10-QPeriod: Q3 FY2020

Guardant Health, Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 5, 2020For Securities:GH

Summary

Guardant Health, Inc. reported third-quarter 2020 results showing continued revenue growth, with total revenue increasing by 23% year-over-year to $74.6 million. This growth was primarily driven by a 16% increase in precision oncology testing revenue, reaching $60.4 million, and a significant 63% surge in development services and other revenue to $14.2 million, fueled by new biopharmaceutical collaborations. Despite revenue expansion, the company continued to incur substantial net losses, amounting to $71.7 million for the quarter, a significant increase from $13.1 million in the prior year period, largely due to a substantial rise in general and administrative expenses, particularly stock-based compensation related to market-based restricted stock units. However, the company maintained a strong liquidity position with $1.1 billion in cash, cash equivalents, and marketable securities as of September 30, 2020, providing ample runway for continued investment in research and development and strategic growth initiatives.

Financial Highlights

51 data points
Beta

Revenue

$74.57M

Net Income

-$77.67M

-104.2% Net Margin

EPS (Diluted)

$-0.78

Total Assets

$1.26B

Cash & Equivalents

$142.94M

Free Cash Flow

-$17.84M

Financial Statements
Beta
Revenue$74.57M
R&D Expenses$36.24M
Operating Expenses$148.82M
Operating Income-$74.25M
Interest Expense$8K
Net Income-$77.67M
EPS (Basic)$-0.78
EPS (Diluted)$-0.78
Shares Outstanding (Basic)99.55M
Shares Outstanding (Diluted)99.55M

Key Highlights

  • 1Total revenue increased 23% year-over-year to $74.6 million for Q3 2020.
  • 2Precision oncology testing revenue grew 16% to $60.4 million, driven by increased sample volume and average selling price, with clinical customer revenue up significantly.
  • 3Development services and other revenue saw a substantial increase of 63% to $14.2 million, attributed to new biopharmaceutical collaboration projects.
  • 4Net loss widened to $71.7 million in Q3 2020 from $13.1 million in Q3 2019, mainly due to a significant increase in general and administrative expenses, particularly stock-based compensation.
  • 5Research and development expenses increased by 48% to $36.2 million, reflecting continued investment in technology and personnel.
  • 6Sales and marketing expenses rose 33% to $25.1 million, supporting commercial expansion.
  • 7The company ended the quarter with a strong cash position of $1.1 billion in cash, cash equivalents, and marketable securities.

Frequently Asked Questions

Guardant Health reported a 23% year-over-year increase in total revenue to $74.6 million for the third quarter of 2020. However, the company also experienced a significant increase in net loss, widening to $71.7 million from $13.1 million in the same period last year, primarily due to a substantial rise in general and administrative expenses, notably stock-based compensation.

Revenue growth was driven by both precision oncology testing, which increased by 16% to $60.4 million, and development services and other, which surged by 63% to $14.2 million. The growth in precision oncology testing was due to higher sample volumes and an improved average selling price, while the development services segment benefited from new collaboration projects with biopharmaceutical customers.

The substantial increase in net loss is primarily attributable to a significant rise in general and administrative expenses, which grew by 303% to $66.3 million. This increase was largely driven by stock-based compensation expenses, particularly those related to market-based restricted stock units granted to key executives, as well as increased headcount and other corporate costs.

Guardant Health maintains a strong liquidity position, with $1.1 billion in cash, cash equivalents, and marketable securities as of September 30, 2020. The company believes this is sufficient to fund its operating plan for more than 12 months, providing a solid foundation for continued investment in research and development and operational expansion.