Grail (GRAL) Q2 2025: Gallery Repeat Testing Climbs to 25%, Powering Evidence-Driven Expansion
Grail’s Q2 marked a pivotal step as repeat Gallery test rates rose to 25%, underlining both product stickiness and growing clinical acceptance. Robust top-line clinical results from large-scale studies reinforce the company’s leadership in multi-cancer early detection (MSED), while operational discipline and channel expansion—such as Quest and Everly Well—support an increasingly scalable model. Upcoming clinical data readouts and regulatory milestones will determine the pace and breadth of future adoption, with cash burn improvements extending Grail’s runway through 2028.
Summary
- Clinical Validation Momentum: Large-scale studies confirm higher positive predictive value and detection rates for Gallery.
- Channel Expansion Drives Uptake: Quest and Everly Well integrations are accelerating provider adoption and order depth.
- Cash Discipline Supports Milestones: Lowered burn guidance extends cash runway into 2028, supporting pivotal regulatory submissions.
Performance Analysis
Grail’s Q2 2025 delivered double-digit revenue growth, driven by a 22% increase in screening revenue and strong commercial uptake of the Gallery test. U.S. Gallery revenue comprised the vast majority of sales, demonstrating both scale and market focus. Test volumes exceeded 45,000 for the quarter, with cumulative prescriptions surpassing 370,000 since launch, reflecting traction among more than 15,000 healthcare providers. Notably, repeat testing now accounts for over 25% of Gallery’s volume, a key indicator of both clinical confidence and patient engagement in annual screening—a crucial lever for sustainable, recurring revenue in diagnostics.
Operationally, Grail continues to optimize cost structure despite a 6% decline in average selling price (ASP) and elevated reprocessing costs tied to the rollout of its automated testing platform. The company improved net loss by 93% year-over-year, supported by a $28 million impairment and $14.2 million in stock-based compensation, while adjusted gross profit remained stable. Cash burn guidance was tightened to $310 million for the year, reflecting ongoing cost discipline and improved operational leverage. With $606 million in cash, Grail’s runway is now projected through 2028, providing ample cushion for regulatory and commercialization milestones.
- Repeat Testing Surge: 25% of test volume now comes from returning patients, up from 20% last quarter.
- Channel Leverage: 7% of Q2 orders flowed through Quest Diagnostics, with higher average prescriber depth.
- Cost Structure Evolution: Platform automation is lowering variable costs, partially offsetting ASP declines and initial reprocessing inefficiencies.
The combination of clinical validation, expanding provider channels, and disciplined cash management positions Grail for continued momentum, though scale-up execution and payer/reimbursement hurdles remain critical watchpoints.
Executive Commentary
"Gallery test orders continue to grow at a strong clip with more than 45,000 gallery commercial tests sold in the second quarter... We remain on track for continued commercial growth in 2025."
Bob Ragusa, Chief Executive Officer
"Net loss for the quarter was $114 million, an improvement of 93% as compared to the second quarter of 2024... our cash runway extends into 2028, enabling us to achieve major planned clinical and regulatory milestones."
Aaron Frieden, Chief Financial Officer
Strategic Positioning
1. Clinical Evidence Leadership
Grail’s competitive edge is anchored in robust, large-scale prospective studies—such as Pathfinder 2 and the NHS Gallery trial—which have now demonstrated not only higher positive predictive value (PPV) but also greater cancer detection rates compared to earlier studies. The company’s focus on methylation-based cell-free DNA technology, validated in real-world intended use populations, has proven durable across both commercial and clinical settings. This evidence bar sets a high hurdle for competitors and underpins regulatory and payer discussions.
2. Channel and Platform Expansion
Strategic partnerships with Quest Diagnostics and Everly Well are materially expanding Grail’s reach. Quest integration reduced friction for providers, with 7% of Q2 orders now routed through its platform and higher per-provider order rates. Everly Well’s digital health channel, with millions of subscribers, is positioned to amplify direct-to-patient and telemedicine-driven demand. These channels not only broaden access but also diversify Grail’s commercial mix, supporting both volume growth and resilience.
3. Operational Scalability and Automation
Grail’s move to an industrial-scale, automated testing platform is designed to support future demand at lower marginal costs. While initial rollout increased turnaround times and reprocessing costs for a subset of samples, management is implementing fixes to streamline operations. This automation is essential to achieving cost efficiencies and margin expansion as test volumes scale, particularly ahead of broader reimbursement and international expansion.
4. Regulatory and Reimbursement Readiness
The pathway to FDA approval and broad reimbursement is clear but complex. The upcoming modular PMA (pre-market approval) submission for Gallery is slated for early 2026, with pivotal data from the NHS Gallery study to follow mid-year. Management is aligning customer support and commercial infrastructure to support a post-approval environment, with ongoing cost discipline to drive toward commercial breakeven.
Key Considerations
Grail’s Q2 underscores a business at the intersection of clinical validation, commercial scale, and operational discipline. The next 12-18 months will be defined by regulatory milestones, payer decisions, and the ability to execute at scale.
Key Considerations:
- Evidence Barriers Remain High: Continued clinical validation will be essential for FDA approval and payer adoption, with the NHS Gallery trial as the next major catalyst.
- Provider and Patient Adoption: Repeat testing growth and channel expansion signal increasing market acceptance, but reimbursement is still a gating factor for mass adoption.
- Cost Structure Optimization: Automation is lowering variable costs, but near-term inefficiencies must be addressed to achieve margin targets as volumes grow.
- Cash Runway and Capital Allocation: Lowered burn guidance and a 2028 runway enable Grail to pursue milestones without near-term funding risk, but discipline will be needed as commercialization ramps.
Risks
Grail faces substantial execution and market risks as it approaches pivotal regulatory and payer inflection points. Delays in FDA approval, slower-than-expected adoption by providers or payers, and operational setbacks in scaling automation could materially impact growth and cash burn. Reimbursement remains the largest external risk, with clinical utility data and payer engagement still works in progress as flagged during Q&A.
Forward Outlook
For Q3 2025, Grail expects:
- Continued sequential growth in Gallery test volumes and commercial revenue, with seasonal moderation possible.
- Further ramp in channel-driven orders, particularly from Quest and Everly Well.
For full-year 2025, management updated guidance:
- Cash burn capped at $310 million, improved from prior guidance.
Management highlighted several factors that will shape the outlook:
- Upcoming clinical data presentations at ESMO in October and the 2025 Analyst Day in November.
- Completion of the modular PMA submission and the NHS Gallery study readout in 2026 as pivotal milestones for regulatory and commercial expansion.
Takeaways
Grail’s Q2 signals a business maturing into its evidence-driven growth phase, with expanding repeat usage, robust channel traction, and a clear regulatory path. The next phase will be defined by the translation of clinical validation into payer coverage, international expansion, and sustainable operating leverage.
- Clinical Validation Drives Differentiation: Large-scale studies reinforce Gallery’s performance, supporting both regulatory approval and commercial confidence.
- Commercial Model Scaling: Channel partnerships and automation are building a scalable foundation, but reimbursement and operational execution remain critical hurdles.
- Watch for NHS Data and FDA Progress: Mid-2026 NHS Gallery results and FDA submission outcomes will be decisive for Grail’s long-term trajectory and international ambitions.
Conclusion
Grail’s Q2 2025 demonstrates a business executing on clinical, commercial, and operational fronts, with repeat testing and channel growth as clear signals of product-market fit. As the company approaches pivotal regulatory and payer milestones, disciplined cash management and evidence-driven strategy will be key to unlocking the next phase of growth.
Industry Read-Through
Grail’s clinical and commercial progress underscores the rising bar for multi-cancer early detection (MSED) entrants, with large-scale prospective validation now a prerequisite for both regulatory and payer acceptance. Channel integration with digital health and diagnostics platforms is emerging as a critical lever for adoption, suggesting that future winners will combine clinical evidence, operational scale, and broad access. For diagnostics peers, the focus must shift from pilot studies to population-scale validation and scalable commercial models, as payers and providers increasingly demand real-world proof and seamless integration.