Grail's (GRAL) stock is dropping 6% after the company reported fourth-quarter revenue above analysts' average estimate and noted that Tricare, a large health insurance provider, had decided to provide coverage of Grail's Galleri test for a portion of its members. However, the company's 2024 screening revenue growth came in at the midpoint of its previous guidance range, and some investors may have expected the firm to report screening sales above that level.

Galleri is a multi-cancer early detection test.

Coverage of Grail's Test by Tricare

Tricare agreed to cover the Galleri test for its members who are 50 years old or older and who have an elevated risk of contracting cancer, Grail stated. Tricare covers active duty service members, retired service members, and their families. It also covers certain former spouses and survivors of service members.

A Look at Grail's Q4 Results

The company's Q4 revenue jumped 26% versus the same period a year earlier to $38.3 million, well above analysts' average estimate of $34.4 million. Moreover, the company's gross profit, excluding some items, climbed 17% year-over-year to $17.9 million.

But GRAL's 2024 screening revenue climbed 45%, coming in only at the midpoint of the company's previous guidance of 40%-50% growth.

Grail's Comments

"We grew U.S. Galleri revenue 45% year-over-year (in 2024), selling more than 137,000 Galleri tests," CEO Bob Ragusa said on the company's earnings call.

"We are focused on driving growth efficiently and reducing our spending profile. In 2024, we made significant strides (in these areas), and we plan to continue to reduce burn in 2025," CFO Aaron Freidin reported on the call.

While we acknowledge the potential of GRAL, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GRAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ ALSO  8 Best Wide Moat Stocks to Buy Now  and  30 Most Important AI Stocks According to BlackRock Disclosure: The author owns shares of GRAL but has no intention of trading them in the next 48 hours. This article is originally published at Insider Monkey.