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

Rhea-AI Summary

Guardant Health (Nasdaq: GH) reported strong Q2 2024 financial results, with revenue increasing 29% to $177.2 million. The company raised its 2024 revenue guidance to $690-$700 million, representing 22-24% growth. Key highlights include:

1. Clinical testing volume up 14% and biopharma testing volume up 56% year-over-year
2. FDA approval of Shield as a first-line colorectal cancer screening option
3. Launch of upgraded Guardant360 on Smart Liquid Biopsy platform
4. Gross profit increased to $104.8 million, with a 59% gross margin
5. Net loss of $102.6 million, or $0.84 per share

The company's strong performance was driven by solid volume growth and improved reimbursement for Guardant360 tests.

Positive

• Revenue growth of 29% year-over-year to $177.2 million
• Raised 2024 revenue guidance to $690-$700 million (22-24% growth)
• Clinical testing volume increased 14% and biopharma testing volume up 56%
• FDA approval of Shield as first-line colorectal cancer screening option
• Gross profit increased to $104.8 million
• Improved reimbursement for Guardant360 tests

Negative

• Net loss increased to $102.6 million from $72.8 million in Q2 2023
• Gross margin decreased to 59% from 61% in the prior year period
• Operating expenses increased to $205.4 million from $202.9 million in Q2 2023
• Free cash flow remained negative at $(99.1) million

Financial Analyst

Guardant Health's Q2 2024 results show strong performance, with revenue growing 29% year-over-year to $177.2 million. Key drivers include a 14% increase in clinical tests and a 56% surge in biopharma tests. The company's raised guidance for 2024 revenue ($690-700 million) signals confidence in continued growth.

However, the widening net loss ($102.6 million vs $72.8 million in Q2 2023) is concerning, primarily due to unrealized losses on equity investments. The non-GAAP net loss improvement ($58.5 million vs $88.7 million) suggests better operational performance when excluding one-time items.

The 59% gross margin, down from 61%, warrants attention. Investors should monitor whether this trend continues, potentially impacting profitability.

Oncology Expert

The FDA approval of Shield as a first-line colorectal cancer (CRC) screening option is a significant milestone. This blood-based test could revolutionize CRC screening, potentially increasing compliance rates due to its less invasive nature compared to colonoscopies.

The upgrade of Guardant360 to the Smart Liquid Biopsy platform, combining genomics and epigenomics, represents a technological leap in liquid biopsy capabilities. This could enhance detection accuracy and provide more comprehensive insights into cancer biology.

The expansion of Guardant360 TissueNext to a 498-gene panel is also noteworthy, potentially broadening treatment options for advanced cancer patients by identifying more actionable mutations.

Market Research Analyst

Guardant Health's market position in precision oncology is strengthening. The 33% growth in precision oncology revenue, driven by volume increases and improved reimbursement, indicates growing market acceptance and expanding payer coverage.

The Shield test's Medicare coverage for 45 million eligible individuals opens a substantial market opportunity. With CRC being a leading cause of cancer deaths, this could drive significant adoption and revenue growth.

However, the company faces challenges in its development services segment, with revenue declining slightly. This suggests a need to diversify revenue streams and reduce dependence on the precision oncology segment for long-term growth.

Revenue growth of 29% driven by strong clinical and biopharma volume and Guardant360 ASP tailwinds

Shield approved by FDA as primary option for CRC screening and is commercially available in U.S.

PALO ALTO, Calif.--(BUSINESS WIRE)-- Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company, today reported financial results for the quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights

• Revenue of $177.2 million for the second quarter of 2024, an increase of 29% over the second quarter of 2023
• Reported 49,400 tests to clinical customers and 10,475 tests to biopharmaceutical customers in the second quarter of 2024, representing increases of 14% and 56%, respectively, over the second quarter of 2023
• Raised 2024 annual guidance for revenue to a new range of $690 to $700 million, representing growth of 22% to 24%

Recent Operating Highlights

• Received FDA approval for Shield as a first-line CRC screening option and initiated commercial launch of Shield IVD
• Shield now meets the requirements for Medicare coverage for 45 million eligible individuals
• Launched major upgrade of Guardant360 on Smart Liquid Biopsy platform, further extending best-in-class performance
• Upgraded Guardant360 TissueNext to a 498 gene panel to identify more treatment options for patients with advanced cancer
• Publication of COSMOS study data in Clinical Cancer Research further validates Reveal for MRD CRC surveillance testing in Stage II and III patients

“We had another strong quarter driven by solid volume growth, particularly for biopharma, and continued improvements to Guardant360 reimbursement,” said Helmy Eltoukhy, co-founder and co-CEO. “We also reached major milestones across our oncology business with the upgrades of Guardant360 onto our Smart Liquid Biopsy platform, a revolutionary platform that combines genomics with epigenomics, and of Guardant360 TissueNext to identify more treatment options for patients with advanced cancer. Additionally, our COSMOS study was recently published in Clinical Cancer Research and submitted to MolDx for Medicare reimbursement of CRC surveillance. We look forward to continuing this momentum throughout the remainder of the year as we deliver on our mission of giving us all more time free from cancer.”

“FDA approval of our Shield blood test for first-line colorectal cancer screening is a huge victory for Guardant and patients,” said AmirAli Talasaz, co-founder and co-CEO. “Commercial launch of Shield and CMS coverage make our blood-based screening option accessible to more than 45 million Medicare beneficiaries. Shield offers a more pleasant way to stay up to date with colorectal cancer screening and detect the disease early, when it is more easily treated.”

Second Quarter 2024 Financial Results

Revenue was $177.2 million for the second quarter of 2024, a 29% increase from $137.2 million for the corresponding prior year period. Precision oncology revenue grew 33%, to $166.5 million for the second quarter of 2024, from $125.2 million for the corresponding prior year period, driven by an increase in clinical and biopharma testing volume, which grew 14% and 56%, 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 Medicare reimbursement for our Guardant360 LDT test to $5,000, effective January 1, 2024; and an increase in both Medicare Advantage and commercial payer reimbursement. Development services and other revenue was $10.7 million for the second quarter of 2024, compared to $11.9 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 $104.8 million for the second quarter of 2024, an increase of $21.5 million from $83.3 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 59%, as compared to 61% for the corresponding prior year period. Precision oncology gross margin was 61% in the second quarter of 2024, as compared to 61% in the prior year period. Development services and other gross margin was 37% in the second quarter of 2024, as compared to 62% in the prior year period.

Non-GAAP gross profit was $106.8 million for the second quarter of 2024, an increase of $21.5 million, from $85.4 million for the corresponding prior year period. Non-GAAP gross margin was 60% for the second quarter of 2024, as compared to 62% for the corresponding prior year period.

Non-GAAP gross profit excluding screening was $109.7 million for the second quarter of 2024, an increase of $22.1 million, from $87.6 million for the corresponding prior year period. Non-GAAP gross margin excluding screening was 62% for the second quarter of 2024, as compared to 64% for the corresponding prior year period.

Operating expenses were $205.4 million for the second quarter of 2024, as compared to $202.9 million for the corresponding prior year period. Non-GAAP operating expenses were $178.8 million for the second quarter of 2024, as compared to $180.5 million for the corresponding prior year period.

Net loss was $102.6 million for the second quarter of 2024, as compared to $72.8 million for the corresponding prior year period. Net loss per share was $0.84 for the second quarter of 2024, as compared to $0.67 for the corresponding prior year period. The year-over-year increase in net loss is primarily due to a $79.5 million increase in unrealized losses recorded for our equity security investment, partially offset by a $23.6 million impairment for our non-marketable equity security investments and other related assets recorded during the corresponding prior year period, a $19.0 million year over year improvement in loss from operations, and a $7.2 million increase in interest income.

Non-GAAP net loss was $58.5 million for the second quarter of 2024, as compared to $88.7 million for the corresponding prior year period. Non-GAAP net loss per share was $0.48 for the second quarter of 2024, as compared to $0.82 for the corresponding prior year period.

Adjusted EBITDA loss was $61.9 million for the second quarter of 2024, as compared to a $85.2 million loss for the corresponding prior year period.

Free cash flow for the second quarter of 2024 was $(99.1) million, as compared to $(100.5) million for the corresponding prior year period. Cash, cash equivalents, and restricted cash were $1.0 billion as of June 30, 2024.

2024 Guidance

Guardant Health now expects full year 2024 revenue excluding screening to be in the range of $690 to $700 million, representing growth of 22% to 24% compared to full year 2023. This compares to the prior range of $675 to $685 million, representing growth of 20% to 21%. Guardant Health continues to expect full year 2024 non-GAAP gross margin excluding screening to be in the range of 61% to 63% and total non-GAAP operating expenses to be in the range of $720 to $730 million, representing a flat to 1% decrease compared to 2023. Guardant Health continues to expect free cash flow to be in the range of $(275) to $(285) million in 2024, representing an improvement of $60 million to $70 million compared to 2023.

Webcast Information

Guardant Health will host a conference call to discuss the second quarter 2024 financial results after market close on Wednesday, August 7, 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 oncology company focused on guarding wellness and giving every person more time free from cancer. Founded in 2012, Guardant is transforming patient care and accelerating new cancer therapies 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 treatment selection 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 June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue:
Precision oncology testing	$	166,518			$	125,244			$	322,747			$	238,637
Development services and other		10,717				11,906				22,979				27,227
Total revenue		177,235				137,150				345,726				265,864
Costs and operating expenses:
Cost of precision oncology testing		65,715				49,357				125,021				94,463
Cost of development services and other		6,706				4,491				12,696				12,458
Research and development expense		83,102				90,359				166,904				183,487
Sales and marketing expense		81,867				71,043				162,292				147,166
General and administrative expense		40,463				41,516				79,114				81,961
Total costs and operating expenses		277,853				256,766				546,027				519,535
Loss from operations		(100,618	)			(119,616	)			(200,301	)			(253,671	)
Interest income		13,913				6,727				28,781				9,787
Interest expense		(645	)			(645	)			(1,290	)			(1,289	)
Other income (expense), net		(15,145	)			41,259				(44,265	)			39,605
Loss before provision for income taxes		(102,495	)			(72,275	)			(217,075	)			(205,568	)
Provision for income taxes		133				496				538				736
Net loss	$	(102,628	)		$	(72,771	)		$	(217,613	)		$	(206,304	)
Net loss per share, basic and diluted	$	(0.84	)		$	(0.67	)		$	(1.78	)		$	(1.95	)
Weighted-average shares used in computing net loss per share, basic and diluted		122,447				108,808				122,080				105,752

Guardant Health, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands, except share and per share data)
	June 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	1,035,239			$	1,133,537
Short-term marketable debt securities		—				35,097
Accounts receivable, net		100,519				88,783
Inventory, net		66,984				61,948
Prepaid expenses and other current assets, net		87,232				27,741
Total current assets		1,289,974				1,347,106
Property and equipment, net		132,317				145,096
Right-of-use assets, net		146,111				157,616
Intangible assets, net		7,742				8,979
Goodwill		3,290				3,290
Other assets, net		29,906				124,334
Total Assets	$	1,609,340			$	1,786,421
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	42,447			$	51,741
Accrued compensation		59,067				72,736
Accrued expenses		70,680				63,475
Deferred revenue		29,375				17,965
Total current liabilities		201,569				205,917
Convertible senior notes, net		1,141,256				1,139,966
Long-term operating lease liabilities		172,194				185,848
Other long-term liabilities		95,934				96,006
Total Liabilities		1,610,953				1,627,737
Stockholders’ equity:
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 122,969,580 and 121,629,861 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		1				1
Additional paid-in capital		2,363,501				2,304,220
Accumulated other comprehensive loss		(5,640	)			(3,675	)
Accumulated deficit		(2,359,475	)			(2,141,862	)
Total Stockholders’ (Deficit) Equity		(1,613	)			158,684
Total Liabilities and Stockholders’ (Deficit) Equity	$	1,609,340			$	1,786,421

Guardant Health, Inc. Reconciliation of Selected GAAP Measures to Non-GAAP Measures (unaudited) (in thousands, except per share data)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
GAAP cost of precision oncology testing	$	65,715			$	49,357			$	125,021			$	94,463
Amortization of intangible assets		(150	)			(149	)			(299	)			(297	)
Stock-based compensation expense and related employer payroll tax payments		(1,309	)			(1,225	)			(2,587	)			(2,443	)
Non-GAAP cost of precision oncology testing	$	64,256			$	47,983			$	122,135			$	91,723
GAAP cost of development services and other	$	6,706			$	4,491			$	12,696			$	12,458
Amortization of intangible assets		(67	)			(201	)			(267	)			(402	)
Stock-based compensation expense and related employer payroll tax payments		(498	)			(478	)			(997	)			(954	)
Non-GAAP cost of development services and other	$	6,141			$	3,812			$	11,432			$	11,102
GAAP gross profit	$	104,814			$	83,302			$	208,009			$	158,943
Amortization of intangible assets		217				350				566				699
Stock-based compensation expense and related employer payroll tax payments		1,807				1,703				3,584				3,397
Non-GAAP gross profit	$	106,838			$	85,355			$	212,159			$	163,039
GAAP cost of screening	$	3,459			$	2,966			$	6,788			$	7,031
Amortization of intangible assets		(67	)			(201	)			(267	)			(402	)
Stock-based compensation expense and related employer payroll tax payments		(498	)			(478	)			(997	)			(954	)
Non-GAAP cost of screening	$	2,894			$	2,287			$	5,524			$	5,675
Non-GAAP gross profit excluding cost of screening	$	109,732			$	87,642			$	217,683			$	168,714
GAAP research and development expense	$	83,102			$	90,359			$	166,904			$	183,487
Stock-based compensation expense and related employer payroll tax payments		(10,001	)			(8,518	)			(20,065	)			(17,266	)
Contingent consideration		(110	)			(531	)			(485	)			(1,101	)
Non-GAAP research and development expense	$	72,991			$	81,310			$	146,354			$	165,120
GAAP sales and marketing expense	$	81,867			$	71,043			$	162,292			$	147,166
Stock-based compensation expense and related employer payroll tax payments		(7,258	)			(5,977	)			(14,587	)			(13,520	)
Non-GAAP sales and marketing expense	$	74,609			$	65,066			$	147,705			$	133,646
GAAP general and administrative expense	$	40,463			$	41,516			$	79,114			$	81,961
Amortization of intangible assets		(335	)			(336	)			(671	)			(667	)
Stock-based compensation expense and related employer payroll tax payments		(8,659	)			(6,755	)			(16,823	)			(11,223	)
Contingent consideration		(300	)			(310	)			(420	)			(10	)
Non-GAAP general and administrative expense	$	31,169			$	34,115			$	61,200			$	70,061
GAAP loss from operations	$	(100,618	)		$	(119,616	)		$	(200,301	)		$	(253,671	)
Amortization of intangible assets		552				686				1,237				1,366
Stock-based compensation expense and related employer payroll tax payments		27,725				22,953				55,059				45,406
Contingent consideration		410				841				905				1,111
Non-GAAP loss from operations	$	(71,931	)		$	(95,136	)		$	(143,100	)		$	(205,788	)
GAAP net loss	$	(102,628	)		$	(72,771	)		$	(217,613	)		$	(206,304	)
Amortization of intangible assets		552				686				1,237				1,366
Stock-based compensation expense and related employer payroll tax payments		27,725				22,953				55,059				45,406
Contingent consideration		410				841				905				1,111
Unrealized losses (gains) on marketable equity securities		15,485				(63,997	)			45,539				(67,879	)
Impairment of non-marketable equity securities and other related assets		—				23,569				—				29,054
Non-GAAP net loss	$	(58,456	)		$	(88,719	)		$	(114,873	)		$	(197,246	)
GAAP net loss per share, basic and diluted	$	(0.84	)		$	(0.67	)		$	(1.78	)		$	(1.95	)
Non-GAAP net loss per share, basic and diluted	$	(0.48	)		$	(0.82	)		$	(0.94	)		$	(1.87	)
Weighted-average shares used in computing GAAP and Non-GAAP net loss per share, basic and diluted		122,447				108,808				122,080				105,752

Reconciliation of GAAP Net Loss to Adjusted EBITDA (unaudited) (in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
GAAP net loss	$	(102,628	)		$	(72,771	)		$	(217,613	)		$	(206,304	)
Interest income		(13,913	)			(6,727	)			(28,781	)			(9,787	)
Interest expense		645				645				1,290				1,289
Other expense (income), net		15,145				(41,259	)			44,265				(39,605	)
Provision for income taxes		133				496				538				736
Depreciation and amortization		10,623				10,631				21,335				20,976
Stock-based compensation expense and related employer payroll tax payments		27,725				22,953				55,059				45,406
Contingent consideration		410				841				905				1,111
Adjusted EBITDA	$	(61,860	)		$	(85,191	)		$	(123,002	)		$	(186,178	)

Reconciliation of Free Cash Flow to Net Cash Used in Operating Activities (unaudited) (in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net cash used in operating activities	$	(94,002	)		$	(94,015	)		$	(124,286	)		$	(168,456	)
Purchase of property and equipment		(5,077	)			(6,513	)			(12,011	)			(14,037	)
Free cash flow	$	(99,079	)		$	(100,528	)		$	(136,297	)		$	(182,493	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807054615/en/

Investor Contact:

Zarak Khurshid

investors@guardanthealth.com

Media Contact:

Melissa Marasco

press@guardanthealth.com

+1 650-647-3711

Source: Guardant Health, Inc.

FAQ

What was Guardant Health's revenue for Q2 2024?

Guardant Health (GH) reported revenue of $177.2 million for Q2 2024, representing a 29% increase from the same period in 2023.

How much did Guardant Health's clinical and biopharma testing volumes grow in Q2 2024?

In Q2 2024, Guardant Health's (GH) clinical testing volume grew 14% year-over-year, while biopharma testing volume increased by 56%.

What is Guardant Health's updated revenue guidance for 2024?

Guardant Health (GH) raised its 2024 revenue guidance to a range of $690 to $700 million, representing growth of 22% to 24% compared to 2023.

What major regulatory approval did Guardant Health receive in Q2 2024?

Guardant Health (GH) received FDA approval for Shield as a first-line colorectal cancer screening option in Q2 2024.

What was Guardant Health's net loss per share in Q2 2024?

Guardant Health (GH) reported a net loss per share of $0.84 for Q2 2024, compared to $0.67 for the same period in 2023.