Guardant Health, a precision oncology company focused on helping conquer cancer globally, came out with its fourth quarter and full year 2023 results late last week. The Palo Alto, California-based company has topped consensus revenue estimates four times over the last four quarters.
The company announced a 25% surge in revenue last year, from about $450 million in FY 2022 to $564 million in FY 2023. Its fourth-quarter revenues rose 22% year over year, driven by a 29% boost in clinical test volume during the same period. Notably, the company’s core liquid biopsy and tissue tests, Guardant360 and Guardant TissueNext, have solidified its presence across nearly all major insurers in the United States, as well as in a growing number of international markets.
Guardant Health recorded more than $155 million in revenue for the fourth quarter, surpassing its initial forecast of $153-$154 million as its precision oncology revenue climbed. Precision oncology revenue grew 25% during the fourth quarter, from $113.8 million in Q4:22 to $142.2 million in Q4:23. This was mostly due to an increase in clinical and biopharma testing volume, which were up 29% (to 46,600 tests) and 16% (to 9,500 tests), respectively. Development services and other revenue fell slightly from $13.1 million in Q4:22 to $12.9 million in the most recent quarter.
Guardant Health’s gross profit was $92.5 million for Q4:23, an increase of $12.8 million from $79.8 million for Q4:22. Gross margin was 60%, as compared to 63% for the corresponding prior year period. Net loss was $187 million for Q4:23, as compared to $139.9 million for Q4:22. Additionally, adjusted EBITDA was a loss of $78.4 million in Q4:23, reflecting an improvement from the $109.8 million loss recorded in Q4:22.
During the earnings call, co-founder and co-CEO, AmirAli Talasaz, discussed Guardant Health’s Shield, a blood-based colorectal cancer screening assay which enables simple blood draws for colorectal cancer screening. Physicians and patients alike have embraced it.
However, a challenge emerged for Guardant’s 2024 plans, as the FDA’s review of the Guardant Shield test faced delays. Talasaz revealed that the planned advisory committee meeting was postponed from Q1 to late Q2 due to panel vacancies. However, Guardant still expects to receive FDA approval during 2024.
“Our team is working hard to prepare for this panel meeting and in parallel is preparing to scale out the commercial operations post the FDA approval,” Talasaz said. “While Shield has only been in market for a short time, we are highly encouraged by the overwhelming enthusiasm…. We are witnessing real world evidence of its effectiveness and the potential to drive unparalleled compliance in completing cancer screening.”
Guardant Health is also looking ahead towards the upcoming launch of Shield IVD, also pending FDA approval, which promises to be transformative and underlines Guardant Health’s commitment to accessible and effective cancer screening.
During the earnings call, Co-CEO Helm Eltoukhy highlighted key milestones achieved by Guardant Health, including payor coverage for Guardant360 surpassing 300 million covered lives. National reimbursement in Japan for Guardant360 and reimbursement from the Centers for Medicare and Medicaid Services for the Guardant Response test were mentioned as significant achievements. The company also experienced positive developments in test pricing, with Medicare adjusting the Guardant360 laboratory-developed test price from $3,500 to $5,000, effective from January 1.
Eltoukhy added, “We’re also starting to see the positive impact on Guardant360
Despite surpassing revenue expectations during the quarter, Guardant Health’s stock took a hit, reaching a 52-week low in the days following the earnings release. The company’s stock fell nearly 13% in the first 24 hours following the announcement after it issued in-line guidance. The delays in the FDA review for the Guardant Shield test also disappointed investors, bringing the stock down. After the results, Wall Street firms J.P. Morgan, The Goldman Sachs Group and Canaccord Genuity cut their price targets on Guardant Health, with each giving the company an “overweight” rating on the stock.
Other Laboratories companies also reported positive financial performance during this most recent earnings season. Bruker Corporation, which came out with its earnings a week before Guardant Health, had a surge in revenues for the quarter by 21%, and for the year by more than 17%. Labcorp also came out with its results, announcing a 3.5% increase in revenue for the quarter, compared to the fourth quarter of 2022. When it comes to its 2024 financial projections, Guardant Health remains bullish. Its revenue projection for FY 2024 falls within the range of $655 million to $670 million, reflecting its confidence in sustained expansion and innovation despite the stock market’s initial response.
