Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 7, 2019
 
GUARDANT HEALTH, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
0001-576280
 
45-4139254
 
 
 
 
 
(State or other jurisdiction
of incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
505 Penobscot Dr.
Redwood City, California 94063
(Address of principal executive offices) (Zip Code)
855-698-8887
(Registrant’s telephone number, include area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ý
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.00001
GH
  The Nasdaq Stock Market LLC






Item 2.02. Results of Operations and Financial Condition.
On November 7, 2019, Guardant Health, Inc. (the “Company”) issued a press release announcing certain financial results for the fiscal quarter ended September 30, 2019. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit No.
 
Description
99.1
 
 
 
 
 
 
 
 
 
 






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
GUARDANT HEALTH, INC.
 
 
 
 
Date:
November 7, 2019
 
 
 
 
By:
/s/ Helmy Eltoukhy
 
 
 
Helmy Eltoukhy
 
 
 
Chief Executive Officer


Exhibit
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Guardant Health Reports Third Quarter 2019 Financial Results and Raises 2019 Revenue Guidance
Q3 2019 revenue increase of 181% over prior year period
REDWOOD CITY, Calif. November 7, 2019 – 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 third quarter ended September 30, 2019.
Recent Highlights
Total revenue for the third quarter of 2019 was $60.8 million, a 181% increase over the third quarter of 2018
Reported 13,259 tests to clinical customers and 5,280 tests to biopharmaceutical customers in the third quarter of 2019, representing increases of 89% and 111%, respectively, over the third quarter of 2018
Initiated ECLIPSE, a large-scale registrational study designed to support the performance of the company’s LUNAR-2 blood test in colorectal cancer screening in average-risk adults
Submitted Premarket Approval Application package for Guardant360 to the U.S. Food and Drug Administration
Launched CLIA-version of the LUNAR Assay for use in prospective clinical trials
“During the quarter, the Guardant team continued to make significant progress across our business,” said Helmy Eltoukhy, PhD, Chief Executive Officer. “We are especially excited by the recent initiation of our ECLIPSE study. If successful, we believe this registrational study will pave the way for a blood-based test to address the significant unmet need of physicians and their patients who seek an alternative to the current tools for colorectal cancer screening.”
Third Quarter 2019 Financial Results
Total revenue was $60.8 million for the three months ended September 30, 2019, a 181% increase from $21.7 million for the corresponding prior year period. Without the adoption of the new revenue recognition standard (“ASC 606”), total revenue for the three months ended September 30, 2019 would have been $59.7 million, a 175% increase over the corresponding prior year period. Precision oncology revenue increased 185% driven by higher testing volume and increased revenue per test. There were 13,259 clinical tests and 5,280 biopharmaceutical tests performed during the third quarter of 2019. Development services revenue increased 156% 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 September 30, 2019 included $5.5 million of payments received in this 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 $42.3 million for the third quarter of 2019, an increase of $30.7 million from $11.6 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 70% for the third quarter of 2019, as compared to 54% for the corresponding prior year period. These results are inclusive of the benefits from the $5.5 million of appeals revenue.
Total operating expenses were $59.8 million for the third quarter of 2019, as compared to $35.8 million for the corresponding prior year period, an increase of 67%.
Net loss attributable to Guardant Health, Inc. common stockholders was $12.8 million in the third quarter of 2019, as compared to $24.5 million in the corresponding prior year period. Net loss per share attributable to Guardant Health, Inc. common stockholders was $0.14 in the third quarter of 2019, as compared to $1.94 in the corresponding prior year period.
Cash, cash equivalents and marketable securities were $825.6 million as of September 30, 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 and nine months ended September 30, 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.
2019 Financial Guidance
Guardant Health now expects full year 2019 total revenue to be in the range of $202 million to $207 million, representing 123% to 128% growth over the full year 2018. This compares to the company's previous full year 2019 total revenue guidance of $180 to $190 million.

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Webcast and Conference Call Information
Guardant Health will host a conference call to discuss the third quarter 2019 financial results after market close on Thursday, November 7, 2019 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: 6094776). 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 and LUNAR assay for research use and for use in prospective clinical trials. In parallel, Guardant Health is actively exploring the performance of the LUNAR assay in initial studies related to screening and early detection in asymptomatic individuals.
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, 2019, 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 caption “Risk Factors” in Guardant Health’s Annual Report on Form 10-K for the year ended December 31, 2018, and in its other reports filed by Guardant Health with the Securities and Exchange Commission. 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.
Investor Contact:
Lynn Lewis or Carrie Mendivil
investors@guardanthealth.com

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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,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
Precision oncology testing
$
52,147

 
$
18,298

 
$
123,048

 
$
50,311

Development services
8,701

 
3,394

 
28,430

 
7,455

Total revenue
60,848

 
21,692

 
151,478

 
57,766

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of precision oncology testing (1)
16,578

 
9,671

 
42,251

 
27,222

Cost of development services
1,936

 
380

 
6,631

 
2,041

Research and development expense (1)
24,569

 
14,253

 
60,417

 
34,062

Sales and marketing expense (1)
18,802

 
13,464

 
56,048

 
36,351

General and administrative expense (1)
16,440

 
8,129

 
42,540

 
23,645

Total costs and operating expenses
78,325

 
45,897

 
207,887

 
123,321

Loss from operations
(17,477
)
 
(24,205
)
 
(56,409
)
 
(65,555
)
Interest income
4,286

 
958

 
9,870

 
2,932

Interest expense
(280
)
 
(304
)
 
(860
)
 
(952
)
Other income (expense), net
179

 
43

 
275

 
4,587

Loss before provision for income taxes
(13,292
)
 
(23,508
)
 
(47,124
)
 
(58,988
)
Provision for (benefit from) income taxes
(202
)
 

 
(1,383
)
 
3

Net loss
(13,090
)
 
(23,508
)
 
(45,741
)
 
(58,991
)
Fair value adjustment of redeemable noncontrolling interest
300

 
(950
)
 
(4,700
)
 
(950
)
Net loss attributable to Guardant Health, Inc. common stockholders
$
(12,790
)
 
$
(24,458
)
 
$
(50,441
)
 
$
(59,941
)
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted
$
(0.14
)
 
$
(1.94
)
 
$
(0.56
)
 
$
(4.87
)
Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted
93,303

 
12,582

 
89,452

 
12,300


(1)     Amounts include stock-based compensation expense as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Cost of precision oncology testing
$
266

 
$
112

 
$
562

 
$
254

Research and development expense
2,066

 
617

 
4,704

 
1,035

Sales and marketing expense
1,458

 
428

 
2,930

 
1,061

General and administrative expense
1,694

 
674

 
3,686

 
1,938

Total stock-based compensation expenses
$
5,484

 
$
1,831

 
$
11,882

 
$
4,288


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 Guardant Health, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share data)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
147,188

 
$
140,544

Short-term marketable securities
375,768

 
278,417

Accounts receivable
39,689

 
35,690

Inventory
14,760

 
9,136

Prepaid expenses and other current assets
5,657

 
5,204

Total current assets
583,062

 
468,991

Long-term marketable securities
302,624

 
77,563

Property and equipment, net
40,759

 
31,003

Intangible assets
8,755

 

Goodwill
2,928

 

Capitalized license fees
7,133

 
7,800

Other assets
3,073

 
2,046

Total Assets
$
948,334

 
$
587,403

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
12,054

 
$
10,642

Accrued compensation
24,604

 
12,986

Accrued expenses
17,239

 
7,081

Capital lease, current
80

 
97

Deferred rent, current
745

 

Deferred revenue
13,095

 
16,138

Total current liabilities
67,817

 
46,944

Capital lease, net of current portion
57

 
119

Deferred rent, net of current portion
10,564

 
7,844

Obligation related to royalty
6,780

 
7,338

Other long-term liabilities
1,220

 
206

Total Liabilities
86,438

 
62,451

Redeemable noncontrolling interest
46,500

 
41,800

Stockholders’ equity:
 
 
 
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 93,853,390 and 85,832,454 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
1

 
1

Additional paid-in capital
1,141,885

 
764,033

Accumulated other comprehensive loss
1,109

 
(83
)
Accumulated deficit
(327,599
)
 
(280,799
)
Total Stockholders’ Equity
815,396

 
483,152

Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
$
948,334

 
$
587,403


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