer cells, which can act as a unique "fingerprint" of cancer, to help screen for some of the deadliest cancers that don't have recommended screening today, such as pancreatic, esophageal, ovarian, liver, and others.* The Galleri test can be used to screen for cancer before a person becomes symptomatic, when cancer may be more easily treated and potentially curable. The Galleri test can indicate the origin of the cancer, giving healthcare providers a roadmap of where to explore further. The Galleri test requires a prescription from a licensed healthcare provider and should be used in addition to recommended cancer screenings such as mammography, colonoscopy, prostate-specific antigen (PSA) test, or cervical cancer screening. The Galleri test is recommended for adults with an elevated risk for cancer, such as those aged 50 or older.

For more information, visit galleri.com.

* Sensitivity in study participants with – Pancreas cancer: 83.7% overall (61.9% stage I, 60.0% stage II, 85.7% stage III, 95.9% stage IV). Esophagus cancer 85.0% overall (12.5% stage I, 64.7% stage II, 94.7% stage III, 100% stage IV). Ovary cancer: 83.1% overall (50.0% stage I, 80.0% stage II, 87.1% stage III, 94.7% stage IV). Liver/bile duct cancer: 93.5% overall (100% stage I, 70.0% stage II, 100% stage III, 100% stage IV).

Laboratory/Test Information
GRAIL's clinical laboratory is certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and accredited by the College of American Pathologists. The Galleri test was developed, and its performance characteristics were determined by GRAIL. The Galleri test has not been cleared or approved by the U.S. Food and Drug Administration. GRAIL's clinical laboratory is regulated under CLIA to perform high-complexity testing. The Galleri test is intended for clinical purposes.

Non-GAAP Disclosure
In addition to our financial results, this press release also includes financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Our non-GAAP financial disclosure includes Adjusted Gross Profit (Loss) and Adjusted EBITDA. We encourage investors to carefully consider our results under GAAP in conjunction with our supplemental non-GAAP information and the reconciliation between these presentations.

• Adjusted Gross Profit/(Loss) is a key performance measure that our management uses to assess our operational performance, as it represents the results of revenues and direct costs, which are key components of our operations. We believe that this non-GAAP financial measure is useful to investors and other interested parties in analyzing our financial performance because it reflects the gross profitability of our operations, and excludes the indirect costs associated with our sales and marketing, product development, general and administrative activities, and depreciation and amortization, and the impact of our financing methods and income taxes.
   
  We calculate Adjusted Gross Profit/(Loss) as gross profit/(loss) (as defined below) adjusted to exclude amortization of intangible assets and stock-based compensation allocated to cost of revenue. Adjusted Gross Profit/(Loss) should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income or loss from operations, net earnings or loss and other GAAP measures of income (loss) or profitability. The following table presents a reconciliation of gross loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted Gross Profit.
   
• Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes. We believe that this non-GAAP financial measure is useful to investors and other interested parties in analyzing our financial performance because it provides a comparable overview of our operations across historical periods. In addition, we believe that providing Adjusted EBITDA, together with a reconciliation of net income (loss) to Adjusted EBITDA, helps investors make comparisons between our company and other companies that may have different capital structures, different tax rates, different operational and ownership histories, and/or different forms of employee compensation.
  
  Adjusted EBITDA is used by our management team as an additional measure of our performance for purposes of business decision-making, including managing expenditures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our financial results that may not be shown solely by period-to-period comparisons of net income or income from operations. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, and may not be directly comparable to similarly titled metrics used by other companies.
  
  Adjusted EBITDA should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income or loss from operations, net earnings or loss and other U.S. GAAP measures of income (loss). Additionally, it is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest and tax payments. Further, our definition of Adjusted EBITDA may differ from similarly titled measures used by other companies and therefore may not be comparable among companies. The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with U.S. GAAP, to Adjusted EBITDA on a consolidated basis.

Full reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in tabular form below.

Forward-Looking Statements
This press release contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "aim," "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should," "would," or "will," the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include expectations and projections of our future financial performance, future tests or products, technology, clinical studies, regulatory compliance, potential market opportunity, anticipated growth strategies, restructuring costs, sufficiency of cash on hand to finance our business, cost savings, budgets and strategies, restructuring and stock-based compensation costs, impact of the restructuring on our operations and growth and anticipated trends in our business.

These statements are only predictions based on our current expectations and projections about future events and trends. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially and adversely from those expressed or implied by the forward-looking statements, including those factors and numerous associated risks discussed under the section entitled "Risk Factors" in our Quarterly Report on Form 10-Q for the period ended September 30, 2024 (the "Form 10-Q"). Moreover, we operate in a dynamic and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results, level of activity, performance, or achievements to differ materially and adversely from those contained in any forward-looking statements we may make.

Forward-looking statements relate to the future and, accordingly, are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Although we believe the expectations and projections expressed or implied by the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Except to the extent required by law, we undertake no obligation to update any of these forward-looking statements after the date of this press release to conform our prior statements to actual results or revised expectations or to reflect new information or the occurrence of unanticipated events.

GRAIL Condensed Consolidated Balance Sheets
(in thousands, except for per share data)	September 30, 2024		December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$                 853,551		$                    97,287
Accounts receivables, net	15,211		16,942
Supplies	21,213		21,695
Prepaid expenses and other current assets	19,721		20,141
Total current assets	909,696		156,065
Property and equipment, net	73,886		84,995
Operating lease right-of-use assets	70,625		84,386
Restricted cash	3,918		4,225
Intangibles assets, net	2,051,473		2,687,223
Goodwill	—		888,936
Other non-current assets	8,356		7,984
Total assets	$              3,117,954		$              3,913,814
Liabilities and stockholders'/member's (deficit) equity
Current liabilities:
Accounts payable	$                     7,321		$                   19,673
Accrued liabilities	71,830		73,806
Incentive plan liabilities	—		54,513
Operating lease liabilities, current portion	13,524		14,809
Other current liabilities	1,593		809
Total current liabilities	94,268		163,610
Operating lease liabilities, net of current portion	58,667		69,598
Deferred tax liabilities, net	375,122		32,921
Other non-current liabilities	2,261		1,498
Total liabilities	530,318		267,627
Preferred stock, par value of $0.001 per share; 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023	—		—
Common stock $0.001 par value per share, 1,500,000,000 shares authorized, 33,203,744 shares issued and outstanding as of September 30, 2024, no shares authorized, issued and outstanding as of December 31, 2023	33		—
Additional paid-in capital	12,291,681		—
Member's equity	—		11,421,446
Accumulated other comprehensive income	2,186		1,066
Accumulated deficit	(9,706,264)		(7,776,325)
Total stockholders'/member's equity	2,587,636		3,646,187
Total liabilities and stockholders'/member's equity	3,117,954		3,913,814

 

GRAIL Condensed Consolidated Statements of Operations (Unaudited)
	Three Months Ended				Nine months ended
(in thousands except for per share data)	September 30, 2024		October 1, 2023		September 30, 2024		October 1, 2023
Revenue:
Screening revenue	$            25,374		$            16,745		$            77,076		$            52,344
Development services revenue	3,278		3,977		10,267		10,435
Total revenue	28,652		20,722		87,343		62,779
Costs and operating expenses:
Cost of screening revenue (exclusive of amortization of intangible assets)	15,970		12,829		45,481		34,379
Cost of development services revenue	1,442		1,489		3,499		4,944
Cost of revenue — amortization of intangible assets	33,473		33,473		100,417		100,417
Research and development	78,231		80,076		274,052		254,659
Sales and marketing	35,625		36,597		123,433		123,169
General and administrative	47,418		50,183		171,745		147,534
Goodwill and intangible impairment	—		718,466		1,420,936		718,466
Total costs and operating expenses	212,159		933,113		2,139,563		1,383,568
Loss from operations	(183,507)		(912,391)		(2,052,220)		(1,320,789)
Other income (expense):
Interest income	11,661		2,529		17,367		6,603
Other expense, net	561		196		514		421
Total other income, net	11,100		2,333		16,853		6,182
Loss before income taxes	(172,407)		(910,058)		(2,035,367)		(1,314,607)
Benefit from income taxes	46,719		18,610		105,428		36,449
Net loss	$        (125,688)		$        (891,448)		$    (1,929,939)		$    (1,278,158)
Net loss per share — Basic and Diluted	$              (3.94)		$            (28.71)		$           (61.61)		$           (41.17)
Weighted average shares of common stock—   basic and diluted	31,880,054		31,049,148		31,326,117		31,049,148

 

GRAIL Condensed Consolidated Statements of Cash Flows (Unaudited)
	Nine Months Ended
(in thousands)	September 30, 2024		October 1, 2023
Net cash used by operating activities	$          (483,666)		$          (466,902)
Net cash used by investing activities	(4,905)		(8,992)
Net cash provided by financing activities	1,244,300		377,780
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	228		49
Net increase (decrease) in cash, cash equivalents, and restricted cash	$            755,957		$            (98,065)
Cash, cash equivalents and restricted cash — beginning of period	$            101,512		$            246,128
Cash, cash equivalents and restricted cash — end of period	$            857,469		$            148,063

 

GRAIL Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2024		October 1, 2023		September 30, 2024		October 1, 2023
Gross loss (1)	$          (22,233)		$          (27,069)		$          (62,054)		$          (76,961)
Amortization of intangible assets	33,473		33,473		100,417		100,417
Stock-based compensation	578		625		1,522		1,448
Adjusted Gross Profit	$            11,818		$              7,029		$            39,885		$            24,904

(1)

Gross profit/(loss) is calculated as total revenue less cost of revenue (exclusive of amortization of intangible assets), cost of revenue—related parties, and cost of revenue—amortization of intangible assets.

 

GRAIL Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2024		October 1, 2023		September 30, 2024		October 1, 2023
Net loss	$        (125,688)		$        (891,448)		$    (1,929,939)		$    (1,278,158)
Adjusted to exclude the following:
Interest income	(11,661)		(2,529)		(17,367)		(6,603)
Benefit from income tax expense	(46,719)		(18,610)		(105,428)		(36,449)
Amortization of intangible assets (1)	34,583		34,583		103,750		103,750
Depreciation	4,647		5,216		14,865		15,018
Goodwill and intangible impairment(2)	—		718,466		1,420,936		718,466
Illumina/GRAIL merger & divestiture legal and professional services costs (3)	226		2,944		22,158		11,198
Stock-based compensation (4)	17,449		25,319		72,502		72,383
Restructuring(5)	19,007		—		19,007		—
Adjusted EBITDA	$        (108,156)		$        (126,059)		$        (399,516)		$        (400,395)

(1)	Represents amortization of intangible assets, including developed technology and trade names.
(2)	Reflects impairment of the goodwill and intangible assets recognized as a result of Illumina's acquisition of the Company in August 2021 ("the Acquisition").
(3)	Represents legal and professional services costs associated with the Acquisition and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and legal and professional services costs associated with the divestiture.
(4)	Represents all stock-based compensation recognized on our standalone financial statements for the periods presented.
(5)	Represents employee severance, benefits, payroll taxes, and other costs associated with the Restructuring Plan.

 

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SOURCE GRAIL, Inc.

FAQ

What was GRAL's revenue growth in Q3 2024?

GRAL reported total revenue of $28.7 million in Q3 2024, representing 38% growth year-over-year.

How many Galleri tests has GRAL sold as of September 30, 2024?

GRAL has sold more than 250,000 Galleri tests as of September 30, 2024.

What was GRAL's cash position in Q3 2024?

GRAL reported cash and cash equivalents of $853.6 million as of September 30, 2024, providing runway into 2028.

What was GRAL's net loss in Q3 2024?

GRAL reported a net loss of $125.7 million in Q3 2024, which includes $34.6 million in amortization and $19.0 million in restructuring charges.