Guardant Health (GH -2.96%), a leader in precision oncology, disclosed robust results in its third-quarter earnings release on Nov. 6. The company reported $191.5 million in revenue, a 33.9% year-over-year increase. Its adjusted loss per share of $0.45 was a better result than the predicted loss per share of $0.73. These better-that-expected results were driven in part by product launches and favorable changes to Medicare pricing. However, elevated operating expenses resulted in a net loss of $107.8 million. Despite these costs, Guardant Health showcased its potential for growth with an upward adjustment in its revenue guidance.
| Metric | Q3 2024 Result | Analyst Estimate | Q3 2023 Result | % Change YOY |
|---|---|---|---|---|
| Total revenue | $191.5 million | N/A | $143 million | 33.9% |
| Adjusted earnings per share | ($0.45) | ($0.73) | ($0.67) | N/A |
| Precision oncology revenue | $180.6 million | N/A | $133.4 million | 35.4% |
| Development services revenue | $10.9 million | N/A | $9.6 million | 13.5% |
Source: Analyst estimates for the quarter provided by FactSet.
Overview of Guardant Health's Business
Guardant Health specializes in developing innovative blood and tissue-based tests, providing testing solutions for the clinical and biopharmaceutical markets. It is recognized for its cutting-edge liquid biopsy technology used in a range of products such as Guardant360, GuardantOMNI, and Shield tests for early cancer detection.
The company focuses on expanding its product portfolio through continuous innovation, which includes enhancing its liquid biopsy technology. This approach is vital for maintaining its competitive edge in precision oncology, driving clinical outcomes, and expanding its customer base.
Quarterly Highlights and Financial Overview
In the third quarter, Guardant Health's revenue rose significantly due to increased demand for its precision oncology tests. Revenue from this segment alone reached $180.6 million, a 35.4% rise from $133.4 million in the prior-year period. This growth was propelled by a 21% increase in clinical test volumes and a 40% boost in biopharma test volumes.
The product launch of Shield, a test for early colorectal cancer detection, played a crucial role this quarter. It received positive feedback from the market and secured Medicare pricing at $920, promoting its broader use. Furthermore, the Guardant360 series continued to contribute significantly to revenues, with its average selling price surpassing $3,000.
The company also secured further regulatory approvals and reimbursement arrangements, which are essential for driving demand and commercial success. Medicare pricing adjustments for products like TissueNext illustrate Guardant Health's strong position in gaining favorable reimbursement rates.
Despite solid revenue growth, operating costs rose to $234.3 million from $199.0 million in the prior-year period, and the company booked a net loss of $107.8 million. Free cash flow was negative $55 million, though that was an improvement from the negative $80 million result a year earlier.
Looking Ahead
Guardant Health is optimistic about its plans, and raised its full-year revenue guidance to between $720 million and $725 million -- up from a prior range of $690 million to $700 million. This reflects the company's confidence in achieving sustained growth through innovation and strategic expansion.
While the company improved its free cash flow outlook for the year, targeting a loss of $265 million to $275 million, it remains focused on achieving profitability. Investors should watch for cost management measures and steady improvements in operating income in the coming quarters.
