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November, 05, 2020

Guardant Health Reports Third Quarter 2020 Financial Results

Q3 2020 Revenue Increase of 23% Over Prior Year Period

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- 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 quarter ended September 30, 2020.

Recent Highlights

  • Revenue of $74.6 million for the third quarter of 2020, an increase of 23% over the corresponding period of 2019
    • Precision oncology revenue of $60.4 million, an increase of 16% over the corresponding period of 2019
    • Development services and other revenue of $14.2 million, an increase of 63% over the corresponding period of 2019
  • Reported 16,950 tests to clinical customers and 3,071 tests to biopharmaceutical customers in the third quarter of 2020, representing an increase of 28% and a decrease of 42%, respectively, over the third quarter of 2019
  • Received FDA-approval for Guardant360® CDx, becoming the first liquid biopsy test for comprehensive tumor mutation profiling across all solid cancers
  • Launched enhanced version of Guardant360 including tumor mutational burden (TMB) and expanded homologous recombination deficiency (HRD) and fusion gene set
  • Study published in Nature Medicine shows evidence of Guardant360 liquid biopsy accelerating clinical trial enrollment compared to tissue biopsy

"Our strong performance in the third quarter is a testament to our team’s dedication, as they stay focused on executing for our customers and on our pipeline programs,” said Helmy Eltoukhy, PhD, co-founder and CEO. “While we expect to continue to see impacts related to the pandemic in the fourth quarter, we are confident that the fundamentals of our business are firmly intact. With the FDA approval of Guardant360 CDx behind us and as we look forward to 2021, I am more confident than ever in the opportunity that lies ahead for Guardant to transform patient care across the cancer care continuum.”

Third Quarter 2020 Financial Results

Revenue was $74.6 million for the three months ended September 30, 2020, a 23% increase from $60.8 million for the three months ended September 30, 2019. Precision oncology revenue grew 16% driven predominantly by an increase in average selling price. There were 16,950 clinical tests and 3,071 biopharmaceutical tests performed during the third quarter of 2020. Development services and other revenue increased 63% primarily related to the timing of project related milestones for companion diagnostic development programs.

Gross profit, or total revenue less cost of precision oncology testing and cost of development services and other, was $53.4 million for the third quarter of 2020, an increase of $11.0 million from $42.3 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 72%, as compared to 70% for the corresponding prior year period.

Operating expenses were $127.6 million for the third quarter of 2020, as compared to $59.8 million for the corresponding prior year period, an increase of 113%.

Net loss attributable to Guardant Health, Inc. common stockholders was $77.7 million for the third quarter of 2020, as compared to $12.8 million for the corresponding prior year period. Net loss per share attributable to Guardant Health, Inc. common stockholders was $0.78 for the third quarter of 2020, as compared to $0.14 for the corresponding prior year period.

Non-GAAP adjusted EBITDA was $14.6 million loss for the third quarter of 2020, as compared to $9.0 million loss for the corresponding prior year period.

Cash, cash equivalents and marketable securities were $1.1 billion as of September 30, 2020.

2020 Guidance

Guardant Health is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

Webcast Information

Guardant Health will host a conference call to discuss the third quarter 2020 financial results after market close on Thursday, November 5, 2020 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 Measure

We believe that the exclusion of certain income and expenses in calculating non-GAAP Adjusted EBITDA 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. To derive Adjusted EBITDA, we remove from GAAP results the impact of income (expenses) attributable to material non-cash items, specifically stock-based compensation and fair value remeasurements due to the subjectivity, management judgment, and market fluctuations involved around these amounts. 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.

This non-GAAP financial measure is not intended to be considered in isolation from, as substitute for, or as superior to, the corresponding financial measure 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.

Definition of Non-GAAP Adjusted EBITDA

“Adjusted EBITDA” is defined as net loss attributable to Guardant Health, Inc. common stockholders before: (i) interest income,(ii) interest expense (iii) provision for (benefit from) income taxes, (iv) depreciation and amortization expense, (v) other (income) expense, net, (vi) stock-based compensation expense, (vii) adjustments relating to non-controlling interest and contingent consideration and, if applicable in a reporting period, and (viii) acquisition-related expenses, and other non-recurring items.

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®, Guardant360® CDx, Guardant360 LDT 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 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, 2019 and in its other reports filed with the Securities and Exchange Commission, including, its Quarterly Report on Form 10-Q for the period ended March 31, 2020. 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,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Revenue:

 

 

 

 

Precision oncology testing

$

60,384

 

$

52,147

 

$

171,621

 

$

123,048

 

Development services and other

 

14,185

 

 

8,701

 

 

36,793

 

 

28,430

 

Total revenue

 

74,569

 

 

60,848

 

 

208,414

 

 

151,478

 

Costs and operating expenses:

 

 

 

 

Cost of precision oncology testing (1)

 

16,699

 

 

16,578

 

 

52,699

 

 

42,251

 

Cost of development services and other

 

4,488

 

 

1,936

 

 

11,429

 

 

6,631

 

Research and development expense (1)

 

36,245

 

 

24,569

 

 

109,580

 

 

60,417

 

Sales and marketing expense (1)

 

25,095

 

 

18,802

 

 

75,225

 

 

56,048

 

General and administrative expense (1)

 

66,294

 

 

16,440

 

 

123,265

 

 

42,540

 

Total costs and operating expenses

 

148,821

 

 

78,325

 

 

372,198

 

 

207,887

 

Loss from operations

 

(74,252

)

 

(17,477

)

 

(163,784

)

 

(56,409

)

Interest income

 

2,313

 

 

4,286

 

 

8,271

 

 

9,870

 

Interest expense

 

(8

)

 

(280

)

 

(30

)

 

(860

)

Other (expense) income, net

 

345

 

 

179

 

 

2,421

 

 

275

 

Loss before provision for income taxes

 

(71,602

)

 

(13,292

)

 

(153,122

)

 

(47,124

)

Provision for (benefit from) income taxes

 

68

 

 

(202

)

 

116

 

 

(1,383

)

Net loss

 

(71,670

)

 

(13,090

)

 

(153,238

)

 

(45,741

)

Adjustment of redeemable noncontrolling interest

 

(6,000

)

 

300

 

 

(6,800

)

 

(4,700

)

Net loss attributable to Guardant Health, Inc. common stockholders

$

(77,670

)

$

(12,790

)

$

(160,038

)

$

(50,441

)

Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted

$

(0.78

)

$

(0.14

)

$

(1.66

)

$

(0.56

)

Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted

 

99,554

 

 

93,303

 

 

96,659

 

 

89,452

 

 

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

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

Cost of precision oncology testing

$

428

 

$

266

 

$

1,138

 

$

562

 

Research and development expense

 

2,369

 

 

2,066

 

 

7,355

 

 

4,704

 

Sales and marketing expense

 

2,320

 

 

1,458

 

 

6,285

 

 

2,930

 

General and administrative expense

 

50,081

 

 

1,694

 

 

72,573

 

 

3,686

 

Total stock-based compensation expense

$

55,198

 

$

5,484

 

$

87,351

 

$

11,882

 

Guardant Health, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

September 30,
2020

 

December 31,
2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

142,945

 

 

$

143,228

 

Short-term marketable securities

870,459

 

 

379,574

 

Accounts receivable, net

36,255

 

 

47,986

 

Inventory

27,731

 

 

15,181

 

Prepaid expenses and other current assets, net

9,898

 

 

11,389

 

Total current assets

1,087,288

 

 

597,358

 

Long-term marketable securities

51,398

 

 

268,783

 

Property and equipment, net

61,882

 

 

43,668

 

Right-of-use assets

36,103

 

 

29,140

 

Intangible assets, net

16,645

 

 

8,524

 

Goodwill

3,290

 

 

3,290

 

Capitalized license fees

50

 

 

6,890

 

Other assets, net

5,453

 

 

4,882

 

Total Assets

$

1,262,109

 

 

$

962,535

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

18,281

 

 

$

16,197

 

Accrued compensation

24,037

 

 

18,557

 

Accrued expenses

22,312

 

 

25,703

 

Deferred revenue

7,337

 

 

12,277

 

Total current liabilities

71,967

 

 

72,734

 

Long-term operating lease liabilities

39,682

 

 

33,256

 

Obligation related to royalty

 

 

6,880

 

Other long-term liabilities

1,856

 

 

1,672

 

Total Liabilities

113,505

 

 

114,542

 

Redeemable noncontrolling interest

56,400

 

 

49,600

 

Stockholders’ equity:

 

 

 

Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 99,897,188 and 94,261,414 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

1

 

 

1

 

Additional paid-in capital

1,601,188

 

 

1,150,090

 

Accumulated other comprehensive income

3,862

 

 

1,111

 

Accumulated deficit

(512,847)

 

 

(352,809)

 

Total Stockholders’ Equity

1,092,204

 

 

798,393

 

Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity

$

1,262,109

 

 

$

962,535

 

Guardant Health, Inc.

Reconciliation of Net Loss Attributable to Guardant Health, Inc. Common Stockholders (1) to Non-GAAP Adjusted EBITDA (unaudited)

(in thousands)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Net loss attributable to Guardant Health, Inc. common stockholders

$

(77,670)

 

 

$

(12,790)

 

 

$

(160,038)

 

 

$

(50,441)

 

Adjustments:

 

 

 

 

 

 

 

Interest income

(2,313)

 

 

(4,286)

 

 

(8,271)

 

 

(9,870)

 

Interest expense

8

 

 

280

 

 

30

 

 

860

 

Other (income) expense, net

(345)

 

 

(179)

 

 

(2,421)

 

 

(275)

 

Provision for (benefit from) income taxes

68

 

 

(202)

 

 

116

 

 

(1,383)

 

Depreciation and amortization

4,353

 

 

2,952

 

 

11,462

 

 

7,963

 

Stock-based compensation expense

55,198

 

 

5,484

 

 

87,351

 

 

11,882

 

Adjustments relating to non-controlling interest and contingent consideration

6,070

 

 

(300)

 

 

6,680

 

 

4,700

 

Acquisition related expenses (2)

 

 

 

 

9,707

 

 

422

 

Adjusted EBITDA (non-GAAP)

$

(14,631)

 

 

$

(9,041)

 

 

$

(55,384)

 

 

$

(36,142)

 

(1) Net Loss attributable to Guardant Health, Inc. common stockholders is the most directly comparable GAAP operating financial measure.

(2) For the nine months ended September 30, 2020, acquisition related expenses consist of a dispute settlement expense of $1.2 million and an IPR&D technology write off for $8.5 million incurred during the three months ended March 31, 2020 in connection with a settlement and a license purchase agreement. For the nine months ended September 30, 2019, acquisition related expenses of $0.4 million primarily include certain diligence, accounting, and legal expenses incurred related to our Bellwether acquisition.

Investor Contact:
Carrie Mendivil
investors@guardanthealth.com

Media Contact:
Anna Czene
press@guardanthealth.com

Source: Guardant Health, Inc.

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