10-QPeriod: Q2 FY2021

Guardant Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:GH

Summary

Guardant Health, Inc. (GH) reported strong revenue growth for the second quarter and first half of 2021, with total revenue increasing by 39% and 28% year-over-year, respectively. This growth was primarily driven by a significant increase in precision oncology testing, particularly from clinical customers, alongside a substantial rise in development services and other revenue. Despite the revenue growth, the company continued to experience significant operating losses, with a net loss of $97.6 million in Q2 2021 and $204.9 million in the first half of 2021. These losses are largely attributable to increased investments in research and development (up 75% in Q2 and 63% in H1) and sales and marketing (up 91% in Q2 and 64% in H1), reflecting the company's strategy to expand its product pipeline, commercial reach, and market adoption. The company ended the period with a robust cash position of $1.8 billion, providing ample liquidity to fund its ongoing operations and strategic initiatives. Guardant Health remains focused on expanding its test offerings and penetrating key markets, but investors should remain mindful of the significant ongoing investment required to achieve profitability and the potential impacts of reimbursement and competitive dynamics.

Financial Highlights

50 data points
Beta

Revenue

$92.10M

Net Income

-$97.58M

-105.9% Net Margin

EPS (Diluted)

$-0.96

Total Assets

$2.29B

Cash & Equivalents

$938.90M

Free Cash Flow

-$81.27M

Financial Statements
Beta
Revenue$92.10M
R&D Expenses$63.72M
Operating Expenses$189.74M
Operating Income-$97.64M
Interest Expense$644K
Net Income-$97.58M
EPS (Basic)$-0.96
EPS (Diluted)$-0.96
Shares Outstanding (Basic)101.17M
Shares Outstanding (Diluted)101.17M

Key Highlights

  • 1Total revenue increased by 39% to $92.1 million for the three months ended June 30, 2021, and by 28% to $170.8 million for the six months ended June 30, 2021.
  • 2Precision oncology testing revenue grew 42% year-over-year for Q2 2021, driven by increased sample volume, particularly from clinical customers.
  • 3Development services and other revenue increased by 27% in Q2 2021 and 52% in the first half of 2021, reflecting growth in biopharmaceutical collaborations.
  • 4Operating expenses significantly increased due to strategic investments, with R&D up 75% and Sales & Marketing up 91% in Q2 2021 compared to the prior year.
  • 5The company reported a net loss of $97.6 million for Q2 2021 and $204.9 million for the first half of 2021, reflecting ongoing investment in growth.
  • 6Cash, cash equivalents, and marketable securities totaled $1.8 billion as of June 30, 2021, providing a strong liquidity position.
  • 7The company introduced Guardant360 TissueNext and Guardant360 Response in June 2021, expanding its product portfolio.

Frequently Asked Questions

Guardant Health's revenue growth is primarily driven by its precision oncology testing services, particularly an increase in sample volume from clinical customers. Additionally, revenue from development services and other, which includes collaborations with biopharmaceutical companies, has also shown significant growth.

The company is making substantial investments in research and development (R&D) and sales and marketing to expand its product offerings, improve its technology, and increase market adoption. These strategic investments, including increased headcount and clinical studies, are a primary reason for the continued operating losses, as the company prioritizes long-term growth over short-term profitability.

Guardant Health maintains a strong liquidity position with $1.8 billion in cash, cash equivalents, and marketable securities as of June 30, 2021. The company believes this is sufficient to fund its operating plan for at least the next 12 months. It primarily funds its operations through equity sales, convertible debt, and revenue generated from its services. While the company anticipates continued growth, it may seek additional capital if needed for expansion or strategic opportunities.

In the period, Guardant Health launched Guardant360 TissueNext, its first tissue-based test, and Guardant360 Response, a test for measuring early indications of patient response to treatment. The company is also continuing to develop its LUNAR program for early-stage cancer patients and expand its GuardantINFORM platform for biopharmaceutical companies.