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      GRAIL Reports Third Quarter 2024 Financial Results

      GRAIL, Inc. is a healthcare company whose mission is to detect cancer early when it can be cured. (PRNewsfoto/GRAIL, Inc.)

      News provided by

      GRAIL, Inc.

      Nov 12, 2024, 16:06 ET

      Share this article

      Share this article


      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.

      SOURCE GRAIL, Inc.

      Modal title

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