The Centers for Medicare & Medicaid Services (CMS) has approved Advanced Diagnostic Laboratory Test (ADLT) status for Guardant Health's Shield blood test for colorectal cancer screening, marking a significant milestone for the first FDA-approved blood-based primary screening test for colorectal cancer.
The ADLT designation, announced on Tuesday, confirms that the Shield test meets CMS criteria for innovative products providing novel clinical information that cannot be obtained by other methods. This status initiates a market-based approach to pricing for Medicare patients.
Reimbursement Details and Financial Impact
Under the new designation, Medicare will reimburse the Shield test at $1,495 for patients during the initial nine-month ADLT period beginning April 1, 2025. This represents a substantial increase from the previous reimbursement rate of $920.
During this initial period, Guardant Health will collect and submit private-payer payment rate data, which CMS will use to determine Medicare pricing beginning January 1, 2026. The established rate will remain in effect through December 31, 2027.
William Blair analyst Andrew Brackmann, who maintains an Outperform rating on Guardant Health, noted that "securing ADLT status is key to solidifying and driving ASPs incrementally higher than what was assumed in guidance." The analyst estimates the $575 increase in Medicare reimbursement could generate approximately $10 million in additional revenue.
This financial boost comes on top of Guardant Health's previously projected annual screening revenue of $25-30 million, with anticipated volumes ranging from 45,000 to 50,000 tests. The company had not factored the ADLT status and price increase into its earlier guidance.
Clinical Significance and Market Adoption
The Shield test received FDA approval in July 2024 as the first blood test authorized for primary colorectal cancer screening, offering an alternative to traditional screening methods like colonoscopy and stool-based tests.
"Obtaining ADLT status reinforces the value that our Shield blood test for colorectal cancer screening brings to patients, offering a more pleasant and convenient option that can help increase the overall screening rate and improve outcomes," said AmirAli Talasaz, Guardant Health co-CEO.
Talasaz added that the company has already observed "strong adoption by providers with Medicare-covered patient populations" and expects the CMS designation and improved reimbursement rate to accelerate investments in commercial infrastructure, expanding access to the test nationwide.
Expanding Diagnostic Portfolio
This development follows another recent coverage win for Guardant Health. In January, Palmetto GBA, a Medicare administrative contractor that administers the Molecular Diagnostics Services program (MolDX), granted coverage for the company's Guardant Reveal test, which monitors for disease recurrence in colorectal cancer patients following curative intent therapy.
The market responded positively to the ADLT status announcement, with Guardant Health's stock rising 14.5% to $41.04 following the news.
The Shield blood test represents an important advancement in colorectal cancer screening technology, potentially increasing screening rates by offering a less invasive alternative to traditional methods. With colorectal cancer remaining one of the leading causes of cancer deaths in the United States, improved screening options could have significant public health implications by enabling earlier detection and treatment.
