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Guardant Health Reports First Quarter 2024 Financial Results and Increases 2024 Revenue Guidance

Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company, today reported financial results for the quarter ended March 31, 2024. First Quarter 2024 Financial Highlights Revenue of $16...

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Revenue growth of 31% driven by strong clinical and biopharma volume and Guardant360 ASP tailwinds

PALO ALTO, Calif.: Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company, today reported financial results for the quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights

  • Revenue of $168.5 million for the first quarter of 2024, an increase of 31% over the first quarter of 2023
  • Reported 46,900 tests to clinical customers and 8,450 tests to biopharmaceutical customers in the first quarter of 2024, representing increases of 20% and 37%, respectively, over the first quarter of 2023
  • Reduced free cash flow to $(37.2) million in the first quarter of 2024, compared to $(82.0) million in the prior year
  • Raised 2024 annual guidance for revenue to a new range of $675 to $685 million, representing growth of 20% to 21%
  • Improved annual free cash flow guidance to $(275) to $(285) million, a reduction of $60 to $70 million compared to 2023

Recent Operating Highlights

  • Validated the strength and quality of ECLIPSE clinical data with the study publication in The New England Journal of Medicine
  • Launched new service at The Royal Marsden to test advanced NSCLC patients in England through an expanded NHS study
  • Presented new data demonstrating the value of epigenomic analysis and methylation sequencing using the Smart Liquid Biopsy platform at the 2024 AACR Annual Meeting
  • Surpassed 500 peer-reviewed publications highlighting Guardant Health technology in scientific literature

“We started the year off very strongly with first quarter revenue growing 31%, driven by both solid volume growth and significant improvements to Guardant360 reimbursement,” said Helmy Eltoukhy, co-founder and co-CEO. “In addition to strong topline performance, this was the first quarter of generating positive cash flow in our Therapy Selection business. We also recently surpassed a significant milestone with over 500 peer-reviewed publications highlighting our technology in scientific literature, demonstrating the impact our innovative suite of products have on both patients and the scientific community.”

“The publication of ECLIPSE data in The New England Journal of Medicine, one of the world’s leading medical journals, underscores the quality of our clinical data,” said AmirAli Talasaz, co-founder and co-CEO. “Our team has worked incredibly hard and is now well-prepared for the upcoming FDA Advisory Committee review on May 23. We are eagerly anticipating the launch of Shield IVD shortly after the expected FDA approval in 2024 and are confident this test is well positioned for rapid adoption.”

First Quarter 2024 Financial Results

Revenue was $168.5 million for the first quarter of 2024, a 31% increase from $128.7 million for the corresponding prior year period. Precision oncology revenue grew 38%, to $156.2 million for the first quarter of 2024, from $113.4 million for the corresponding prior year period, driven by an increase in clinical and biopharma testing volume, which grew 20% and 37%, respectively, over the prior year period. The increase in precision oncology revenue was also attributable to an increase in reimbursement for our tests, due to an increase in the Medicare reimbursement rate for our Guardant360 LDT test to $5,000, effective January 1, 2024, and an increase in reimbursement received from commercial payers. Development services and other revenue was $12.3 million for the first quarter of 2024, compared to $15.3 million for the corresponding prior year period.

Gross profit, or total revenue less cost of precision oncology testing and cost of development services and other, was $103.2 million for the first quarter of 2024, an increase of $27.6 million from $75.6 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 61%, as compared to 59% for the corresponding prior year period. Precision oncology gross margin was 62% in the first quarter of 2024, as compared to 60% in the prior year period. Development services and other gross margin was 51% in the first quarter of 2024, as compared to 48% in the prior year period.

Non-GAAP gross profit was $105.3 million for the first quarter of 2024, an increase of $27.6 million, from $77.7 million for the corresponding prior year period. Non-GAAP gross margin was 63% for the first quarter of 2024, as compared to 60% for the corresponding prior year period.

Non-GAAP gross profit excluding screening was $108.0 million for the first quarter of 2024, an increase of $26.9 million, from $81.1 million for the corresponding prior year period. Non-GAAP gross margin excluding screening was 64% for the first quarter of 2024, as compared to 63% for the corresponding prior year period.

Operating expenses were $202.9 million for the first quarter of 2024, as compared to $209.7 million for the corresponding prior year period. Non-GAAP operating expenses were $176.5 million for the first quarter of 2024, as compared to $188.3 million for the corresponding prior year period.

Net loss was $115.0 million for the first quarter of 2024, as compared to $133.5 million for the corresponding prior year period. Net loss per share was $0.94 for the first quarter of 2024, as compared to $1.30 for the corresponding prior year period. The year-over-year decrease in net loss is primarily due to a $34.4 million year over year improvement in loss from operations, and a $11.8 million increase in interest income, partially offset by a $33.9 million increase in unrealized losses recorded for our investment in Lunit, Inc.

Non-GAAP net loss was $56.4 million for the first quarter of 2024, as compared to $108.5 million for the corresponding prior year period. Non-GAAP net loss per share was $0.46 for the first quarter of 2024, as compared to $1.06 for the corresponding prior year period.

Adjusted EBITDA loss was $61.1 million for the first quarter of 2024, as compared to a $101.0 million loss for the corresponding prior year period.

Free cash flow for the first quarter of 2024 was $(37.2) million, as compared to $(82.0) million for the corresponding prior year period. Cash, cash equivalents, and restricted cash were $1.1 billion as of March 31, 2024.

2024 Guidance

Guardant Health now expects full year 2024 revenue excluding screening to be in the range of $675 to $685 million, representing growth of 20% to 21% compared to full year 2023 This compares to the prior range of $655 to $670 million, representing growth of 16% to 19%. Guardant Health now expects full year 2024 non-GAAP gross margin excluding screening to be in the range of 61% to 63%, compared to the prior range of 60% to 62%. Guardant Health now expects total non-GAAP operating expenses to be in the range of $720 to $730 million, representing a flat to 1% decrease compared to 2023, an improvement compared to the prior range of $740 to $750 million. Guardant Health now expects free cash flow to be in the range of $(275) to $(285) million in 2024, an improvement compared to the prior range of $(320) to $(330) million.

Webcast Information

Guardant Health will host a conference call to discuss the first quarter 2024 financial results after market close on Thursday, May 9, 2024 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 cost of screening, non-GAAP gross profit, non-GAAP gross profit excluding cost of screening, 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, contingent consideration, 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; contingent consideration; 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 items because we believe that these income and expenses do not reflect expected future operating performance. 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 medicine company focused on guarding wellness and giving every person more time free from cancer. Founded in 2012, Guardant is transforming patient care by providing critical insights into what drives disease through its advanced blood and tissue tests, real-world data and AI analytics. Guardant tests help improve outcomes across all stages of care, including screening to find cancer early, monitoring for recurrence in early-stage cancer, and helping doctors select the best treatment for patients with advanced cancer. For more information, visit guardanthealth.com and follow the company on LinkedIn, X (Twitter) and Facebook.

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, regulatory approval for products 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, 2023, 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 March 31,

 

2024

 

2023

 

 

 

 

Revenue:

 

 

 

Precision oncology testing

$

156,229

 

 

$

113,393

 

Development services and other

 

12,262

 

 

 

15,321

 

Total revenue

 

168,491

 

 

 

128,714

 

Costs and operating expenses:

 

 

 

Cost of precision oncology testing

 

59,306

 

 

 

45,106

 

Cost of development services and other

 

5,990

 

 

 

7,967

 

Research and development expense

 

83,802

 

 

 

93,128

 

Sales and marketing expense

 

80,425

 

 

 

76,123

 

General and administrative expense

 

38,651

 

 

 

40,445

 

Total costs and operating expenses

 

268,174

 

 

 

262,769

 

Loss from operations

 

(99,683

)

 

 

(134,055

)

Interest income

 

14,868

 

 

 

3,060

 

Interest expense

 

(645

)

 

 

(644

)

Other income (expense), net

 

(29,120

)

 

 

(1,654

)

Loss before provision for income taxes

 

(114,580

)

 

 

(133,293

)

Provision for income taxes

 

405

 

 

 

240

 

Net loss

$

(114,985

)

 

$

(133,533

)

Net loss per share, basic and diluted

$

(0.94

)

 

$

(1.30

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

121,712

 

 

 

102,663

 

Guardant Health, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

March 31,
2024

 

December 31,
2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash, cash equivalents and restricted cash

$

1,129,257

 

 

$

1,133,537

 

Short-term marketable debt securities

 

 

 

 

35,097

 

Accounts receivable, net

 

84,562

 

 

 

88,783

 

Inventory, net

 

62,991

 

 

 

61,948

 

Prepaid expenses and other current assets, net

 

31,736

 

 

 

27,741

 

Total current assets

 

1,308,546

 

 

 

1,347,106

 

Property and equipment, net

 

138,387

 

 

 

145,096

 

Right-of-use assets, net

 

151,881

 

 

 

157,616

 

Intangible assets, net

 

8,294

 

 

 

8,979

 

Goodwill

 

3,290

 

 

 

3,290

 

Other assets, net

 

94,200

 

 

 

124,334

 

Total Assets

$

1,704,598

 

 

$

1,786,421

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

37,603

 

 

$

51,741

 

Accrued compensation

 

92,639

 

 

 

72,736

 

Accrued expenses

 

67,211

 

 

 

63,475

 

Deferred revenue

 

22,556

 

 

 

17,965

 

Total current liabilities

 

220,009

 

 

 

205,917

 

Convertible senior notes, net

 

1,140,611

 

 

 

1,139,966

 

Long-term operating lease liabilities

 

178,907

 

 

 

185,848

 

Other long-term liabilities

 

96,786

 

 

 

96,006

 

Total Liabilities

 

1,636,313

 

 

 

1,627,737

 

Stockholders’ equity:

 

 

 

Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 121,787,297 and 121,629,861 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

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