10-QPeriod: Q2 FY2023

Guardant Health, Inc. Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:GH

Summary

Guardant Health, Inc. reported its financial results for the second quarter and first half of 2023, highlighting significant revenue growth driven by its precision oncology testing segment. Total revenue increased by 26% year-over-year for the quarter and 30% for the first half, primarily fueled by a substantial rise in clinical testing volume. Despite this top-line growth, the company continues to operate at a loss, with net losses of $72.8 million for the quarter and $206.3 million for the first half. The company strengthened its cash position by raising $381.4 million in net proceeds from a follow-on public offering in May 2023, resulting in total cash, cash equivalents, and marketable securities exceeding $1.2 billion as of June 30, 2023. The company's strategic focus remains on expanding its early cancer detection capabilities, particularly with the Shield LDT test for colorectal cancer, which has shown promising results in clinical studies and a premarket approval application submitted to the FDA. Continued investment in research and development, alongside international expansion efforts, are key priorities. While revenue growth is encouraging, investors will be closely watching the company's path to profitability and its ability to navigate reimbursement complexities and ongoing legal proceedings.

Financial Highlights

50 data points
Beta

Revenue

$137.15M

Net Income

-$72.77M

-53.1% Net Margin

EPS (Diluted)

$-0.67

Total Assets

$1.84B

Cash & Equivalents

$271.17M

Free Cash Flow

-$100.53M

Financial Statements
Beta
Revenue$137.15M
R&D Expenses$90.36M
Operating Expenses$256.77M
Operating Income-$119.62M
Interest Expense$645K
Net Income-$72.77M
EPS (Basic)$-0.67
EPS (Diluted)$-0.67
Shares Outstanding (Basic)108.81M
Shares Outstanding (Diluted)108.81M

Key Highlights

  • 1Total revenue increased by 26% to $137.2 million for Q2 2023 compared to $109.1 million in Q2 2022, driven by a 36% increase in precision oncology testing revenue.
  • 2Precision oncology testing revenue from clinical customers grew by 42% year-over-year, with sample volume increasing to approximately 43,500 tests in Q2 2023.
  • 3The company successfully raised $381.4 million in net proceeds from a follow-on public offering in May 2023, significantly boosting its cash reserves.
  • 4As of June 30, 2023, Guardant Health held $1.2 billion in cash, cash equivalents, and marketable debt securities, indicating a strong liquidity position.
  • 5Net loss for Q2 2023 was $72.8 million, an improvement from $229.4 million in the prior year period, but indicative of ongoing operational losses.
  • 6The Shield LDT test for colorectal cancer screening has met co-primary endpoints in the ECLIPSE study, and a premarket approval application was submitted to the FDA in March 2023.
  • 7Other income (expense), net, for Q2 2023 was positively impacted by $64.0 million in unrealized gains from the Lunit, Inc. investment, alongside $23.6 million in impairments for non-marketable securities.

Frequently Asked Questions

Guardant Health continues to experience strong revenue growth, particularly in its precision oncology testing segment, driven by increased test volumes from clinical customers. The company also successfully bolstered its cash position through a significant follow-on public offering, providing ample liquidity with over $1.2 billion in cash and marketable securities as of June 30, 2023. However, the company is still operating at a net loss, and the path to profitability remains a key focus for investors. Continued investment in R&D and market expansion are expected.

The primary driver of revenue growth is the increase in precision oncology testing, especially from clinical customers. This is attributed to a significant rise in sample volume, up 42% year-over-year for clinical customers in Q2 2023. Revenue from biopharmaceutical customers also saw an increase, driven by higher sample volume and an expanding customer base, partly supported by the launch of the GuardantINFINITY test.

The Shield LDT test for colorectal cancer screening has achieved significant milestones. It met its co-primary endpoints in the extensive ECLIPSE study, demonstrating promising sensitivity and specificity. A premarket approval application was submitted to the FDA in March 2023, marking a critical step towards potential wider adoption and commercialization. The company also plans to expand its Shield assay into lung and multi-cancer screening.

The company's main expenses include Cost of Revenue, Research and Development (R&D), Sales and Marketing, and General and Administrative (G&A). For Q2 2023, total cost of revenue increased by 47% driven by higher testing volumes. R&D expenses grew by 6%, reflecting continued investment in product development and clinical studies. Sales and marketing expenses decreased slightly by 3%, while G&A expenses decreased by 5%, primarily due to a reduction in stock-based compensation related to market-based RSUs that were fully expensed in the prior year.