Guardant Health Earnings: Momentum Continues in Therapy Selection Liquid Biopsies

Guardant Health GH delivered strong first-quarter results, and management increased its sales outlook for the full year. Our 2023 assumptions remain within the company’s new guidance range, and we do not anticipate changing our $63 fair value estimate at first glance. Also, although our moat rating remains no-moat, we are still optimistic about Guardant’s liquid biopsy pipeline, particularly for early detection of colorectal cancer, which is reflected in our positive moat trend rating.

In the quarter, sales grew 34% year over year driven primarily by clinical testing (45% growth) and biopharma sample growth (21% growth) primarily through its portfolio of therapy selection liquid biopsies (more than 95% of current sales). Even more potential lies in Guardant’s pipeline of early cancer detection tests, in our opinion, including its colorectal cancer liquid biopsy that has been submitted for U.S. Food and Drug Administration approval and may eventually receive third-party payer reimbursement to compete head to head against colonoscopy and Exact Science’s Cologuard. As Guardant continues to make significant research and development and marketing investments as is typical of a company in its nascent development stage, operating losses expanded a bit in the quarter, too. Positively though, the company holds about three years’ worth of cash and marketable securities to handle its existing cash burn rate, which could even contract toward breakeven soon.

For 2023, management increased its sales outlook after this quarter’s strong sales momentum. Specifically, Guardant now expects 19% to 21% growth in sales to $535 million to $545 million, or mildly higher than its previous outlook and our expectation remains within management’s new outlook range. Guardant continues to expect cash burn of about $350 million in 2023, which remains similar to our expectation for the year.