Guardant Health Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Guardant Health, Inc. (Nasdaq: GH) reported its Q3 2022 financial results, achieving $117.4 million in revenue, a 24% year-over-year increase. Clinical testing volumes surged 42% and biopharma sample volumes rose 40% compared to Q3 2021. Despite this growth, the company experienced a net loss of $162 million, a significant increase from $107.5 million the previous year. Operating expenses also rose 29% to $221.5 million. Due to ongoing challenges, the revenue guidance for 2022 has been revised down to $440-$450 million.

Positive

• Revenue increased by 24% year-over-year to $117.4 million.
• Clinical tests increased by 42% and biopharma tests by 40% year-over-year.
• Guardant Reveal expanded to include breast and lung cancers.

Negative

• Net loss attributable to common stockholders increased to $162 million from $107.5 million year-over-year.
• Operating expenses rose by 29%, totaling $221.5 million.
• 2022 revenue guidance lowered to $440-$450 million from previous $460-$470 million.

Q3 clinical and biopharma volumes up 42% and 40% year over year

PALO ALTO, Calif.--(BUSINESS WIRE)-- Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary tests, vast data sets and advanced analytics, today reported financial results for the quarter ended September 30, 2022.

Recent Highlights

• Revenue of $117.4 million for the third quarter of 2022, an increase of 24% over the corresponding period of 2021
• Reported 32,400 tests to clinical customers and 6,750 tests to biopharmaceutical customers in the third quarter of 2022, representing an increase of 42% and 40%, respectively, over the third quarter of 2021
• Expanded Guardant Reveal™ , the only tissue-free liquid biopsy test for detection of residual and recurrent disease, to include early-stage breast and lung cancers in addition to colorectal cancer
• Introduced GuardantINFINITY™, a next-generation smart liquid biopsy assay that provides broad genomic and epigenomic insights into the complexities of tumor molecular profiles and immune response to advance cancer research and therapy development
• Received FDA approval for Guardant360^® CDx liquid biopsy test as a companion diagnostic for ENHERTU^® for treatment of non-small cell lung cancer patients with activating HER2 mutations
• ECLIPSE readout and PMA submission for Shield assay both expected during the fourth quarter of the year

“Volume growth accelerated sequentially in clinical oncology, propelling us to new records in revenue and volumes. We made additional strides with Guardant Reveal, expanding its use into multiple cancer indications that now include colorectal, lung and breast cancers. In addition, Guardant Infinity, our first smart liquid biopsy offering, has seen a rapid uptake with our biopharma partners. That said, counter to our expectations earlier in the year, clinical volumes continue to be impacted by a challenging backdrop with lingering access restrictions and provider staffing shortages.” said Helmy Eltoukhy, co-founder and co-CEO.

“During the quarter we made great progress on the ECLIPSE study and are very close to locking our study database with about 70 CRCs. In parallel, our Shield LDT screening test continues to be well received by physicians and patients and has demonstrated outstanding levels of patient adherence,” said AmirAli Talasaz, co-founder and co-CEO. “This positive early response to Shield LDT gives us increased confidence in our ability to develop Shield into a leading non-invasive cancer screening methodology.”

Third Quarter 2022 Financial Results

Revenue was $117.4 million for the three months ended September 30, 2022, a 24% increase from $94.8 million for the three months ended September 30, 2021. Precision oncology revenue grew 29%, driven predominantly by an increase in clinical testing volume and biopharma sample volume, which grew 42% and 40%, respectively, over the prior year period. Development services and other revenue slightly decreased by 1%.

Gross profit, or total revenue less cost of precision oncology testing and cost of development services and other, was $76.9 million for the third quarter of 2022, an increase of $12.9 million from $64.0 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 66%, as compared to 67% for the corresponding prior year period.

Operating expenses were $221.5 million for the third quarter of 2022, as compared to $171.3 million for the corresponding prior year period, an increase of 29%. Non-GAAP operating expenses were $200.5 million for the third quarter of 2022, as compared to $135.1 million for the corresponding prior year period.

Net loss attributable to Guardant Health, Inc. common stockholders was $162.0 million for the third quarter of 2022, as compared to $107.5 million for the corresponding prior year period. Net loss per share attributable to Guardant Health, Inc. common stockholders was $1.58 for the third quarter of 2022, as compared to $1.06 for the corresponding prior year period. Non-GAAP net loss was $120.8 million for the third quarter of 2022, as compared to $70.5 million for the corresponding prior year period. Non-GAAP net loss per share was $1.18 for the third quarter of 2022, as compared to $0.70 for the corresponding prior year period.

Adjusted EBITDA loss was $112.8 million for the third quarter of 2022, as compared to a $65.2 million loss for the corresponding prior year period.

Cash, cash equivalents and marketable debt securities were $1.1 billion as of September 30, 2022.

2022 Guidance

Given the continued challenging backdrop and reimbursement delays impacting the clinical oncology business, Guardant Health now expects full year 2022 revenue to be in the range of $440 million to $450 million, representing growth of 18% to 20% compared to full year 2021. This compares to previous full year 2022 revenue guidance of $460 million to $470 million.

Webcast Information

Guardant Health will host a conference call to discuss the third quarter 2022 financial results after market close on Thursday, November 3, 2022 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 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 attributable to Guardant Health, Inc., common stockholders, non-GAAP net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted, and Adjusted EBITDA.

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, changes in estimated fair value of noncontrolling interest liability, adjustments relating to redeemable noncontrolling interest, contingent consideration, acquisition related expenses, amortization of intangible assets, fair value adjustments on marketable equity securities, impairment of other assets, and other non-recurring items.

Adjusted EBITDA is defined as net loss attributable to Guardant Health, Inc. common stockholders adjusted for interest income, interest expense, other income (expense), net, provision for (benefit from) income taxes, depreciation and amortization expense, stock-based compensation expense and related employer payroll tax payments, changes in estimated fair value of noncontrolling interest liability, adjustments relating to redeemable noncontrolling interest and contingent consideration, and, if applicable in a reporting period, acquisition-related expenses, and other non-recurring items.

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 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. 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 helping conquer cancer globally through use of its proprietary 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 commercially launched Guardant360®, Guardant360 CDx, Guardant360 TissueNext™, Guardant360 Response™, and GuardantOMNI® tests for advanced stage cancer patients, and Guardant Reveal™ for early-stage cancer patients. The Guardant Health screening portfolio, including the Shield™ test, aims to address the needs of individuals eligible for cancer screening.

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, 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, 2021, and any current and periodic reports filed with 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 September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
Revenue:
Precision oncology testing	$	102,054			$	79,272			$	278,252			$	215,605
Development services and other		15,350				15,507				44,395				49,940
Total revenue		117,404				94,779				322,647				265,545
Costs and operating expenses:
Cost of precision oncology testing		39,434				29,665				104,493				78,142
Cost of development services and other		1,062				1,151				4,711				11,348
Research and development expense		100,017				70,968				267,229				190,200
Sales and marketing expense		80,370				50,228				218,405				132,282
General and administrative expense		41,121				50,055				126,068				166,366
Total costs and operating expenses		262,004				202,067				720,906				578,338
Loss from operations		(144,600	)			(107,288	)			(398,259	)			(312,793	)
Interest income		1,754				689				3,919				3,277
Interest expense		(644	)			(644	)			(1,933	)			(1,934	)
Other income (expense), net		(18,389	)			(187	)			(18,059	)			(720	)
Fair value adjustments of noncontrolling interest liability		—				—				(99,785	)			—
Loss before provision for income taxes		(161,879	)			(107,430	)			(514,117	)			(312,170	)
Provision for income taxes		115				96				537				289
Net loss		(161,994	)			(107,526	)			(514,654	)			(312,459	)
Adjustment of redeemable noncontrolling interest		—				—				—				(2,300	)
Net loss attributable to Guardant Health, Inc. common stockholders	$	(161,994	)		$	(107,526	)		$	(514,654	)		$	(314,759	)
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted	$	(1.58	)		$	(1.06	)		$	(5.04	)		$	(3.11	)
Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted		102,289				101,420				102,065				101,184

Guardant Health, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands, except share and per share data)
	September 30, 2022				December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	158,310			$	492,202
Short-term marketable debt securities		799,727				440,546
Accounts receivable, net		86,200				97,652
Inventory, net		63,047				30,674
Prepaid expenses and other current assets, net		23,565				53,052
Total current assets		1,130,849				1,114,126
Long-term marketable debt securities		156,741				698,034
Property and equipment, net		168,007				124,461
Right-of-use assets, net		178,747				189,443
Intangible assets, net		12,417				14,207
Goodwill		3,290				3,290
Other assets, net		51,728				60,938
Total Assets	$	1,701,779			$	2,204,499
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	40,911			$	17,580
Accrued compensation		57,423				42,496
Accrued expenses		63,367				45,285
Noncontrolling interest liability		—				78,000
Deferred revenue		13,423				11,326
Total current liabilities		175,124				194,687
Convertible senior notes, net		1,136,748				1,134,821
Long-term operating lease liabilities		216,174				226,053
Other long-term liabilities		6,988				3,933
Total Liabilities		1,535,034				1,559,494
Stockholders’ equity:
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 102,413,638 and 101,767,446 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1				1
Additional paid-in capital		1,716,075				1,657,593
Accumulated other comprehensive loss		(26,852	)			(4,764	)
Accumulated deficit		(1,522,479	)			(1,007,825	)
Total Stockholders’ Equity		166,745				645,005
Total Liabilities and Stockholders’ Equity	$	1,701,779			$	2,204,499

Guardant Health, Inc. Reconciliation of Selected GAAP Measures to Non-GAAP Measures (unaudited) (in thousands)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
GAAP cost of precision oncology testing	$	39,434			$	29,665			$	104,493			$	78,142
Amortization of intangible assets		(285	)			(152	)			(582	)			(449	)
Stock-based compensation expense and related employer payroll tax payments		(1,377	)			(762	)			(3,782	)			(2,449	)
Non-GAAP cost of precision oncology testing	$	37,772			$	28,751			$	100,129			$	75,244
GAAP research and development expense	$	100,017			$	70,968			$	267,229			$	190,200
Stock-based compensation expense and related employer payroll tax payments		(7,256	)			(4,624	)			(18,857	)			(13,674	)
Contingent consideration		(355	)			—				(2,652	)			—
Non-GAAP research and development expense	$	92,406			$	66,344			$	245,720			$	176,526
GAAP sales and marketing expense	$	80,370			$	50,228			$	218,405			$	132,282
Amortization of intangible assets		(67	)			—				(201	)			—
Stock-based compensation expense and related employer payroll tax payments		(6,643	)			(4,127	)			(18,267	)			(10,554	)
Non-GAAP sales and marketing expense	$	73,660			$	46,101			$	199,937			$	121,728
GAAP general and administrative expense	$	41,121			$	50,055			$	126,068			$	166,366
Amortization of intangible assets		(339	)			(339	)			(1,007	)			(1,008	)
Stock-based compensation expense and related employer payroll tax payments		(5,955	)			(26,044	)			(31,042	)			(101,154	)
Contingent consideration		(390	)			(970	)			(4,195	)			(1,845	)
Non-GAAP general and administrative expense	$	34,437			$	22,702			$	89,824			$	62,359
GAAP loss from operations	$	(144,600	)		$	(107,288	)		$	(398,259	)		$	(312,793	)
Amortization of intangible assets		691				491				1,790				1,457
Stock-based compensation expense and related employer payroll tax payments		21,231				35,557				71,948				127,831
Contingent consideration		745				970				6,847				1,845
Non-GAAP loss from operations	$	(121,933	)		$	(70,270	)		$	(317,674	)		$	(181,660	)
GAAP net loss	$	(161,994	)		$	(107,526	)		$	(514,654	)		$	(312,459	)
Amortization of intangible assets		691				491				1,790				1,457
Stock-based compensation expense and related employer payroll tax payments		21,231				35,557				71,948				127,831
Contingent consideration		745				970				6,847				1,845
Unrealized losses on marketable equity securities		13,230				—				13,230				—
Impairment of other assets		5,261				—				5,261				—
Fair value adjustments of noncontrolling interest liability		—				—				99,785				—
Non-GAAP net loss	$	(120,836	)		$	(70,508	)		$	(315,793	)		$	(181,326	)
GAAP net loss attributable to Guardant Health, Inc. common stockholders	$	(161,994	)		$	(107,526	)		$	(514,654	)		$	(314,759	)
Amortization of intangible assets		691				491				1,790				1,457
Stock-based compensation expense and related employer payroll tax payments		21,231				35,557				71,948				127,831
Contingent consideration		745				970				6,847				1,845
Unrealized losses on marketable equity securities		13,230				—				13,230				—
Impairment of other assets		5,261				—				5,261				—
Fair value adjustments of noncontrolling interest liability		—				—				99,785				—
Adjustment of redeemable noncontrolling interest		—				—				—				2,300
Non-GAAP net loss attributable to Guardant Health, Inc. common stockholders	$	(120,836	)		$	(70,508	)		$	(315,793	)		$	(181,326	)
GAAP net loss per share attributable to Guardant Health, Inc., common stockholders, basic and diluted	$	(1.58	)		$	(1.06	)		$	(5.04	)		$	(3.11	)
Non-GAAP net loss per share attributable to Guardant Health, Inc., common stockholders, basic and diluted	$	(1.18	)		$	(0.70	)		$	(3.09	)		$	(1.79	)
Weighted-average shares used in computing GAAP and Non-GAAP net loss per share, basic and diluted		102,289				101,420				102,065				101,184

Guardant Health, Inc. Reconciliation of GAAP Net Loss Attributable to Guardant Health, Inc. Common Stockholders to Adjusted EBITDA (unaudited) (in thousands)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2021				2022				2021
GAAP net loss attributable to Guardant Health, Inc. common stockholders	$	(161,994	)		$	(107,526	)		$	(514,654	)		$	(314,759	)
Interest income		(1,754	)			(689	)			(3,919	)			(3,277	)
Interest expense		644				644				1,933				1,934
Other (income) expense, net		18,389				187				18,059				720
Provision for income taxes		115				96				537				289
Depreciation and amortization		9,807				5,544				25,793				16,181
Stock-based compensation expense and related employer payroll tax payments		21,231				35,557				71,948				127,831
Contingent consideration		745				970				6,847				1,845
Fair value adjustments of noncontrolling interest liability		—				—				99,785				—
Adjustment of redeemable noncontrolling interest		—				—				—				2,300
Adjusted EBITDA	$	(112,817	)		$	(65,217	)		$	(293,671	)		$	(166,936	)

 

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Investor Contact:

investors@guardanthealth.com

Media Contact:

press@guardanthealth.com

Source: Guardant Health, Inc.

FAQ

What were Guardant Health's Q3 2022 earnings results?

Guardant Health reported Q3 2022 revenue of $117.4 million, a 24% increase from the previous year.

How did clinical and biopharma volumes perform in Q3 2022 for Guardant Health?

Clinical test volumes rose by 42% and biopharma test volumes increased by 40% year-over-year.

What is the revised revenue guidance for Guardant Health for 2022?

The revised revenue guidance for 2022 is between $440 million and $450 million.

What was Guardant Health's net loss in Q3 2022?

Guardant Health reported a net loss of $162 million for Q3 2022.