Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 19, 2018
 
GUARDANT HEALTH, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
0001-576280
 
45-4139254
 
 
 
 
 
(State or other jurisdiction
of incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
505 Penobscot Dr.
Redwood City, California 94063
(Address of principal executive offices) (Zip Code)
855-698-8887
(Registrant’s telephone number, include area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ý
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨





Item 2.02. Results of Operations and Financial Condition.
On November 19, 2018, Guardant Health, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended September 30, 2018. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit No.
 
Description
99.1
 
 
 
 
 
 
 
 
 
 






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
GUARDANT HEALTH, INC.
 
 
 
Date: November 19, 2018
 
 
 
By:
/s/ Helmy Eltoukhy
 
 
Helmy Eltoukhy
 
 
Chief Executive Officer



Exhibit
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Guardant Health Reports Third Quarter 2018 Financial Results
Revenue growth of 95% over prior year period
REDWOOD CITY, Calif. November 19, 2018 – Guardant Health, Inc. (Nasdaq:GH), a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood tests, vast data sets and advanced analytics, today reported financial results for the third quarter ended September 30, 2018.
Recent Highlights
Revenues of $21.7 million for the third quarter of 2018, representing a 95% increase over the third quarter of 2017
Reported 7,027 tests to clinical customers and 2,505 tests to biopharmaceutical customers in the third quarter, representing increases of 14% and 67% respectively, over the third quarter 2017
Lung cancer study published in JAMA Oncology demonstrated Guardant360 outperformed tissue biopsy alone in identification of targetable mutations
Awarded Medicare coverage for the Guardant360 assay in non-small cell lung cancer through a local coverage determination from Palmetto GBA, a Medicare Administrative Contractor; successfully received first payment
Completed initial public offering, raising approximately $249.5 million of net proceeds, after underwriting fees and other expenses
“Our third quarter accomplishments reflect the ongoing strength of our business,” said Helmy Eltoukhy, PhD, Chief Executive Officer. “We are continuing to build proof points for a blood-first paradigm ahead of traditional tissue genotyping, as demonstrated by the study from the University of Pennsylvania which was recently published in JAMA Oncology.”
“In addition, we are pleased with the successful completion of our IPO,” continued Dr. Eltoukhy.  “We are grateful for the support of our investors who participated in the offering, and we are focused on the creation of long-term shareholder value through unprecedented access to cancer’s molecular information throughout all stages of the disease.”
Third Quarter 2018 Financial Results
Revenue was $21.7 million in the three months ended September 30, 2018, a 95% increase from $11.1 million in the three months ended September 30, 2017.  Precision oncology revenue increased 78% driven by higher testing volume and increases in revenue per test. Tests for clinical customers increased 14% (after excluding tests in the third quarter of 2017 from a customer that began processing tests in-house in March 2018 based on a joint development agreement) and tests for biopharmaceutical customers increased 67%.
Gross profit, or total revenue less cost of precision oncology testing and cost of development services, was $11.6 million for the third quarter of 2018, an increase of $9.1 million from $2.5 million in the corresponding prior year period.  Gross margin, or gross profit divided by total revenue, was 53.7%, as compared to 22.2% in the corresponding prior year period.  
Operating expenses were $35.8 million for the third quarter of 2018, as compared to $31.1 million in the corresponding prior year period, an increase of 15%.
Net loss attributable to Guardant Health, Inc. common stockholders was $24.5 million in the third quarter of 2018, as compared to $33.3 million in the corresponding period of the prior year. Net loss per share attributable to Guardant Health, Inc. common stockholders was $1.94 in the third quarter of 2018, as compared to $2.76 in the corresponding period of the prior year.
Cash, cash equivalents and marketable securities were $274.3 million as of September 30, 2018. In October 2018, Guardant completed an initial public offering, raising approximately $249.5 million net of underwriting fees and other expenses.
2018 Financial Guidance
Guardant Health expects full year 2018 revenue to be in the range of $82.0 million to $84.0 million.
Webcast and Conference Call Information
Guardant Health will host a conference call to discuss the third quarter 2018 financial results after market close on Monday, November 19, 2018 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone (866) 417-5537 for U.S. callers or (409) 217-8233 for international callers (Conference ID: 9156645). The webcast can be accessed at http://investors.guardanthealth.com.

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About Guardant Health
Guardant Health is a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood tests, vast data sets and advanced analytics. Its Guardant Health Oncology Platform is designed to leverage its capabilities in technology, clinical development, regulatory and reimbursement to drive commercial adoption, improve patient clinical outcomes and lower healthcare costs. In pursuit of its goal to manage cancer across all stages of the disease, Guardant Health has launched multiple liquid biopsy-based tests, Guardant360 and GuardantOMNI, for advanced stage cancer patients, which fuel its development programs for recurrence and early detection, LUNAR-1 and LUNAR-2, respectively. Since its launch in 2014, Guardant360 has been used by more than 5,000 oncologists, over 40 biopharmaceutical companies and all 27 of the National Comprehensive Cancer Network centers.
Forward Looking Statements
This press release contains forward-looking statements, including statements regarding Guardant Health's expected financial results for the year ended December 31, 2018, 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 Quarterly Report for the period ended September 30, 2018 filed with the Securities and Exchange Commission (the "SEC") relating to its Registration Statement on Form S-1 and in its other reports filed with the SEC. 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.
Investor Contact:
Lynn Lewis or Carrie Mendivil
investors@guardanthealth.com

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Guardant Health, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Precision oncology testing
$
18,298

 
$
10,253

 
$
50,311

 
$
27,927

Development services
3,394

 
879

 
7,455

 
1,913

Total revenue
21,692

 
11,132

 
57,766

 
29,840

Costs and operating expenses:
 
 
 
 
 
 
 
Cost of precision oncology testing (1)(2)   
9,671

 
7,603

 
27,222

 
20,928

Cost of development services
380

 
1,058

 
2,041

 
1,542

Research and development expense (1)(2)   
14,253

 
7,246

 
34,062

 
17,442

Sales and marketing expense (1)(2)   
13,464

 
7,808

 
36,351

 
22,941

General and administrative expense (1)(2)   
8,129

 
16,095

 
23,645

 
27,982

Total costs and operating expenses
45,897

 
39,810

 
123,321

 
90,835

Loss from operations
(24,205
)
 
(28,678
)
 
(65,555
)
 
(60,995
)
Interest income
958

 
657

 
2,932

 
1,222

Interest expense
(304
)
 
(303
)
 
(952
)
 
(2,398
)
Loss on debt extinguishment

 

 

 
(5,075
)
Other income (expense), net
43

 
(266
)
 
4,587

 
(915
)
Loss before provision for income taxes
(23,508
)
 
(28,590
)
 
(58,988
)
 
(68,161
)
Provision for income taxes

 

 
3

 

Net loss
(23,508
)
 
(28,590
)
 
(58,991
)
 
(68,161
)
Fair value adjustment of redeemable noncontrolling interest
(950
)
 

 
(950
)
 

Net loss attributable to Guardant Health, Inc.
$
(24,458
)
 
$
(28,590
)
 
$
(59,941
)
 
$
(68,161
)
Deemed dividend related to repurchase of Series A convertible
preferred stock

 
(4,716
)
 

 
(4,716
)
Deemed dividend related to change in conversion rate of Series D convertible preferred stock

 

 

 
(1,058
)
Net loss attributable to Guardant Health, Inc. common stockholders
$
(24,458
)
 
$
(33,306
)
 
$
(59,941
)
 
$
(73,935
)
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted
$
(1.94
)
 
$
(2.76
)
 
$
(4.87
)
 
$
(5.76
)
Weighted-average shares used in computing net loss per share
attributable to Guardant Health, Inc. common stockholders,
basic and diluted
12,582

 
12,073

 
12,300

 
12,831


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(1)     Amounts include stock-based compensation expense as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Cost of precision oncology testing
$
112

 
$
(25
)
 
$
254

 
$
104

Research and development expense
617

 
17

 
1,035

 
307

Sales and marketing expense
428

 
(526
)
 
1,061

 
14

General and administrative expense
674

 
1,342

 
1,938

 
1,673

Total stock-based compensation expenses
$
1,831

 
$
808

 
$
4,288

 
$
2,098

(2)     Amounts include compensation expenses associated with repurchase of common stock as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Cost of precision oncology testing
$

 
$
72

 
$

 
$
72

Research and development expense

 
250

 

 
250

Sales and marketing expense

 
659

 

 
659

General and administrative expense

 
9,672

 
157

 
9,672

Total compensation expense associated with  
repurchase of common stock
$

 
$
10,653

 
$
157

 
$
10,653


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 Guardant Health, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
 
 
September 30, 2018
 
December 31, 2017
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
113,957

 
$
72,280

Short-term marketable securities
157,385

 
149,040

Accounts receivable
14,640

 
12,787

Inventory
7,075

 
7,287

Prepaid expenses and other current assets
4,024

 
1,541

Total current assets
297,081

 
242,935

Long-term marketable securities
2,963

 
73,254

Property and equipment, net
30,318

 
16,036

Capitalized license fees
8,044

 
8,739

Deferred offering costs
4,257

 

Other assets
1,936

 
1,974

Total Assets
$
344,599

 
$
342,938

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,081

 
$
4,998

Accrued compensation
7,430

 
4,911

Accrued expenses
7,482

 
6,406

Capital lease, current
102

 
199

Deferred revenue
3,955

 
3,113

Total current liabilities
32,050

 
19,627

Capital lease, net of current portion
137

 
460

Deferred rent, net of current portion
7,623

 
6,537

Obligation related to royalty
7,446

 
7,708

Other long-term liabilities
206

 

Total Liabilities
47,462

 
34,332

Redeemable noncontrolling interest
41,950

 

Stockholders’ equity:
 
 
 
Convertible preferred stock, par value of $0.00001 per share; 80,104,464 shares authorized as of September 30, 2018 (unaudited) and December 31, 2017; 78,627,369 shares issued and outstanding as of September 30, 2018 (unaudited) and December 31, 2017 with aggregate liquidation preference of $501,410 as of September 30, 2018 (unaudited)
499,974

 
499,974

Common stock, par value of $0.00001 per share; 111,853,396 shares authorized as of September 30, 2018 (unaudited) and December 31, 2017; 13,002,822 and 11,896,882 shares issued and outstanding as of September 30, 2018 (unaudited) and December 31, 2017

 

Additional paid-in capital
11,421

 
4,900

Accumulated other comprehensive loss
(531
)
 
(532
)
Accumulated deficit
(255,677
)
 
(195,736
)
Total Stockholders’ Equity
255,187

 
308,606

Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
$
344,599

 
$
342,938


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