Press Release

February 24, 2020

Guardant Health Reports Fourth Quarter and Full Year 2019 Financial Results and Provides Full Year 2020 Outlook

Full Year 2019 Revenue Increase of 137% Over 2018

REDWOOD CITY, Calif., Feb. 24, 2020 (GLOBE NEWSWIRE) -- Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood tests, vast data sets and advanced analytics, today reported financial results for the fourth quarter and full year ended December 31, 2019.

Recent Highlights

  • Revenue of $62.9 million for the fourth quarter and $214.4 million for the full year of 2019, representing 91% and 137% increases, respectively, over the corresponding periods of 2018
  • Received expanded Medicare local coverage determination from Palmetto GBA, making Guardant360 assay the first and only liquid biopsy to be broadly covered for use across the vast majority of advanced solid tumors
  • Initiated the NRG-GI005 COBRA study to validate the clinical utility of LUNAR-1 assay as a diagnostic biomarker for selecting which patients with stage II colon cancer could benefit from adjuvant chemotherapy
  • Entered into a strategic collaboration with Amgen to develop Guardant360 assay as a blood-based companion diagnostic test for AMG 510, an investigational oral therapy that inhibits KRAS G12C mutant protein

“2019 was a transformational year for Guardant. We made incredible progress across our entire business and rapidly increased our revenue - growing more than 100 percent over 2018,” said Helmy Eltoukhy, PhD, co-founder and CEO. “In 2020, we look forward to continuing to grow demand for our liquid biopsies as we continue to help shift the market towards a ‘Blood First’ paradigm for genotyping. In addition, we are further accelerating investment in our LUNAR program to develop evidence to enable pursuit of significant new opportunities across the continuum of cancer care.”

Fourth Quarter 2019 Financial Results

Revenue was $62.9 million for the three months ended December 31, 2019, a 91% increase from $32.9 million for the three months ended December 31, 2018. Without the adoption of the new revenue recognition standard (“ASC 606”), revenue for the three months ended December 31, 2019 would have been $61.6 million, an 87% increase over the corresponding prior year period. Precision oncology revenue increased 104% driven primarily by higher testing volume. There were 15,270 clinical tests and 6,316 biopharmaceutical tests performed during the fourth quarter of 2019. Development services revenue increased 15% primarily from new projects in 2019 related to companion diagnostic development and regulatory approval services for biopharmaceutical customers. Total revenue for the three months ended December 31, 2019 included $1.3 million of payments received in that quarter from successful appeals of payers’ denials of reimbursement for samples processed in 2018. Given the age of the samples associated with these successful appeals, the company does not believe this appeals revenue is indicative of results in the ordinary course of its operations.

Gross profit, or total revenue less cost of precision oncology testing and cost of development services, was $41.1 million for the fourth quarter of 2019, an increase of $22.1 million from $18.9 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 65.3%, as compared to 57.5% for the corresponding prior year period.

Operating expenses were $67.0 million for the fourth quarter of 2019, as compared to $46.3 million for the corresponding prior year period, an increase of 45%.

Net loss attributable to Guardant Health, Inc. common stockholders was $25.2 million for the fourth quarter of 2019, as compared to $25.1 million for the corresponding prior year period. Net loss per share attributable to Guardant Health, Inc. common stockholders was $0.27 for the fourth quarter of 2019, as compared to $0.30 for the corresponding period of the prior year.

Full Year 2019 Financial Results

Revenue for the year ended December 31, 2019 was $214.4 million, a 137% increase from $90.6 million for the year ended December 31, 2018. Without the adoption of ASC 606, revenue for the full year ended December 31, 2019 would have been $214.0 million, a 136% increase over the prior year. Precision oncology revenue increased 130% driven by higher testing volume and increased revenue per test. There were 49,926 clinical tests and 20,643 biopharmaceutical tests performed during 2019. Development services revenue increased 177% primarily from new projects in 2019 related to companion diagnostic development and regulatory approval services for biopharmaceutical customers. Total revenue for the year ended December 31, 2019 included $6.8 million of payments received during that year from successful appeals of payers’ denials of reimbursement for samples processed in 2018. Given the age of the samples associated with these successful appeals, the company does not believe this appeals revenue is indicative of results in the ordinary course of its operations.

Gross profit was $143.7 million for the year ended December 31, 2019, an increase of $96.2 million from $47.4 million for the year ended December 31, 2018. Gross margin was 67.0% for the year ended December 31, 2019, as compared to 52.3% for the year ended December 31, 2018.

Operating expenses were $226.0 million for the year ended December 31, 2019, as compared to $140.4 million for the year ended December 31, 2018, an increase of 61%.

Net loss attributable to Guardant Health, Inc. common stockholders was $75.7 million for the year ended December 31, 2019, as compared to $85.1 million for the year ended December 31, 2018. Net loss per share attributable to Guardant Health, Inc. common stockholders was $0.84 for the year ended December 31, 2019, as compared to $2.80 for the year ended December 31, 2018.

Cash, cash equivalents and marketable securities were $791.6 million as of December 31, 2019.

Guardant Health adopted ASC 606 effective January 1, 2019, which primarily impacted the company’s recognition of revenue related to patient claims paid by third-party commercial and governmental payors. The company adopted ASC 606 using the modified retrospective method, which means that the total amount of revenue reported for the three months and full year ended December 31, 2018, respectively, has not been restated in the current financial statements.  Instead, the accumulated difference resulting from applying the new revenue standard to all contracts that were not completed as of adoption was recorded to accumulated deficit as of January 1, 2019.

2020 Financial Guidance

Guardant Health expects full year 2020 revenue to be in the range of $275.0 million to $285.0 million, representing 31% growth over the full year 2019 at the midpoint of the range. Net loss is expected to be in the range of $155.0 million to $160.0 million in 2020.

CFO Transition

Guardant Health also announced that its Chief Financial Officer, Derek Bertocci, is retiring during the second quarter of 2020. He will continue to serve in his current role until a successor is hired and plans to remain at Guardant Health and support the company during this transition.

“My time at Guardant has been a true privilege and I am honored to have worked alongside such an amazing team,” said Mr. Bertocci “I believe deeply in Guardant’s vision and look forward to seeing Helmy, AmirAli and the entire team achieve even greater success in the years to come.”

“Derek’s leadership, business acumen, work ethic and values have been instrumental to Guardant’s growth for over almost 4 years,” said Dr. Eltoukhy. “On behalf of our entire management team and board of directors, I want to thank Derek for his contributions. We have a strong bench of talent in our finance and accounting organization and look forward to welcoming a new CFO in the coming months.”

Webcast and Conference Call Information

Guardant Health will host a conference call to discuss the fourth quarter and full year 2019 financial results after market close on Monday, February 24, 2020 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone (866) 417-5537 for U.S. callers or (409) 217-8233 for international callers (Conference ID: 8657963). The webcast can be accessed at http://investors.guardanthealth.com.

About Guardant Health

Guardant Health is a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood 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 launched liquid biopsy-based Guardant360 and GuardantOMNI tests for advanced stage cancer patients. These tests fuel development of our LUNAR program, which aims to address the needs of early stage cancer patients with neoadjuvant and adjuvant treatment selection, cancer survivors with surveillance, asymptomatic individuals eligible for cancer screening and individuals at a higher risk for developing cancer with early detection.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding Guardant Health’s expected financial results for the year ending December 31, 2020 and statements regarding the onboarding of a new CFO into Guardant Health’s management, 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, 2018, its Quarterly Report on Form 10-Q for the period ended September 30, 2019 and in its other reports filed with the Securities and Exchange Commission, including, when filed, its Annual Report on Form 10-K for the year ended December 31, 2019. 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.

In light of the foregoing, investors are urged not to rely on any forward-looking statement in reaching any conclusion or making any investment decision about any securities of Guardant Health. The financial information set forth herein is presented on a preliminary and unaudited basis; audited financial statements will be included in Guardant Health’s Annual Report on Form 10-K for the year ended December 31, 2019, when filed.

Investor Contact:
Carrie Mendivil
investors@guardanthealth.com

Media Contact:
Anna Czene
press@guardanthealth.com

Guardant Health, Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)

       
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2019   2018   2019   2018
               
Revenue:              
Precision oncology testing (1)  $ 57,414     $ 28,096     $ 180,462     $ 78,407  
Development services (1) 5,483     4,777     33,913     12,232  
Total revenue (1) 62,897     32,873     214,375     90,639  
Costs and operating expenses:              
Cost of precision oncology testing (2) 20,004     12,624     62,255     39,846  
Cost of development services 1,834     1,323     8,465     3,364  
Research and development expense (2) 25,875     16,652     86,292     50,714  
Sales and marketing expense (2) 22,287     17,114     78,335     53,465  
General and administrative expense (2)(3) 18,859     12,547     61,399     36,192  
Total costs and operating expenses 88,859     60,260     296,746     183,581  
Loss from operations (25,962 )   (27,387 )   (82,371 )   (92,942 )
Interest income 3,871     2,334     13,741     5,266  
Interest expense (321 )   (299 )   (1,181 )   (1,251 )
Other income (expense), net (187 )   115     88     4,702  
Loss before provision for income taxes (22,599 )   (25,237 )   (69,723 )   (84,225 )
Provision for (benefit from) income taxes (489 )   35     (1,872 )   38  
Net loss (22,110 )   (25,272 )   (67,851 )   (84,263 )
Adjustment of redeemable noncontrolling interest (3,100 )   150     (7,800 )   (800 )
Net loss attributable to Guardant Health, Inc. common stockholders $ (25,210 )   $ (25,122 )   $ (75,651 )   $ (85,063 )
Net loss per share attributable to Guardant Health, Inc. common stockholders,
basic and diluted
$ (0.27 )   $ (0.30 )   $ (0.84 )   $ (2.80 )
Weighted-average shares used in computing net loss per share
attributable to Guardant Health, Inc. common stockholders, 
basic and diluted
93,997     84,123     90,597     30,403  
                       

(1) Fiscal year 2018 results do not reflect the impact of the adoption of the new revenue accounting standard in fiscal year 2019.         

(2) Amounts include stock-based compensation expense as follows:

       
  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2019   2018   2019   2018
               
Cost of precision oncology testing $ 301     $ 258     $ 863     $ 512  
Research and development expense 1,203     649     5,907     1,684  
Sales and marketing expense 1,786     666     4,716     1,727  
General and administrative expense (3) 1,782     990     5,468     2,928  
Total stock-based compensation expenses $ 5,072     $ 2,563     $ 16,954     $ 6,851  
                               

(3) Amounts include compensation expense of $0.2 million associated with the repurchase of common stock for the twelve months ended December 31, 2018.  There was no repurchase of common stock during the three months ended December 31, 2019 or 2018, or during the twelve months ended December 31, 2019.

 
Guardant Health, Inc.
Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share data)

  As of December 31,
  2019   2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 143,228     $ 140,544  
Short-term marketable securities 379,574     278,417  
Accounts receivable 47,986     35,690  
Inventory 15,181     9,136  
Prepaid expenses and other current assets 11,389     5,204  
Total current assets 597,358     468,991  
Long-term marketable securities 268,783     77,563  
Property and equipment, net 43,668     31,003  
Right-of-use assets 29,140      
Intangible assets, net 8,524      
Goodwill 3,290      
Capitalized license fees 6,890     7,800  
Other assets 4,882     2,046  
Total Assets (1) $ 962,535     $ 587,403  
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
AND STOCKHOLDERS’ EQUITY
     
Current liabilities:      
Accounts payable $ 16,197     $ 10,642  
Accrued compensation 18,557     12,986  
Accrued expenses 25,703     7,178  
Deferred revenue 12,277     16,138  
Total current liabilities 72,734     46,944  
Long-term operating lease liabilities 33,256      
Deferred rent, net of current portion     7,844  
Obligation related to royalty 6,880     7,338  
Other long-term liabilities 1,672     325  
Total Liabilities (1) 114,542     62,451  
Redeemable noncontrolling interest 49,600     41,800  
Stockholders’ equity:      
Preferred stock, par value of $0.00001 per share; 10,000,000 shares authorized as of December 31, 2019
and 2018; no shares issued and outstanding as of December 31, 2019 and December 31, 2018
     
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of December 31,
2019 and 2018; 94,261,414 and 85,832,454 shares issued and outstanding as of December 31, 2019
and December 31, 2018, respectively
1     1  
Additional paid-in capital 1,150,090     764,033  
Accumulated other comprehensive gain (loss) 1,111     (83 )
Accumulated deficit (352,809 )   (280,799 )
Total Stockholders’ Equity 798,393     483,152  
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity $ 962,535     $ 587,403  

(1) Fiscal 2018 results do not reflect the impact of the adoption of the new revenue accounting and lease accounting standards in fiscal year 2019. 

GHLogo2018F.png

Source: Guardant Health, Inc.