10-QPeriod: Q2 FY2020

Guardant Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 6, 2020For Securities:GH

Summary

Guardant Health, Inc. reported its second-quarter 2020 financial results, highlighting significant revenue growth driven by its precision oncology testing segment. Total revenue increased by 23% year-over-year to $66.3 million. The company experienced strong growth in clinical customer revenue, largely due to expanded Medicare coverage for its Guardant360 test. While revenue from biopharmaceutical customers saw a slight decrease, this was attributed to the timing of clinical trials. Despite revenue growth, the company continued to invest heavily in research and development, leading to an increased net loss of $49.7 million for the quarter. Significant increases in R&D and G&A expenses, partly due to substantial stock-based compensation related to executive awards, contributed to the wider loss. The company ended the quarter with a strong liquidity position, holding over $1.1 billion in cash, cash equivalents, and marketable securities, bolstered by a successful follow-on public offering in June 2020.

Financial Highlights

51 data points
Beta

Revenue

$66.33M

Net Income

-$54.64M

-82.4% Net Margin

EPS (Diluted)

$-0.57

Total Assets

$1.28B

Cash & Equivalents

$164.67M

Free Cash Flow

-$32.87M

Financial Statements
Beta
Revenue$66.33M
R&D Expenses$36.32M
Operating Expenses$120.95M
Operating Income-$54.62M
Interest Expense$10K
Net Income-$54.64M
EPS (Basic)$-0.57
EPS (Diluted)$-0.57
Shares Outstanding (Basic)96.01M
Shares Outstanding (Diluted)96.01M

Key Highlights

  • 1Total revenue grew 23% to $66.3 million in Q2 2020 compared to $54.0 million in Q2 2019.
  • 2Precision oncology testing revenue increased 21% to $51.0 million, driven by higher average selling prices and increased Medicare reimbursement.
  • 3Development services revenue saw a 29% increase to $15.3 million, attributed to new collaboration projects.
  • 4Net loss widened to $49.7 million from $11.3 million in the prior year's quarter, primarily due to increased R&D and G&A expenses.
  • 5Stock-based compensation expenses, particularly for market-based restricted stock units, significantly impacted G&A expenses.
  • 6The company ended the quarter with a robust cash position of $1.1 billion, supported by a June 2020 public offering.
  • 7The company noted the ongoing impact of the COVID-19 pandemic on its operations, clinical studies, and customer sample volumes.

Frequently Asked Questions

Guardant Health reported a 23% year-over-year increase in total revenue to $66.3 million for the second quarter of 2020. Precision oncology testing revenue grew 21% to $51.0 million, while development services revenue increased by 29% to $15.3 million.

The company maintained a strong liquidity position, ending the quarter with $164.7 million in cash and cash equivalents and $919.3 million in marketable securities, totaling over $1.1 billion. This was significantly bolstered by a successful follow-on public offering in June 2020 which raised approximately $354.6 million in net proceeds.

The net loss for the quarter increased to $49.7 million from $11.3 million in Q2 2019. This was primarily driven by significant investments in research and development, which nearly doubled year-over-year, and a substantial increase in general and administrative expenses. The latter was largely due to increased stock-based compensation expenses, particularly related to market-based restricted stock units granted to executives, and higher headcount.

The company stated that the COVID-19 pandemic has disrupted its operations and expects it to continue to do so. This includes impacts on sample volumes from clinical and biopharmaceutical customers, delays in clinical studies, and constraints on sales and marketing efforts. The company also launched a COVID-19 test, Guardant-19, in June 2020 under an Emergency Use Authorization, though its commercial scale and financial impact are yet to be determined.