Q3 revenue increased 22% year over year driven
by clinical volume growth of 35%
Raises 2023 revenue guidance to $553 to 556
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 September 30,
2023.
Third Quarter 2023 Financial Highlights
- Revenue of $143.0 million for the third quarter of 2023, an
increase of 22% over the third quarter of 2022
- Reported 43,900 tests to clinical customers and 7,500 tests to
biopharmaceutical customers in the third quarter of 2023,
representing increases of 35% and 11%, respectively, over the third
quarter of 2022
Recent Operating Highlights
- Presented first results of the PEGASUS MRD de-escalation trial
at the European Society for Medical Oncology, ESMO, with data
suggesting Guardant Reveal may help guide adjuvant treatment of
colon cancer
- Received coverage for Guardant Reveal from Geisinger Health
Plan
- Surpassed 200 million covered lives for TissueNext
- Launched Guardant360 for clinical use in Japan and biopharma
use in China
- Received regulatory approval in Japan for Guardant360 CDx as a
companion diagnostic to ENHERTU for treatment of non-small cell
lung cancer patients with HER2 mutations
- Published the first paper for Shield demonstrating utility of
blood-based CRC screening in Annals of Oncology
“We ended the third quarter with revenue growth of 22%, driven
by strong year-over-year growth in clinical volume. We are starting
to see the impact of coverage decisions on Guardant360, with
uplifts in ASPs and additional tailwinds further strengthening the
financial profile of our Therapy Selection business,” said Helmy
Eltoukhy, co-founder and co-CEO. “We recently presented exciting
MRD data, further demonstrating the clinical utility of our Reveal
blood test. We look forward to a strong finish to the year.”
“We are continuing to make steady progress in our screening
business with our Shield blood test,” said AmirAli Talasaz,
co-founder and co-CEO. “At our recent investor day, we shared some
promising new clinical validation data on the next generation of
our Shield test. We are also advancing our progress in lung and
other indications as we develop Shield into a multi-cancer early
detection test.”
Third Quarter 2023 Financial Results
Revenue was $143.0 million for the three months ended September
30, 2023, a 22% increase from $117.4 million for the three months
ended September 30, 2022. Precision oncology revenue grew 31%,
driven predominantly by an increase in clinical testing volume and
biopharma sample volume, which grew 35% and 11%, respectively, over
the prior year period. In addition, our clinical testing revenue
for the three months ended September 30, 2023 includes a payment of
$3.6 million from Medicare related to a successful appeal for
claims dated between 2018 and 2020. Development services and other
revenue decreased by 37%, primarily due to the timing and amount of
milestones related to our partnership agreements and companion
diagnostics collaboration projects with biopharmaceutical
customers, as well as a reduction in royalty revenue during the
three months ended September 30, 2023.
Gross profit, or total revenue less cost of precision oncology
testing and cost of development services and other, was $85.4
million for the third quarter of 2023, an increase of $8.5 million
from $76.9 million for the corresponding prior year period. Gross
margin, or gross profit divided by total revenue, was 60%, as
compared to 66% for the corresponding prior year period. Precision
oncology gross margin was 60% in the third quarter of 2023, as
compared to 61% in the prior year period. The reduction is
primarily due to changes in product mix. Development services and
other gross margin was 59% in the third quarter of 2023, as
compared to 93% 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, for which
we are currently booking minimal revenue.
Operating expenses were $199.0 million for the third quarter of
2023, as compared to $221.5 million for the corresponding prior
year period. Non-GAAP operating expenses were $177.3 million for
the third quarter of 2023, as compared to $200.5 million for the
corresponding prior year period.
Net loss was $86.1 million for the third quarter of 2023, as
compared to $162.0 million for the corresponding prior year period.
Net loss per share was $0.73 for the third quarter of 2023, as
compared to $1.58 for the corresponding prior year period. The
year-over-year reduction in net loss is primarily due to a $31.1
million year-over-year improvement in our loss from operations, a
$29.9 million positive change in unrealized gains and losses, and a
$9.9 million increase in interest income.
Non-GAAP net loss was $79.2 million for the third quarter of
2023, as compared to $120.8 million for the corresponding prior
year period. Non-GAAP net loss per share was $0.67 for the third
quarter of 2023, as compared to $1.18 for the corresponding prior
year period.
Adjusted EBITDA loss was $79.7 million for the third quarter of
2023, as compared to a $112.8 million loss for the corresponding
prior year period.
Free cash flow for the third quarter of 2023 was negative $80.2
million. Cash, cash equivalents and marketable debt securities were
$1.2 billion as of September 30, 2023.
2023 Guidance
Guardant Health now expects full year 2023 revenue to be in the
range of $553 to $556 million, representing growth of 23% to 24%
compared to full year 2022. 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 third
quarter and full year 2023 financial results after market close on
Monday, November 6, 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue:
Precision oncology testing
$
133,423
$
102,054
$
372,060
$
278,252
Development services and other
9,607
15,350
36,834
44,395
Total revenue
143,030
117,404
408,894
322,647
Costs and operating expenses:
Cost of precision oncology testing
53,648
39,434
148,111
104,493
Cost of development services and other
3,966
1,062
16,424
4,711
Research and development expense
93,851
100,017
277,338
267,229
Sales and marketing expense
68,934
80,370
216,100
218,405
General and administrative expense
36,174
41,121
118,135
126,068
Total costs and operating expenses
256,573
262,004
776,108
720,906
Loss from operations
(113,543
)
(144,600
)
(367,214
)
(398,259
)
Interest income
11,690
1,754
21,477
3,919
Interest expense
(644
)
(644
)
(1,933
)
(1,933
)
Other income (expense), net
16,885
(18,389
)
56,490
(18,059
)
Fair value adjustments of noncontrolling
interest liability
—
—
—
(99,785
)
Loss before provision for income taxes
(85,612
)
(161,879
)
(291,180
)
(514,117
)
Provision for income taxes
490
115
1,226
537
Net loss
$
(86,102
)
$
(161,994
)
$
(292,406
)
$
(514,654
)
Net loss per share, basic and diluted
$
(0.73
)
$
(1.58
)
$
(2.66
)
$
(5.04
)
Weighted-average shares used in computing
net loss per share, basic and diluted
117,736
102,289
109,791
102,065
Guardant Health, Inc.
Condensed Consolidated Balance
Sheets
(unaudited)
(in thousands, except share
and per share data)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
457,339
$
141,647
Short-term marketable debt securities
697,482
869,584
Accounts receivable, net
88,801
97,256
Inventory, net
77,036
51,598
Prepaid expenses and other current assets,
net
26,239
31,509
Total current assets
1,346,897
1,191,594
Property and equipment, net
147,671
167,920
Right-of-use assets, net
161,668
174,001
Intangible assets, net
9,670
11,727
Goodwill
3,290
3,290
Other assets, net
128,035
61,453
Total Assets
$
1,797,231
$
1,609,985
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
205,266
$
175,817
Deferred revenue
21,485
17,403
Total current liabilities
226,751
193,220
Convertible senior notes, net
1,139,322
1,137,391
Long-term operating lease liabilities
192,677
210,015
Other long-term liabilities
10,182
9,179
Total Liabilities
1,568,932
1,549,805
Stockholders’ equity:
Common stock, par value of $0.00001 per
share; 350,000,000 shares authorized as of September 30, 2023 and
December 31, 2022; 117,849,155 and 102,619,383 shares issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
1
1
Additional paid-in capital
2,188,797
1,742,114
Accumulated other comprehensive loss
(5,680
)
(19,522
)
Accumulated deficit
(1,954,819
)
(1,662,413
)
Total Stockholders’ Equity
228,299
60,180
Total Liabilities and Stockholders’
Equity
$
1,797,231
$
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP cost of precision oncology
testing
$
53,648
$
39,434
$
148,111
$
104,493
Amortization of intangible assets
(151
)
(285
)
(448
)
(582
)
Stock-based compensation expense and
related employer payroll tax payments
(1,120
)
(1,377
)
(3,563
)
(3,782
)
Non-GAAP cost of precision oncology
testing
$
52,377
$
37,772
$
144,100
$
100,129
GAAP cost of development services and
other
$
3,966
$
1,062
$
16,424
$
4,711
Amortization of intangible assets
$
(201
)
$
—
$
(603
)
$
—
Stock-based compensation expense and
related employer payroll tax payments
$
(437
)
$
—
$
(1,391
)
$
—
Non-GAAP cost of development services
and other
$
3,328
$
1,062
$
14,430
$
4,711
GAAP research and development
expense
$
93,851
$
100,017
$
277,338
$
267,229
Stock-based compensation expense and
related employer payroll tax payments
(8,611
)
(7,256
)
(25,877
)
(18,857
)
Contingent consideration
(531
)
(355
)
(1,632
)
(2,652
)
Non-GAAP research and development
expense
$
84,709
$
92,406
$
249,829
$
245,720
GAAP sales and marketing
expense
$
68,934
$
80,370
$
216,100
$
218,405
Amortization of intangible assets
—
(67
)
—
(201
)
Stock-based compensation expense and
related employer payroll tax payments
(5,137
)
(6,643
)
(18,657
)
(18,267
)
Non-GAAP sales and marketing
expense
$
63,797
$
73,660
$
197,443
$
199,937
GAAP general and administrative
expense
$
36,174
$
41,121
$
118,135
$
126,068
Amortization of intangible assets
(339
)
(339
)
(1,006
)
(1,007
)
Stock-based compensation expense and
related employer payroll tax payments
(6,794
)
(5,955
)
(18,017
)
(31,042
)
Contingent consideration
(220
)
(390
)
(230
)
(4,195
)
Non-GAAP general and administrative
expense
$
28,821
$
34,437
$
98,882
$
89,824
GAAP loss from operations
$
(113,543
)
$
(144,600
)
$
(367,214
)
$
(398,259
)
Amortization of intangible assets
691
691
2,057
1,790
Stock-based compensation expense and
related employer payroll tax payments
22,099
21,231
67,505
71,948
Contingent consideration
751
745
1,862
6,847
Non-GAAP loss from operations
$
(90,002
)
$
(121,933
)
$
(295,790
)
$
(317,674
)
GAAP net loss
$
(86,102
)
$
(161,994
)
$
(292,406
)
$
(514,654
)
Amortization of intangible assets
691
691
2,057
1,790
Stock-based compensation expense and
related employer payroll tax payments
22,099
21,231
67,505
71,948
Contingent consideration
751
745
1,862
6,847
Unrealized gains on marketable equity
securities
(16,634
)
13,230
(84,513
)
13,230
Impairment of non-marketable equity
securities and other related assets
—
5,261
29,054
5,261
Fair value adjustments of noncontrolling
interest liability
—
—
—
99,785
Non-GAAP net loss
$
(79,195
)
$
(120,836
)
$
(276,441
)
$
(315,793
)
GAAP net loss per share, basic and
diluted
$
(0.73
)
$
(1.58
)
$
(2.66
)
$
(5.04
)
Non-GAAP net loss per share, basic and
diluted
$
(0.67
)
$
(1.18
)
$
(2.52
)
$
(3.09
)
Weighted-average shares used in
computing GAAP and Non-GAAP net loss per share, basic and
diluted
117,736
102,289
109,791
102,065
Guardant Health, Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP net loss
$
(86,102
)
$
(161,994
)
$
(292,406
)
$
(514,654
)
Interest income
(11,690
)
(1,754
)
(21,477
)
(3,919
)
Interest expense
644
644
1,933
1,933
Other (income) expense, net
(16,885
)
18,389
(56,490
)
18,059
Provision for income taxes
490
115
1,226
537
Depreciation and amortization
11,037
9,807
32,013
25,793
Stock-based compensation expense and
related employer payroll tax payments
22,099
21,231
67,505
71,948
Contingent consideration
751
745
1,862
6,847
Fair value adjustments of noncontrolling
interest liability
—
—
—
99,785
Adjusted EBITDA
$
(79,656
)
$
(112,817
)
$
(265,834
)
$
(293,671
)
Reconciliation of Free Cash
Flow to Net Cash Used in Operating Activities
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(77,791
)
$
(78,160
)
$
(246,247
)
$
(218,714
)
Purchase of property and equipment
(2,372
)
(21,726
)
(16,409
)
(67,460
)
Free cash flow
$
(80,163
)
$
(99,886
)
$
(262,656
)
$
(286,174
)
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version on businesswire.com: https://www.businesswire.com/news/home/20231106684413/en/
Investor Contact:
investors@guardanthealth.com
Media
Contact: Melissa Marasco press@guardanthealth.com +1
650-647-3711
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