On August 3, 2023 Guardant Health, Inc. (Nasdaq: GH), a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary tests, vast data sets and advanced analytics, reported financial results for the quarter ended June 30, 2023 (Press release, Guardant Health, AUG 3, 2023, View Source [SID1234633798]).
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"We are continuing to make advancements in our screening business as we spearhead a new patient-preferred category with our Shield blood test"
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Second Quarter 2023 Financial Highlights
Revenue of $137.2 million for the second quarter of 2023, an increase of 26% over the second quarter of 2022
Reported 43,500 tests to clinical customers and 6,700 tests to biopharmaceutical customers in the second quarter of 2023, representing increases of 49% and 12%, respectively, over the second quarter of 2022
Recent Operating Highlights
Received new commercial plan coverage from Anthem Blue Cross and Blue Shield, Aetna, and Humana, resulting in Guardant360 now being covered by all major U.S. commercial health insurers and exceeding 300 million covered lives
Announced reimbursement approval of Guardant360 CDx liquid biopsy test in Japan for patients with advanced solid tumor cancers
Received first commercial plan coverage for Guardant Reveal
Strengthened financial position with an underwritten public offering raising $381 million in net proceeds, ending the quarter with $1.2 billion of cash, cash equivalents and marketable securities
"We had another very strong quarter with revenue growing 26% year over year, driven by strength across precision oncology where we reached 50,000 combined tests during the quarter," said Helmy Eltoukhy, co-founder and co-CEO. "Our clinical volumes were driven by growth in lung and breast cancer for Guardant360 and by rapid year-over-year growth for Reveal and TissueNext. With this strong momentum, we are on track to achieve cash flow breakeven in Therapy Selection within the next 3-6 months."
"We are continuing to make advancements in our screening business as we spearhead a new patient-preferred category with our Shield blood test," said AmirAli Talasaz, co-founder and co-CEO. "In the near-term, we remain focused on obtaining FDA approval for the Shield test in colorectal cancer, preparing for the commercial launch of Shield IVD in 2024 and delivering on our plans to develop Shield into a multi-cancer test."
Second Quarter 2023 Financial Results
Revenue was $137.2 million for the three months ended June 30, 2023, a 26% increase from $109.1 million for the three months ended June 30, 2022. Precision oncology revenue grew 36%, driven predominantly by an increase in clinical testing volume and biopharma sample volume, which grew 49% and 12%, respectively, over the prior year period. Development services and other revenue decreased by 30%, primarily due to the timing and amount of milestones related to our partnership agreements and the change in companion diagnostics collaboration projects with biopharma customers.
Gross profit, or total revenue less cost of precision oncology testing and cost of development services and other, was $83.3 million for the second quarter of 2023, an increase of $10.9 million from $72.4 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 61%, as compared to 66% for the corresponding prior year period. Precision oncology gross margin was 61% in the second quarter of 2023, as compared to 63% in the prior year period. The reduction is due to the change in mix between clinical and biopharma revenue, as well as the year over year change in blended clinical ASP due to the increased proportion of volume coming from Reveal, TissueNext and Response. Development services and other gross margin was 62% in the second quarter of 2023, as compared to 86% in the prior year period. The change is primarily due to the inclusion of the cost of processing Shield LDT samples as part of our screening market development activities.
Operating expenses were $202.9 million for the second quarter of 2023, as compared to $202.7 million for the corresponding prior year period. Non-GAAP operating expenses were $180.5 million for the second quarter of 2023, as compared to $176.2 million for the corresponding prior year period.
Net loss was $72.8 million for the second quarter of 2023, as compared to $229.4 million for the corresponding prior year period. Net loss per share was $0.67 for the second quarter of 2023, as compared to $2.25 for the corresponding prior year period. The year over year reduction in net loss is primarily due to a charge of $99.8 million recorded in the second quarter of 2022 to reflect an increase in the fair value of the outstanding shares in our AMEA joint venture which we acquired in June 2022, and other income of $64.0 million reflecting an unrealized gain related to our strategic equity investment in Lunit, Inc., our AI partner for TissueNext, which has seen a substantial increase in its share price over the last few months.
Non-GAAP net loss was $88.7 million for the second quarter of 2023, as compared to $101.8 million for the corresponding prior year period. Non-GAAP net loss per share was $0.82 for the second quarter of 2023, as compared to $1.00 for the corresponding prior year period.
Adjusted EBITDA loss was $85.2 million for the second quarter of 2023, as compared to a $94.3 million loss for the corresponding prior year period.
Free cash flow for the second quarter of 2023 was negative $100.5 million. Cash, cash equivalents and marketable debt securities were $1.2 billion as of June 30, 2023.
2023 Guidance
Guardant Health now expects full year 2023 revenue to be in the range of $545 to $550 million, representing growth of 21% to 22% compared to full year 2022. This compares to its previous guidance range of $535 to $545 million. Guardant Health continues to expect full year 2023 operating expenses to be below full year 2022, driven by efficiency measures and continued leverage of its existing infrastructure, and free cash flow to be approximately negative $350 million in 2023.
Webcast Information
Guardant Health will host a conference call to discuss the second quarter and full year 2023 financial results after market close on Thursday, August 3, 2023 at 1:30 pm Pacific Time / 4:30 pm Eastern Time. A webcast of the conference call can be accessed at View Source The webcast will be archived and available for replay for at least 90 days after the event.