Q2 revenue increased 26% year over year driven
by clinical volume growth of 49%
Raises 2023 revenue guidance to $545 to $550
million
Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology
company focused on helping conquer cancer globally through use of
its proprietary tests, vast data sets and advanced analytics, today
reported financial results for the quarter ended June 30, 2023.
Second Quarter 2023 Financial Highlights
- Revenue of $137.2 million for the second quarter of 2023, an
increase of 26% over the second quarter of 2022
- Reported 43,500 tests to clinical customers and 6,700 tests to
biopharmaceutical customers in the second quarter of 2023,
representing increases of 49% and 12%, respectively, over the
second quarter of 2022
Recent Operating Highlights
- Received new commercial plan coverage from Anthem Blue Cross
and Blue Shield, Aetna, and Humana, resulting in Guardant360 now
being covered by all major U.S. commercial health insurers and
exceeding 300 million covered lives
- Announced reimbursement approval of Guardant360 CDx liquid
biopsy test in Japan for patients with advanced solid tumor
cancers
- Received first commercial plan coverage for Guardant
Reveal
- Strengthened financial position with an underwritten public
offering raising $381 million in net proceeds, ending the quarter
with $1.2 billion of cash, cash equivalents and marketable
securities
“We had another very strong quarter with revenue growing 26%
year over year, driven by strength across precision oncology where
we reached 50,000 combined tests during the quarter,” said Helmy
Eltoukhy, co-founder and co-CEO. “Our clinical volumes were driven
by growth in lung and breast cancer for Guardant360 and by rapid
year-over-year growth for Reveal and TissueNext. With this strong
momentum, we are on track to achieve cash flow breakeven in Therapy
Selection within the next 3-6 months.”
“We are continuing to make advancements in our screening
business as we spearhead a new patient-preferred category with our
Shield blood test,” said AmirAli Talasaz, co-founder and co-CEO.
“In the near-term, we remain focused on obtaining FDA approval for
the Shield test in colorectal cancer, preparing for the commercial
launch of Shield IVD in 2024 and delivering on our plans to develop
Shield into a multi-cancer test.”
Second Quarter 2023 Financial Results
Revenue was $137.2 million for the three months ended June 30,
2023, a 26% increase from $109.1 million for the three months ended
June 30, 2022. Precision oncology revenue grew 36%, driven
predominantly by an increase in clinical testing volume and
biopharma sample volume, which grew 49% and 12%, respectively, over
the prior year period. Development services and other revenue
decreased by 30%, primarily due to the timing and amount of
milestones related to our partnership agreements and the change in
companion diagnostics collaboration projects with biopharma
customers.
Gross profit, or total revenue less cost of precision oncology
testing and cost of development services and other, was $83.3
million for the second quarter of 2023, an increase of $10.9
million from $72.4 million for the corresponding prior year period.
Gross margin, or gross profit divided by total revenue, was 61%, as
compared to 66% for the corresponding prior year period. Precision
oncology gross margin was 61% in the second quarter of 2023, as
compared to 63% in the prior year period. The reduction is due to
the change in mix between clinical and biopharma revenue, as well
as the year over year change in blended clinical ASP due to the
increased proportion of volume coming from Reveal, TissueNext and
Response. Development services and other gross margin was 62% in
the second quarter of 2023, as compared to 86% in the prior year
period. The change is primarily due to the inclusion of the cost of
processing Shield LDT samples as part of our screening market
development activities.
Operating expenses were $202.9 million for the second quarter of
2023, as compared to $202.7 million for the corresponding prior
year period. Non-GAAP operating expenses were $180.5 million for
the second quarter of 2023, as compared to $176.2 million for the
corresponding prior year period.
Net loss was $72.8 million for the second quarter of 2023, as
compared to $229.4 million for the corresponding prior year period.
Net loss per share was $0.67 for the second quarter of 2023, as
compared to $2.25 for the corresponding prior year period. The year
over year reduction in net loss is primarily due to a charge of
$99.8 million recorded in the second quarter of 2022 to reflect an
increase in the fair value of the outstanding shares in our AMEA
joint venture which we acquired in June 2022, and other income of
$64.0 million reflecting an unrealized gain related to our
strategic equity investment in Lunit, Inc., our AI partner for
TissueNext, which has seen a substantial increase in its share
price over the last few months.
Non-GAAP net loss was $88.7 million for the second quarter of
2023, as compared to $101.8 million for the corresponding prior
year period. Non-GAAP net loss per share was $0.82 for the second
quarter of 2023, as compared to $1.00 for the corresponding prior
year period.
Adjusted EBITDA loss was $85.2 million for the second quarter of
2023, as compared to a $94.3 million loss for the corresponding
prior year period.
Free cash flow for the second quarter of 2023 was negative
$100.5 million. Cash, cash equivalents and marketable debt
securities were $1.2 billion as of June 30, 2023.
2023 Guidance
Guardant Health now expects full year 2023 revenue to be in the
range of $545 to $550 million, representing growth of 21% to 22%
compared to full year 2022. This compares to its previous guidance
range of $535 to $545 million. Guardant Health continues to expect
full year 2023 operating expenses to be below full year 2022,
driven by efficiency measures and continued leverage of its
existing infrastructure, and free cash flow to be approximately
negative $350 million in 2023.
Webcast Information
Guardant Health will host a conference call to discuss the
second quarter and full year 2023 financial results after market
close on Thursday, August 3, 2023 at 1:30 pm Pacific Time / 4:30 pm
Eastern Time. A webcast of the conference call can be accessed at
http://investors.guardanthealth.com. The webcast will be archived
and available for replay for at least 90 days after the event.
Non-GAAP Measures
Guardant Health has presented in this release certain financial
information in accordance with U.S. Generally Accepted Accounting
Principles (GAAP) and also on a non-GAAP basis, including non-GAAP
cost of precision oncology testing, non-GAAP cost of development
services and other, non-GAAP research and development expense,
non-GAAP sales and marketing expense, non-GAAP general and
administrative expense, non-GAAP loss from operations, non-GAAP net
loss, non-GAAP net loss per share, basic and diluted, Adjusted
EBITDA, and free cash flow.
We define our non-GAAP measures as the applicable GAAP measure
adjusted for the impacts of stock-based compensation and related
employer payroll tax payments, changes in estimated fair value of
noncontrolling interest liability, contingent consideration,
acquisition related expenses, amortization of intangible assets,
fair value adjustments on marketable equity securities, impairment
of non-marketable equity securities and other related assets, and
other non-recurring items.
Adjusted EBITDA is defined as net loss adjusted for interest
income; interest expense; other income (expense), net; provision
for income taxes; depreciation and amortization expense;
stock-based compensation expense and related employer payroll tax
payments; changes in estimated fair value of noncontrolling
interest liability; adjustments relating to contingent
consideration; and, if applicable in a reporting period,
acquisition-related expenses, and other non-recurring items. Free
cash flow is defined as net cash used in operating activities in
the period less purchase of property and equipment in the
period.
We believe that the exclusion of certain income and expenses in
calculating these non-GAAP financial measures can provide a useful
measure for investors when comparing our period-to-period core
operating results, and when comparing those same results to that
published by our peers. We exclude certain other items because we
believe that these income (expenses) do not reflect expected future
operating expenses. Additionally, certain items are inconsistent in
amounts and frequency, making it difficult to perform a meaningful
evaluation of our current or past operating performance. We use
these non-GAAP financial measures to evaluate ongoing operations,
for internal planning and forecasting purposes, and to manage our
business.
These non-GAAP financial measures are not intended to be
considered in isolation from, as substitute for, or as superior to,
the corresponding financial measures prepared in accordance with
GAAP. There are limitations inherent in non-GAAP financial measures
because they exclude charges and credits that are required to be
included in a GAAP presentation, and do not present the full
measure of our recorded costs against its revenue. In addition, our
definition of the non-GAAP financial measures may differ from
non-GAAP measures used by other companies.
About Guardant Health
Guardant Health is a leading precision oncology company focused
on helping conquer cancer globally through use of its proprietary
tests, vast data sets and advanced analytics. The Guardant Health
oncology platform leverages capabilities to drive commercial
adoption, improve patient clinical outcomes and lower healthcare
costs across all stages of the cancer care continuum. Guardant
Health has commercially launched Guardant360®, Guardant360® CDx,
Guardant360 TissueNext™, Guardant360 Response™, and
GuardantINFINITY™ tests for advanced-stage cancer patients, and
Guardant Reveal™ for early-stage cancer patients. The Guardant
Health screening portfolio, including the commercially launched
Shield™ test, aims to address the needs of individuals eligible for
cancer screening. For more information, visit guardanthealth.com
and follow the company on LinkedIn and Twitter.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws, including statements
relating to Guardant Health’s future results, or regarding the
potential benefits and advantages of Guardant Health’s platforms,
assays and tests, which involve risks and uncertainties that could
cause Guardant Health’s actual results to differ materially from
the anticipated results and expectations expressed in these
forward-looking statements. These statements are based on current
expectations, forecasts and assumptions, and actual outcomes and
results could differ materially from these statements due to a
number of factors. These and additional risks and uncertainties
that could affect Guardant Health’s financial and operating results
and cause actual results to differ materially from those indicated
by the forward-looking statements made in this press release
include those discussed under the captions “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operation” and elsewhere in its Annual Report on Form
10-K for the year ended December 31, 2022, and any current and
periodic reports filed with or furnished to the Securities and
Exchange Commission thereafter. The forward-looking statements in
this press release are based on information available to Guardant
Health as of the date hereof, and Guardant Health disclaims any
obligation to update any forward-looking statements provided to
reflect any change in its expectations or any change in events,
conditions, or circumstances on which any such statement is based,
except as required by law. These forward-looking statements should
not be relied upon as representing Guardant Health’s views as of
any date subsequent to the date of this press release.
Guardant Health, Inc.
Condensed Consolidated
Statements of Operations
(unaudited)
(in thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Precision oncology testing
$
125,244
$
92,062
$
238,637
$
176,198
Development services and other
11,906
17,082
27,227
29,045
Total revenue
137,150
109,144
265,864
205,243
Costs and operating expenses:
Cost of precision oncology testing
49,357
34,375
94,463
65,059
Cost of development services and other
4,491
2,352
12,458
3,649
Research and development expense
90,359
85,455
183,487
167,212
Sales and marketing expense
71,043
73,603
147,166
138,035
General and administrative expense
41,516
43,680
81,961
84,947
Total costs and operating expenses
256,766
239,465
519,535
458,902
Loss from operations
(119,616
)
(130,321
)
(253,671
)
(253,659
)
Interest income
6,727
1,387
9,787
2,165
Interest expense
(645
)
(645
)
(1,289
)
(1,289
)
Other income (expense), net
41,259
378
39,605
330
Fair value adjustments of noncontrolling
interest liability
—
(99,785
)
—
(99,785
)
Loss before provision for income taxes
(72,275
)
(228,986
)
(205,568
)
(352,238
)
Provision for income taxes
496
446
736
422
Net loss
$
(72,771
)
$
(229,432
)
$
(206,304
)
$
(352,660
)
Net loss per share, basic and diluted
$
(0.67
)
$
(2.25
)
$
(1.95
)
$
(3.46
)
Weighted-average shares used in computing
net loss per share, basic and diluted
108,808
102,047
105,752
101,950
Guardant Health, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
(in thousands, except share
and per share data)
June 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
271,073
$
141,647
Short-term marketable debt securities
953,776
869,584
Accounts receivable, net
86,468
97,256
Inventory, net
60,529
51,598
Prepaid expenses and other current assets,
net
25,809
31,509
Total current assets
1,397,655
1,191,594
Property and equipment, net
155,741
167,920
Right-of-use assets, net
165,273
174,001
Intangible assets, net
10,361
11,727
Goodwill
3,290
3,290
Other assets, net
107,697
61,453
Total Assets
$
1,840,017
$
1,609,985
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
188,696
$
175,817
Deferred revenue
12,237
17,403
Total current liabilities
200,933
193,220
Convertible senior notes, net
1,138,678
1,137,391
Long-term operating lease liabilities
198,230
210,015
Other long-term liabilities
9,450
9,179
Total Liabilities
1,547,291
1,549,805
Stockholders’ equity:
Common stock, par value of $0.00001 per
share; 350,000,000 shares authorized as of June 30, 2023 and
December 31, 2022; 117,662,134 and 102,619,383 shares issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
1
1
Additional paid-in capital
2,169,911
1,742,114
Accumulated other comprehensive loss
(8,469
)
(19,522
)
Accumulated deficit
(1,868,717
)
(1,662,413
)
Total Stockholders’ Equity
292,726
60,180
Total Liabilities and Stockholders’
Equity
$
1,840,017
$
1,609,985
Guardant Health, Inc.
Reconciliation of Selected
GAAP Measures to Non-GAAP Measures
(unaudited)
(in thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
GAAP cost of precision oncology
testing
$
49,357
$
34,375
$
94,463
$
65,059
Amortization of intangible assets
(149
)
(149
)
(297
)
(297
)
Stock-based compensation expense and
related employer payroll tax payments
(1,225
)
(1,229
)
(2,443
)
(2,405
)
Non-GAAP cost of precision oncology
testing
$
47,983
$
32,997
$
91,723
$
62,357
GAAP cost of development services and
other
$
4,491
$
2,352
$
12,458
$
3,649
Amortization of intangible assets
$
(201
)
$
—
$
(402
)
$
—
Stock-based compensation expense and
related employer payroll tax payments
$
(478
)
$
—
$
(954
)
$
—
Non-GAAP cost of development services
and other
$
3,812
$
2,352
$
11,102
$
3,649
GAAP research and development
expense
$
90,359
$
85,455
$
183,487
$
167,212
Stock-based compensation expense and
related employer payroll tax payments
(8,518
)
(6,191
)
(17,266
)
(11,601
)
Contingent consideration
(531
)
(177
)
(1,101
)
(2,297
)
Non-GAAP research and development
expense
$
81,310
$
79,087
$
165,120
$
153,314
GAAP sales and marketing
expense
$
71,043
$
73,603
$
147,166
$
138,035
Amortization of intangible assets
—
(134
)
—
(134
)
Stock-based compensation expense and
related employer payroll tax payments
(5,977
)
(6,054
)
(13,520
)
(11,624
)
Non-GAAP sales and marketing
expense
$
65,066
$
67,415
$
133,646
$
126,277
GAAP general and administrative
expense
$
41,516
$
43,680
$
81,961
$
84,947
Amortization of intangible assets
(336
)
(336
)
(667
)
(668
)
Stock-based compensation expense and
related employer payroll tax payments
(6,755
)
(12,252
)
(11,223
)
(25,087
)
Contingent consideration
(310
)
(1,415
)
(10
)
(3,805
)
Acquisition related expenses
—
63
—
—
Non-GAAP general and administrative
expense
$
34,115
$
29,740
$
70,061
$
55,387
GAAP loss from operations
$
(119,616
)
$
(130,321
)
$
(253,671
)
$
(253,659
)
Amortization of intangible assets
686
619
1,366
1,099
Stock-based compensation expense and
related employer payroll tax payments
22,953
25,726
45,406
50,717
Contingent consideration
841
1,592
1,111
6,102
Acquisition related expenses
—
(63
)
—
—
Non-GAAP loss from operations
$
(95,136
)
$
(102,447
)
$
(205,788
)
$
(195,741
)
GAAP net loss
$
(72,771
)
$
(229,432
)
$
(206,304
)
$
(352,660
)
Amortization of intangible assets
686
619
1,366
1,099
Stock-based compensation expense and
related employer payroll tax payments
22,953
25,726
45,406
50,717
Contingent consideration
841
1,592
1,111
6,102
Acquisition related expenses
—
(63
)
—
—
Unrealized gains on marketable equity
securities
(63,997
)
—
(67,879
)
—
Impairment of non-marketable equity
securities and other related assets
23,569
—
29,054
—
Fair value adjustments of noncontrolling
interest liability
—
99,785
—
99,785
Non-GAAP net loss
$
(88,719
)
$
(101,773
)
$
(197,246
)
$
(194,957
)
GAAP net loss per share, basic and
diluted
$
(0.67
)
$
(2.25
)
$
(1.95
)
$
(3.46
)
Non-GAAP net loss per share, basic and
diluted
$
(0.82
)
$
(1.00
)
$
(1.87
)
$
(1.91
)
Weighted-average shares used in
computing GAAP and Non-GAAP net loss per share, basic and
diluted
108,808
102,047
105,752
101,950
Guardant Health, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
GAAP net loss
$
(72,771
)
$
(229,432
)
$
(206,304
)
$
(352,660
)
Interest income
(6,727
)
(1,387
)
(9,787
)
(2,165
)
Interest expense
645
645
1,289
1,289
Other (income) expense, net
(41,259
)
(378
)
(39,605
)
(330
)
Provision for income taxes
496
446
736
422
Depreciation and amortization
10,631
8,785
20,976
15,986
Stock-based compensation expense and
related employer payroll tax payments
22,953
25,726
45,406
50,717
Contingent consideration
841
1,592
1,111
6,102
Acquisition related expenses
—
(63
)
—
—
Fair value adjustments of noncontrolling
interest liability
—
99,785
—
99,785
Adjusted EBITDA
$
(85,191
)
$
(94,281
)
$
(186,178
)
$
(180,854
)
Reconciliation of Free Cash
Flow to Net Cash Used in Operating Activities
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(94,015
)
$
(111,935
)
$
(168,456
)
$
(140,554
)
Purchase of property and equipment
(6,513
)
(23,034
)
(14,037
)
(45,734
)
Free cash flow
$
(100,528
)
$
(134,969
)
$
(182,493
)
$
(186,288
)
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Investor Contact:
investors@guardanthealth.com
Media Contact:
press@guardanthealth.com
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