x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 45-4139254 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
505 Penobscot Dr. Redwood City, California | 94063 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | o |
Emerging growth company | x |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.00001 | GH | The Nasdaq Stock Market LLC |
Page | ||
Unaudited Condensed Consolidated Financial Statements | ||
Condensed Consolidated Balance Sheets | ||
Condensed Consolidated Statements of Operations | ||
Condensed Consolidated Statements of Comprehensive Loss | ||
Condensed Consolidated Statements of Noncontrolling Interest and Stockholders’ Equity | ||
Condensed Consolidated Statements of Cash Flows | ||
Notes to the Unaudited Condensed Consolidated Financial Statements | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures About Market Risk | ||
Controls and Procedures | ||
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 153,790 | $ | 140,544 | |||
Short-term marketable securities | 313,069 | 278,417 | |||||
Accounts receivable | 28,989 | 35,690 | |||||
Inventory | 10,256 | 9,136 | |||||
Prepaid expenses and other current assets | 6,151 | 5,204 | |||||
Total current assets | 512,255 | 468,991 | |||||
Long-term marketable securities | 25,916 | 77,563 | |||||
Property and equipment, net | 30,581 | 31,003 | |||||
Capitalized license fees | 7,557 | 7,800 | |||||
Other assets | 2,862 | 2,046 | |||||
Total Assets(1) | $ | 579,171 | $ | 587,403 | |||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 7,163 | $ | 10,642 | |||
Accrued compensation | 14,683 | 12,986 | |||||
Accrued expenses | 9,137 | 7,081 | |||||
Capital lease, current | 96 | 97 | |||||
Deferred revenue | 17,113 | 16,138 | |||||
Total current liabilities | 48,192 | 46,944 | |||||
Capital lease, net of current portion | 100 | 119 | |||||
Deferred rent, net of current portion | 8,975 | 7,844 | |||||
Obligation related to royalty | 7,120 | 7,338 | |||||
Other long-term liabilities | 150 | 206 | |||||
Total Liabilities(1) | 64,537 | 62,451 | |||||
Commitments and contingencies (Note 7) | |||||||
Redeemable noncontrolling interest | 46,500 | 41,800 | |||||
Stockholders’ equity: | |||||||
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 86,098,474 and 85,832,454 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 1 | 1 | |||||
Additional paid-in capital | 771,009 | 764,033 | |||||
Accumulated other comprehensive loss | 333 | (83 | ) | ||||
Accumulated deficit | (303,209 | ) | (280,799 | ) | |||
Total Stockholders’ Equity | 468,134 | 483,152 | |||||
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | $ | 579,171 | $ | 587,403 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenue: | ||||||||
Precision oncology testing | $ | 28,837 | $ | 14,191 | ||||
Development services | 7,818 | 2,501 | ||||||
Total revenue | 36,655 | 16,692 | ||||||
Costs and operating expenses: | ||||||||
Cost of precision oncology testing | 11,023 | 8,045 | ||||||
Cost of development services | 2,512 | 1,208 | ||||||
Research and development expense | 16,316 | 8,255 | ||||||
Sales and marketing expense | 17,807 | 11,312 | ||||||
General and administrative expense | 12,661 | 6,519 | ||||||
Total costs and operating expenses | 60,319 | 35,339 | ||||||
Loss from operations | (23,664 | ) | (18,647 | ) | ||||
Interest income | 2,485 | 985 | ||||||
Interest expense | (293 | ) | (331 | ) | ||||
Other income (expense), net | 147 | 4,149 | ||||||
Loss before provision for income taxes | (21,325 | ) | (13,844 | ) | ||||
Provision for income taxes | 26 | — | ||||||
Net loss | (21,351 | ) | (13,844 | ) | ||||
Fair value adjustment of redeemable noncontrolling interest | (4,700 | ) | — | |||||
Net loss attributable to Guardant Health, Inc. common stockholders | $ | (26,051 | ) | $ | (13,844 | ) | ||
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted | $ | (0.30 | ) | $ | (1.16 | ) | ||
Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted | 85,935 | 11,920 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net loss | $ | (21,351 | ) | $ | (13,844 | ) | ||
Other comprehensive income (loss), net of tax impact: | ||||||||
Unrealized gain (loss) on available-for-sale securities | 485 | (298 | ) | |||||
Foreign currency translation adjustments | (69) | — | ||||||
Other comprehensive income (loss) | 416 | (298) | ||||||
Comprehensive loss | $ | (20,935 | ) | $ | (14,142 | ) | ||
Comprehensive loss attributable to redeemable noncontrolling interest | (4,700 | ) | — | |||||
Comprehensive loss attributable to Guardant Health, Inc. | $ | (25,635 | ) | $ | (14,142 | ) |
Redeemable Noncontrolling Interest | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | 41,800 | 85,832,454 | $ | 1 | $ | 764,033 | $ | (83 | ) | $ | (280,799 | ) | $ | 483,152 | |||||||||||
Cumulative effect adjustment for Topic 606 adoption | — | — | — | — | — | 4,907 | 4,907 | |||||||||||||||||||
Cumulative effect adjustment for ASU 2018-07 adoption | — | — | — | 1,266 | — | (1,266 | ) | — | ||||||||||||||||||
Issuance of common stock upon exercise of stock options | — | 146,318 | — | 538 | — | — | 538 | |||||||||||||||||||
Vesting of common stock exercised early | — | — | — | 56 | — | — | 56 | |||||||||||||||||||
Common stock issued under employee stock purchase plan | — | 119,702 | — | 1,933 | — | — | 1,933 | |||||||||||||||||||
Stock-based compensation | — | — | — | 3,183 | — | — | 3,183 | |||||||||||||||||||
Fair value adjustment of redeemable noncontrolling interest | 4,700 | — | — | — | — | (4,700 | ) | (4,700 | ) | |||||||||||||||||
Other comprehensive gain, net of tax impact | — | — | — | — | 416 | — | 416 | |||||||||||||||||||
Net loss | — | — | — | — | — | (21,351 | ) | (21,351 | ) | |||||||||||||||||
Balance as of March 31, 2019 | $ | 46,500 | 86,098,474 | $ | 1 | $ | 771,009 | $ | 333 | $ | (303,209 | ) | $ | 468,134 | ||||||||||||
Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance as of December 31, 2017 | 78,627,369 | $ | 499,974 | 11,896,882 | $ | — | $ | 4,900 | $ | (532 | ) | $ | (195,736 | ) | $ | 308,606 | |||||||||||||
Issuance of common stock upon exercise of stock options | — | — | 421,264 | — | 1,103 | — | — | 1,103 | |||||||||||||||||||||
Issuance of common stock upon early exercise of stock options | — | — | 44,268 | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock upon exercise of warrants | — | — | 31,713 | — | 4 | — | — | 4 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,277 | — | — | 1,277 | |||||||||||||||||||||
Other comprehensive loss, net of tax impact | — | — | — | — | — | (298 | ) | — | (298 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | — | (13,844 | ) | (13,844 | ) | |||||||||||||||||||
Balance as of March 31, 2018 | 78,627,369 | $ | 499,974 | 12,394,127 | $ | — | $ | 7,284 | $ | (830 | ) | $ | (209,580 | ) | $ | 296,848 | |||||||||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (21,351 | ) | $ | (13,844 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 2,354 | 1,395 | |||||
Unrealized translation (gains) losses on obligation related to royalty | (144 | ) | 206 | ||||
Non-cash stock-based compensation | 3,182 | 1,277 | |||||
Non-cash interest expense | — | (3 | ) | ||||
Amortization of discounts on marketable securities | (553 | ) | (78 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 11,608 | 623 | |||||
Inventory | (1,120 | ) | 321 | ||||
Prepaid expenses and other current assets | (947 | ) | (1,312 | ) | |||
Other assets | (833 | ) | 255 | ||||
Accounts payable | (2,610 | ) | 1,989 | ||||
Accrued compensation | 1,697 | (608 | ) | ||||
Accrued expenses and other current liabilities | 2,308 | 1,108 | |||||
Deferred rent | 1,131 | 621 | |||||
Deferred revenue | 975 | 1,491 | |||||
Net cash used in operating activities | (4,303 | ) | (6,559 | ) | |||
INVESTING ACTIVITIES: | |||||||
Purchase of marketable securities | (45,966 | ) | (19,634 | ) | |||
Maturity of marketable securities | 64,000 | 32,125 | |||||
Purchase of property and equipment | (2,705 | ) | (4,021 | ) | |||
Net cash provided by investing activities | 15,329 | 8,470 | |||||
FINANCING ACTIVITIES: | |||||||
Payments made on royalty obligations | (73 | ) | — | ||||
Payments made on capital lease obligations | (21 | ) | (47 | ) | |||
Proceeds from issuance of common stock upon exercise of stock options | 538 | 1,310 | |||||
Proceeds from issuance of common stock upon the exercise of warrants | — | 4 | |||||
Proceeds from issuances of common stock under employee stock purchase plan | 1,933 | — | |||||
Payment of offering costs related to initial public offering | (89 | ) | — | ||||
Net cash provided by financing activities | 2,288 | 1,267 | |||||
Net effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | (69 | ) | — | ||||
Net increase in cash, cash equivalents and restricted cash | 13,245 | 3,178 | |||||
Cash, cash equivalents and restricted cash - Beginning of period | 140,544 | 72,596 | |||||
Cash, cash equivalents and restricted cash - End of period | $ | 153,789 | $ | 75,774 | |||
Supplemental Disclosures of Cash Flow Information: | |||||||
Cash paid for interest | $ | 293 | $ | 30 | |||
Cash paid for income taxes | $ | (48 | ) | $ | — |
Supplemental Disclosures of Noncash Investing and Financing Activities: | |||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 490 | $ | 3,351 |
1. | Description of Business |
2. | Summary of Significant Accounting Policies |
Revenue | Accounts Receivable | |||||||||||
Three Months Ended March 31, | March 31, 2019 | December 31, 2018 | ||||||||||
2019 | 2018 | |||||||||||
(unaudited) | (unaudited) | |||||||||||
Customer A | * | 11 | % | * | * | |||||||
Customer B | 24 | % | * | 35 | % | 65 | % | |||||
Customer C | * | 13 | % | * | * | |||||||
Customer D | * | * | 13 | % | * |
* | less than 10% |
Balance as of December 31, 2018 | Adjustments Due to ASC 606 | Balance as of January 1, 2019 | |||||||||
(in thousands) | |||||||||||
Assets: | |||||||||||
Accounts receivable | $ | 35,690 | $ | 4,907 | $ | 40,597 | |||||
Equity: | |||||||||||
Accumulated deficit | $ | (280,799 | ) | $ | 4,907 | $ | (275,892 | ) |
Three Months Ended March 31, 2019 | |||||||||||
As Reported Under ASC 606 | Effect of Change | Balances Without Adoption of ASC606 | |||||||||
(in thousands) | |||||||||||
Revenue: | |||||||||||
Precision oncology testing | $ | 28,837 | $ | 994 | $ | 29,831 | |||||
Development services | 7,818 | — | 7,818 | ||||||||
March 31, 2019 | |||||||||||
As Reported Under ASC 606 | Effect of Change | Balances Without Adoption of ASC606 | |||||||||
(in thousands) | |||||||||||
Assets: | |||||||||||
Accounts receivable | $ | 28,989 | $ | 994 | $ | 29,983 | |||||
Equity: | |||||||||||
Accumulated deficit | (303,209 | ) | 994 | (302,215 | ) |
3. | Investment in Joint Venture |
4. | Condensed Consolidated Balance Sheet Components |
March 31, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
(in thousands) | |||||||
Machinery and equipment | $ | 23,742 | $ | 23,440 | |||
Computer hardware | 5,293 | 4,949 | |||||
Leasehold improvements | 14,163 | 13,965 | |||||
Furniture and fixtures | 1,540 | 1,522 | |||||
Computer software | 741 | 643 | |||||
Construction in progress | 1,405 | 3,118 | |||||
Property and equipment, gross | 46,884 | 47,637 | |||||
Less: accumulated depreciation and amortization | (16,303 | ) | (16,634 | ) | |||
Property and equipment, net | $ | 30,581 | $ | 31,003 |
March 31, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
(in thousands) | |||||||
Accrued royalty obligations | $ | 853 | $ | 707 | |||
Accrued legal expenses | 2,400 | 814 | |||||
Accrued tax liabilities | 1,410 | 1,470 | |||||
Accrued professional services | 1,988 | 1,791 | |||||
Purchases of property and equipment included in accrued expenses | 137 | 343 | |||||
Other | 2,349 | 1,956 | |||||
Total accrued expenses | $ | 9,137 | $ | 7,081 |
5. | Fair Value Measurements, Cash Equivalents and Marketable Securities |
March 31, 2019 | |||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
(unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
Financial Assets: | |||||||||||||||
Money market funds | $ | 10,093 | $ | 10,093 | $ | — | $ | — | |||||||
Total cash equivalents | 10,093 | 10,093 | — | — | |||||||||||
Corporate bonds | 43,083 | — | 43,083 | — | |||||||||||
U.S. government debt securities | 264,992 | — | 264,992 | — | |||||||||||
U.S. government agency bonds | 4,994 | — | 4,994 | — | |||||||||||
Total short-term marketable securities | 313,069 | — | 313,069 | — | |||||||||||
Corporate bonds | 2,005 | — | 2,005 | — | |||||||||||
U.S. government debt securities | 23,911 | — | 23,911 | — | |||||||||||
Total long-term marketable securities | 25,916 | — | 25,916 | — | |||||||||||
Total | $ | 349,078 | $ | 10,093 | $ | 338,985 | $ | — |
December 31, 2018 | |||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
(in thousands) | |||||||||||||||
Financial Assets: | |||||||||||||||
Money market funds | $ | 25,796 | $ | 25,796 | $ | — | $ | — | |||||||
Total cash equivalents | 25,796 | 25,796 | — | — | |||||||||||
Corporate bonds | 38,397 | — | 38,397 | — | |||||||||||
U.S. government debt securities | 235,016 | — | 235,016 | — | |||||||||||
U.S. government agency bonds | 5,004 | — | 5,004 | — | |||||||||||
Total short-term marketable securities | 278,417 | — | 278,417 | — | |||||||||||
Corporate bonds | 3,805 | — | 3,805 | — | |||||||||||
U.S. government debt securities | 73,758 | — | 73,758 | — | |||||||||||
Total long-term marketable securities | 77,563 | — | 77,563 | — | |||||||||||
Total | $ | 381,776 | $ | 25,796 | $ | 355,980 | $ | — |
March 31, 2019 | |||||||||||||||
Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Estimated Fair Value | ||||||||||||
(unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
Money market fund | $ | 10,093 | $ | — | $ | — | $ | 10,093 | |||||||
Corporate bond | 45,065 | 26 | (3 | ) | 45,088 | ||||||||||
U.S. government debt securities | 288,522 | 455 | (74 | ) | 288,903 | ||||||||||
U.S. government agency bonds | 4,995 | — | (1 | ) | $ | 4,994 | |||||||||
Total | $ | 348,675 | $ | 481 | $ | (78 | ) | $ | 349,078 |
December 31, 2018 | |||||||||||||||
Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Estimated Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Money market fund | $ | 25,796 | $ | — | $ | — | $ | 25,796 | |||||||
Corporate bond | 42,273 | — | (71 | ) | 42,202 | ||||||||||
U.S. government debt securities | 308,775 | 235 | (236 | ) | 308,774 | ||||||||||
U.S. government agency bonds | 5,014 | — | (10 | ) | 5,004 | ||||||||||
Total | $ | 381,858 | $ | 235 | $ | (317 | ) | $ | 381,776 |
6. | Patent License Agreement |
7. | Commitments and Contingencies |
Year Ending December 31, | |||
(unaudited) | |||
(in thousands) | |||
Remainder of 2019 | $ | 3,693 | |
2020 | 7,276 | ||
2021 | 8,161 | ||
2022 | 8,388 | ||
2023 | 9,023 | ||
2024 and thereafter | 26,076 | ||
Total | $ | 62,617 |
Year Ending December 31, | |||
(unaudited) | |||
(in thousands) | |||
Remainder of 2019 | $ | 107 | |
2020 | 108 | ||
2021 | 36 | ||
Total minimum capital lease payments | 251 | ||
Less: amount representing interest | (55 | ) | |
Present value of net minimum capital lease payments | 196 | ||
Less: current installments of obligations under capital lease | (96 | ) | |
Obligations under capital lease, excluding current installments | $ | 100 |
Year Ending December 31, | |||
(unaudited) | |||
(in thousands) | |||
Remainder of 2019 | $ | 1,052 | |
2020 | 1,402 | ||
2021 | 1,402 | ||
2022 | 1,683 | ||
2023 | 1,683 | ||
2024 and thereafter | 5,609 | ||
Total future minimum royalty payments | 12,831 | ||
Less: amount representing interest | (5,711 | ) | |
Present value of future minimum royalty payments | $ | 7,120 |
8. | Common Stock |
March 31, 2019 | December 31, 2018 | ||||
(unaudited) | |||||
Shares underlying outstanding stock options | 7,378,068 | 7,588,405 | |||
Shares underlying unvested restricted stock units | 102,498 | — | |||
Shares available for issuance under the 2018 Incentive Award Plan | 3,436,451 | 3,556,507 | |||
Shares available for issuance under the 2018 Employee Stock Purchase Plan | 802,548 | 922,250 | |||
Total | 11,719,565 | 12,067,162 |
9. | Stock-Based Compensation |
Options Outstanding | |||||||||||||||
Shares Available for Grant | Shares Subject to Options Outstanding | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||
(in thousands) | |||||||||||||||
Balance as of December 31, 2018 | 3,556,507 | 7,588,405 | $ | 4.58 | 8.3 | $ | 250,495 | ||||||||
Granted | (18,370 | ) | 18,370 | 41.25 | |||||||||||
Exercised | — | (146,318 | ) | 3.49 | |||||||||||
Canceled | 812 | (82,389 | ) | 4.77 | |||||||||||
Restricted stock units granted | (120,835 | ) | — | — | |||||||||||
Restricted stock units canceled | 18,337 | — | — | ||||||||||||
Balance as of March 31, 2019 | 3,436,451 | 7,378,068 | $ | 4.69 | 8.0 | $ | 531,281 | ||||||||
Vested and Exercisable as of March 31, 2019 | 3,361,540 | $ | 3.61 | 7.4 | $ | 245,680 |
Restricted Stock Units Outstanding | Weighted-Average Grant Date Fair Value | ||||||
Unvested balance as of December 31, 2018 | — | $ | — | ||||
Granted | 120,835 | 44.02 | |||||
Canceled | (18,337 | ) | 41.30 | ||||
Unvested balance as of March 31, 2019 | 102,498 | $ | 44.50 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Cost of precision oncology testing | $ | 170 | $ | 63 | ||||
Research and development expense | 1,210 | 204 | ||||||
Sales and marketing expense | 826 | 374 | ||||||
General and administrative expense | 976 | 636 | ||||||
Total stock-based compensation expense | $ | 3,182 | $ | 1,277 |
Three Months Ended March 31, | ||||
2019 | 2018 | |||
(unaudited) | ||||
Expected term (in years) | 6.22 | 5.01 – 10.00 | ||
Expected volatility | 66.7% | 81.6% – 86.5% | ||
Risk-free interest rate | 2.7% | 2.5% – 2.7% | ||
Expected dividend yield | —% | —% |
10. | Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Net loss | $ | (21,351 | ) | $ | (13,844 | ) | ||
Fair value adjustment of redeemable noncontrolling interest | (4,700 | ) | — | |||||
Net loss attributable to Guardant Health, Inc. common stockholders, basic and diluted | $ | (26,051 | ) | $ | (13,844 | ) | ||
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted | $ | (0.30 | ) | $ | (1.16 | ) | ||
Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted | 85,935 | 11,920 |
Three Months Ended March 31, | ||||||
2019 | 2018 | |||||
(unaudited) | ||||||
(in thousands) | ||||||
Convertible preferred stock (on an as if converted basis) | — | 58,265 | ||||
Stock options issued and outstanding | 7,503 | 7,457 | ||||
Unvested restricted stock units | 78 | — | ||||
ESPP obligation | 59 | — | ||||
Preferred stock warrants (on an as if converted basis) | — | 8 | ||||
Common stock warrants | — | 312 | ||||
Common stock subject to repurchase | 41 | 19 | ||||
Total | 7,681 | 66,061 |
11. | Segment and Geographic Information |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
United States | $ | 31,245 | $ | 12,902 | ||||
International(1) | 5,410 | 3,790 | ||||||
Total revenue | $ | 36,655 | $ | 16,692 |
(1) | No single country outside of the United States accounted for more than 10% of total revenue during three months ended March 31, 2019 and 2018. |
12. | Related Party Transactions |
13. | Subsequent Events |
• | Testing volume, pricing and customer mix. Our revenue and costs are affected by the volume of testing and mix of customers from period to period. We evaluate both the volume of tests that we perform for patients on behalf of clinicians and the number of tests we perform for biopharmaceutical companies. Our performance depends on our ability to retain and broaden adoption with existing customers, as well as attract new customers. We believe that the test volume we receive from clinicians and biopharmaceutical companies are indicators of growth in each of these customer verticals. Customer mix for our tests has the potential to significantly affect our results of operations, as the average selling price for biopharmaceutical sample testing is currently higher than our average selling price for clinical tests since we are not a contracted provider for, or our tests are not covered by clinical patients’ insurance for, the majority of the tests that we perform for patients on behalf of clinicians. Approximately 38% and 37% of our U.S. clinical tests for three months ended March 31, 2019 and 2018, respectively, were for Medicare beneficiaries. Prior to the third quarter of 2018, Medicare did not cover our tests and we did not submit claims for reimbursement. In September 2018, we began to submit claims to Medicare for reimbursement for Guardant360 clinical tests for certain Medicare beneficiaries, and in October 2018, we began to receive payments from Medicare for these clinical tests. In March 2019, Palmetto GBA posted a proposed LCD that, if finalized as written, would provide limited Medicare coverage for use of Guardant360 for qualifying patients diagnosed with solid cancers of non-central nervous system origin. We can provide no assurances, however, that the draft LCD will be finalized as written or implemented by Palmetto GBA or the California MAC. |
• | Regulatory approval. Our Guardant360 test was the first comprehensive liquid biopsy test approved by NYSDOH. In addition, we believe our facility was the first comprehensive liquid biopsy laboratory to be CLIA-certified, CAP-accredited and NYSDOH-permitted. The FDA granted designation as a breakthrough device for our Guardant360 test as a companion diagnostic in January 2018 and for our GuardantOMNI test as a companion diagnostic in December 2018. Breakthrough Device designation, which, supersedes the EAP designation and, among other things, provides for priority review and more interactive communication with the FDA during the development process. While FDA approval is currently not required to market our tests in the United States, we intend to submit an application for a pre-market approval, or PMA, for each of our Guardant360 and GuardantOMNI tests for use as companion diagnostics. In March 2018, the Centers for Medicare and Medicaid Services, or CMS, published a Decision Memorandum for next-generation sequencing tests for patients with advanced cancer who meet certain clinical criteria, or the NGS Decision Memorandum. The NGS Decision Memorandum states that coverage would be available for next-generation sequencing FDA-approved tests offered within the FDA-approved labeling. FDA approval therefore provides a path to reimbursement by Medicare under the NGS Decision Memorandum. We believe that this establishes a competitive advantage for tests receiving FDA approval and that FDA approval will be increasingly necessary for diagnostic tests to gain adoption, both in the United States and abroad. We believe FDA approval, if obtained, will help increase adoption of our tests and facilitate favorable reimbursement decisions by Medicare and commercial payers. Any negative regulatory decisions or changes affecting our business could adversely impact our operations and financial results. |
• | Payer coverage and reimbursement. Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payers, including both commercial and government payers. Payment from commercial payers differs depending on whether we have entered into a contract with the payers as a “participating provider” or do not have a contract and are considered a “non-participating provider.” Payers often reimburse non-participating providers, if at all, at a lower amount than participating providers. We have received a substantial portion of our revenue from a limited number of commercial payers, most of which have not contracted with us to be a participating provider. We have received reimbursement for tests of patients with a variety of cancers, though for amounts that on average are significantly lower than for participating providers. Historically, we have experienced situations where commercial payers proactively reduced the amounts they were willing to reimburse for our tests, and in other situations, commercial payers have determined that the amounts they previously paid were too high and have |
• | Biopharmaceutical customers. Our revenue also depends on our ability to attract new, and to maintain and expand relationships with existing, biopharmaceutical customers, and we expect to increase our sales and marketing expense in furtherance of this goal. As we continue to develop these relationships, we expect to support a growing number of clinical trials both in the United States and internationally. If our relationships expand with biopharmaceutical customers, we believe we may continue to have opportunities to offer our platform to such customers for companion diagnostic development and for novel target discovery and validation, and to grow into other business opportunities. For example, we believe genomic data, in combination with clinical outcomes or claims data, has revenue-generating potential, including for novel target identification and clinical trial enrollment. |
• | Research and development. A significant aspect of our business is our investment in research and development, including the development of new products, such as those being developed as part of our LUNAR early detection program. In particular, we have invested heavily in clinical studies, including more than 40 clinical outcomes studies, the largest-ever liquid-to-tissue concordance study, and a prospective interventional clinical utility study demonstrating clinical overall response rates in line with tissue biopsy approaches. Our clinical research has resulted in over 110 peer-reviewed publications. For example, the positive results from the Noninvasive vs. Invasive Lung Evaluation (NILE) study, a head-to-head comparison of the Guardant360 assay to standard-of-care tissue testing for the identification of guideline-recommended biomarkers in first-line advanced NSCLC patients, was published in Clinical Cancer Research. Beyond meeting its primary endpoint of demonstrating that the Guardant360 test was as accurate as standard-of-care tissue testing for the detection of guideline-recommended biomarkers in advanced NSCLC, the NILE study showed that (i) Guardant360 testing resulted in guideline-recommended testing for three times as many patients as standard-of-care tissue testing; (ii) when results for Guardant360 and tissue testing were both available for a patient, they were concordant in more than 90% of cases; (iii) the median time to results for Guardant360 was 9 days versus 15 days for standard-of-care tissue testing, and (iv) the Guardant360 test’s clinical sensitivity for EGFR L858R mutations was 90%. In addition, we are collaborating with investigators from multiple academic cancer centers, including MD Anderson Cancer Center, the University of Colorado, Memorial Sloan Kettering Cancer Center, Massachusetts General Cancer Center, Wake Forest Cancer Center and the University of California San Francisco, as well as several international institutions. We believe these studies are critical to |
• | International expansion. A component of our long-term growth strategy is to expand our commercial footprint internationally, and we expect to increase our sales and marketing expense to execute on this strategy. We currently offer our tests in countries outside the United States primarily through distributor relationships or direct contracts with hospitals. In May 2018, we formed and capitalized a joint venture, Guardant Health AMEA, Inc., which we refer to as the Joint Venture, with SoftBank, relating to the sale, marketing and distribution of our tests generally outside the Americas and Europe. We expect to rely on the Joint Venture to accelerate commercialization of our products in Asia, the Middle East and Africa, with our initial focus being on Japan. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Revenue: | ||||||||
Precision oncology testing | $ | 28,837 | $ | 14,191 | ||||
Development services | 7,818 | 2,501 | ||||||
Total revenue | 36,655 | 16,692 | ||||||
Costs and operating expenses: | ||||||||
Cost of precision oncology testing(1) | 11,023 | 8,045 | ||||||
Cost of development services | 2,512 | 1,208 | ||||||
Research and development expense(1) | 16,316 | 8,255 | ||||||
Sales and marketing expense(1) | 17,807 | 11,312 | ||||||
General and administrative expense(1) | 12,661 | 6,519 | ||||||
Total costs and operating expenses | 60,319 | 35,339 | ||||||
Loss from operations | (23,664 | ) | (18,647 | ) | ||||
Interest income | 2,485 | 985 | ||||||
Interest expense | (293 | ) | (331 | ) | ||||
Other income (expense), net | 147 | 4,149 | ||||||
Loss before provision for income taxes | (21,325 | ) | (13,844 | ) | ||||
Provision for income taxes | 26 | — | ||||||
Net loss | $ | (21,351 | ) | $ | (13,844 | ) |
(1) | Amounts include stock-based compensation expense as follows: |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Cost of precision oncology testing | $ | 170 | $ | 63 | ||||
Research and development expense | 1,210 | 204 | ||||||
Sales and marketing expense | 826 | 374 | ||||||
General and administrative expense | 976 | 636 | ||||||
Total stock-based compensation expense | $ | 3,182 | $ | 1,277 |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Precision oncology testing | $ | 28,837 | $ | 14,191 | $ | 14,646 | 103 | % | ||||||
Development services | 7,818 | 2,501 | 5,317 | 213 | % | |||||||||
Total revenue | $ | 36,655 | $ | 16,692 | $ | 19,963 | 120 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Cost of precision oncology testing | $ | 11,023 | $ | 8,045 | $ | 2,978 | 37 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Cost of development services | $ | 2,512 | $ | 1,208 | $ | 1,304 | 108 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Research and development | $ | 16,316 | $ | 8,255 | $ | 8,061 | 98 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Sales and marketing | $ | 17,807 | $ | 11,312 | $ | 6,495 | 57 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
General and administrative | $ | 12,661 | $ | 6,519 | $ | 6,142 | 94 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Interest income | $ | 2,485 | $ | 985 | $ | 1,500 | 152 | % |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Interest expense | $ | 293 | $ | 331 | $ | (38 | ) | (11 | )% |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited) | ||||||||||||||
(in thousands) | ||||||||||||||
Other income (expense), net | $ | 147 | $ | 4,149 | $ | (4,002 | ) | (96 | )% |
Three Months Ended March 31, | Change | ||||||||||||
2019 | 2018 | $ | % | ||||||||||
(unaudited) | |||||||||||||
(in thousands) | |||||||||||||
Provision for income taxes | $ | 26 | $ | — | $ | 26 | * |
* | Not meaningful |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(unaudited) | |||||||
(in thousands) | |||||||
Cash used in operating activities | $ | (4,303 | ) | $ | (6,559 | ) | |
Cash provided by investing activities | $ | 15,329 | $ | 8,470 | |||
Cash provided by financing activities | $ | 2,288 | $ | 1,267 |
Three Months Ended March 31, | ||||
2019 | 2018 | |||
(unaudited) | ||||
Expected term (in years) | 6.22 | 5.01 – 10.00 | ||
Expected volatility | 66.7% | 81.6% – 86.5% | ||
Risk-free interest rate | 2.7% | 2.5% – 2.7% | ||
Expected dividend yield | —% | —% |
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed/Furnished Herewith | ||||||
3.1 | 8-K | 001-38683 | 3.1 | 10/9/2018 | ||||||||
3.2 | 8-K | 001-38683 | 3.2 | 10/9/2018 | ||||||||
10.1# | S-8 | 333-227762 | 99.3 | 10/10/2018 | ||||||||
10.1(a)# | 10-K | 001-38683 | 10.4(a) | 3/29/2019 | ||||||||
10.2# | S-1/A | 333-227206 | 10.13 | 9/21/2018 | ||||||||
10.2(a)# | 10-K | 001-38683 | 10.5(a) | 3/29/2019 | ||||||||
10.3# | * | |||||||||||
10.4# | 10-K | 001-38683 | 10.19 | 3/29/2019 | ||||||||
10.5#§ | * | |||||||||||
10.6# | * | |||||||||||
31.1 | * | |||||||||||
31.2 | * | |||||||||||
32.1 | ** | |||||||||||
32.2 | ** | |||||||||||
101.INS | XBRL Instance Document | * | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | * | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | * | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | * | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | * | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | * | ||||||||||
GUARDANT HEALTH, INC. | |||
Dated: | May 10, 2019 | By: | /s/ Derek Bertocci |
Name: | Derek Bertocci | ||
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Guardant Health, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 10, 2019 | /s/ Helmy Eltoukhy | |
Helmy Eltoukhy | |||
Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Guardant Health, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 10, 2019 | /s/ Derek Bertocci | |
Derek Bertocci | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: | May 10, 2019 | /s/ Helmy Eltoukhy | |
Helmy Eltoukhy | |||
Chief Executive Officer | |||
(Principal Executive Officer) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: | May 10, 2019 | /s/ Derek Bertocci | |
Derek Bertocci | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 07, 2019 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | GH | |
Entity Registrant Name | Guardant Health, Inc. | |
Entity Central Index Key | 0001576280 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 87,112,669 |
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenue: | ||
Precision oncology testing | $ 28,837 | $ 14,191 |
Development services | 7,818 | 2,501 |
Total revenue | 36,655 | 16,692 |
Costs and operating expenses: | ||
Cost of precision oncology testing | 11,023 | 8,045 |
Cost of development services | 2,512 | 1,208 |
Research and development expense | 16,316 | 8,255 |
Sales and marketing expense | 17,807 | 11,312 |
General and administrative expense | 12,661 | 6,519 |
Total costs and operating expenses | 60,319 | 35,339 |
Loss from operations | (23,664) | (18,647) |
Interest income | 2,485 | 985 |
Interest expense | (293) | (331) |
Other income (expense), net | 147 | 4,149 |
Loss before provision for income taxes | (21,325) | (13,844) |
Provision for income taxes | 26 | 0 |
Net loss | (21,351) | (13,844) |
Fair value adjustment of redeemable noncontrolling interest | (4,700) | 0 |
Net loss attributable to Guardant Health, Inc. common stockholders | $ (26,051) | $ (13,844) |
Net loss per share attributable to common stockholders, basic and diluted (in usd per share) | $ (0.30) | $ (1.16) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 85,935 | 11,920 |
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.0000001 | $ 0.0000001 |
Common stock, shares authorized (shares) | 350,000,000 | 350,000,000 |
Common stock, shares outstanding (shares) | 86,098,474 | 85,832,454 |
Common stock, shares issued (shares) | 86,098,474 | 85,832,454 |
Variable interest entity, assets | $ 47,000 | $ 48,300 |
Variable interest entity, liabilities | $ 942 | $ 1,200 |
Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (21,351) | $ (13,844) |
Other comprehensive income (loss), net of tax impact: | ||
Unrealized gain (loss) on available-for-sale securities | 485 | (298) |
Foreign currency translation adjustments | (69) | 0 |
Other comprehensive income (loss) | 416 | (298) |
Comprehensive loss | (20,935) | (14,142) |
Comprehensive loss attributable to redeemable noncontrolling interest | (4,700) | 0 |
Comprehensive loss attributable to Guardant Health, Inc. | $ (25,635) | $ (14,142) |
Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity (unaudited) - USD ($) $ in Thousands |
Total |
Redeemable Noncontrolling Interest |
Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2017 | $ 308,606 | $ 499,974 | $ 0 | $ 4,900 | $ (532) | $ (195,736) | |
Beginning balance, shares at Dec. 31, 2017 | 78,627,369 | 11,896,882 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 421,264 | ||||||
Issuance of common stock upon exercise of stock options | 1,103 | 1,103 | |||||
Stock-based compensation | 1,277 | 1,277 | |||||
Issuance of common stock upon early exercise of stock options, shares | 44,268 | ||||||
Issuance of common stock upon exercise of warrants, shares | 31,713 | ||||||
Issuance of common stock upon exercise of warrants | (4) | (4) | |||||
Other comprehensive gain (loss), net of tax impact | (298) | (298) | |||||
Net loss | (13,844) | (13,844) | |||||
Ending balance, shares at Mar. 31, 2018 | 78,627,369 | 12,394,127 | |||||
Ending balance at Mar. 31, 2018 | 296,848 | $ 499,974 | $ 0 | 7,284 | (830) | (209,580) | |
Beginning balance at Dec. 31, 2018 | $ 41,800 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Fair value adjustment of redeemable noncontrolling interest | (4,700) | 4,700 | (4,700) | ||||
Ending balance at Mar. 31, 2019 | $ 46,500 | ||||||
Beginning balance at Dec. 31, 2018 | $ 483,152 | $ 1 | 764,033 | (83) | (280,799) | ||
Beginning balance, shares at Dec. 31, 2018 | 85,832,454 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock upon exercise of stock options, shares | 146,318 | 146,318 | |||||
Issuance of common stock upon exercise of stock options | $ 538 | 538 | |||||
Vesting of common stock exercised early | 56 | 56 | |||||
Stock-based compensation | 3,183 | 3,183 | |||||
Common stock issued under employee stock purchase plan (in shares) | 119,702 | ||||||
Common stock issued under employee stock purchase plan | 1,933 | 1,933 | |||||
Other comprehensive gain (loss), net of tax impact | 416 | 416 | |||||
Net loss | (21,351) | (21,351) | |||||
Ending balance, shares at Mar. 31, 2019 | 86,098,474 | ||||||
Ending balance at Mar. 31, 2019 | $ 468,134 | $ 1 | $ 771,009 | $ 333 | $ (303,209) |
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
OPERATING ACTIVITIES: | ||
Net loss | $ (21,351) | $ (13,844) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,354 | 1,395 |
Unrealized translation (gains) losses on obligation related to royalty | (144) | 206 |
Non-cash stock-based compensation | 3,182 | 1,277 |
Non-cash interest expense | 0 | (3) |
Amortization of discounts on marketable securities | (553) | (78) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 11,608 | 623 |
Inventory | (1,120) | 321 |
Prepaid expenses and other current assets | (947) | (1,312) |
Other assets | (833) | 255 |
Accounts payable | (2,610) | 1,989 |
Accrued compensation | 1,697 | (608) |
Accrued expenses and other current liabilities | 2,308 | 1,108 |
Deferred rent | 1,131 | 621 |
Deferred revenue | 975 | 1,491 |
Net cash used in operating activities | (4,303) | (6,559) |
INVESTING ACTIVITIES: | ||
Purchase of marketable securities | (45,966) | (19,634) |
Maturity of marketable securities | 64,000 | 32,125 |
Purchase of property and equipment | (2,705) | (4,021) |
Net cash provided by investing activities | 15,329 | 8,470 |
FINANCING ACTIVITIES: | ||
Payments made on royalty obligations | (73) | 0 |
Payments made on capital lease obligations | (21) | (47) |
Proceeds from issuance of common stock upon exercise of stock options | 538 | 1,310 |
Proceeds from issuance of common stock upon the exercise of warrants | 0 | 4 |
Proceeds from issuances of common stock under employee stock purchase plan | 1,933 | 0 |
Payment of offering costs related to initial public offering | (89) | 0 |
Net cash provided by financing activities | 2,288 | 1,267 |
Net effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | (69) | 0 |
Net increase in cash, cash equivalents and restricted cash | 13,245 | 3,178 |
Cash, cash equivalents and restricted cash - Beginning of period | 140,544 | 72,596 |
Cash, cash equivalents and restricted cash - End of period | 153,789 | 75,774 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 293 | 30 |
Cash paid for income taxes | (48) | 0 |
Supplemental Disclosures of Noncash Investing and Financing Activities: | ||
Purchases of property and equipment included in accounts payable and accrued expenses | $ 490 | $ 3,351 |
Description of Business |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Guardant Health, Inc. (the “Company”) 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. The key to conquering cancer is unprecedented access to its molecular information throughout all stages of the disease, which it enables by a routine blood draw, or liquid biopsy. The Guardant Health Oncology Platform is designed to leverage the Company’s capabilities in technology, clinical development, regulatory, reimbursement and commercial adoption to improve patient clinical outcomes, lower healthcare costs and accelerate biopharmaceutical drug development. In pursuit of its goal to manage cancer across all stages of the disease, it has launched its Guardant360 and GuardantOMNI liquid biopsy-based tests for advanced stage cancer patients, and is developing tests from its LUNAR early detection program to address the needs of early stage cancer patients with adjuvant treatment selection, cancer survivors with surveillance and asymptomatic individuals with screening. The Company was incorporated in Delaware in December 2011 and is headquartered in Redwood City, California. In April 2018, the Company established Guardant Health AMEA, Inc. (the “Joint Venture”) in the United States with an entity affiliated with SoftBank. Under the terms of the joint venture agreement, the Company held a 50% ownership interest in the Joint Venture. As of March 31, 2019, the Joint Venture has subsidiaries in Singapore and Japan (see Note 3). Reverse Stock Split In September 2018, the Company’s Board of Directors and its stockholders approved a 0.7378-for-one reverse stock split of the Company’s common stock. The reverse stock split became effective on September 19, 2018. The par value of the common stock was not adjusted as a result of the reverse stock split. Adjustments corresponding to the reverse stock split were made to the ratio at which the convertible preferred stock was convertible into common stock immediately prior to the closing of the Company's initial public offering (the “IPO”). All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted for all periods presented to give effect to this reverse stock split. |
Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of Guardant Health, Inc. and its consolidated Joint Venture. Other stockholders’ interests in the Joint Venture are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The Company believes that its existing cash and cash equivalents and marketable securities as of March 31, 2019 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying condensed consolidated financial statements are issued. As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimation of variable consideration, standalone selling price allocation included in contracts with multiple performance obligations, estimation of potential credit losses on accounts receivable, the valuation of inventory, stock-based compensation, contingencies, certain inputs into the provision for income taxes, including related reserves, valuation of redeemable noncontrolling interest, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates. Unaudited Interim Condensed Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2019, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018, and the related interim condensed consolidated disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring accruals that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. JOBS Act Accounting Election The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012 (the “JOBS Act”). Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. The Company has elected to use this extended transition period and, as a result, the consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company also intends to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Foreign Currency Translation The functional currency of the subsidiaries of the consolidated Joint Venture is the local currency. The assets and liabilities of the subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date, with the resulting translation adjustments recorded to a separate component of accumulated other comprehensive loss within stockholders’ equity. Income and expense accounts are translated at average exchange rates during the period. Foreign currency transaction gains and losses resulting from transactions denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. For the three months ended March 31, 2019, foreign currency translation adjustment was immaterial. Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three months or less. Cash equivalents include bank demand deposits and money market accounts that invest primarily in U.S. government-backed securities and treasuries. Cash equivalents are carried at cost, which approximates their fair value. Restricted cash consists of deposits related to the Company’s corporate credit card. Restricted cash balance was included in other assets in the accompanying condensed consolidated balance sheet, and was immaterial as of March 31, 2019 and December 31, 2018. Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and investments in marketable securities. The Company limits its exposure to credit losses by investing in money market funds through a U.S. bank with high credit ratings. The Company’s cash may consist of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company also invests in investment‑grade debt instruments and has policy limits for the amount it can invest in any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company is also subject to credit risk from its accounts receivable. The majority of the Company’s accounts receivable arises from the provision of precision oncology services in the United States and are primarily with biopharmaceutical companies with high credit ratings. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Accounts receivable are recorded at the invoiced amount and do not bear interest. Significant customers are those which represent more than 10% of the Company’s total revenue or accounts receivable balance at each respective condensed consolidated balance sheet date. For each significant customer, revenue as a percentage of revenue and accounts receivable as a percentage of accounts receivable are as follows:
Accounts Receivable Accounts receivable represent valid claims against biopharmaceutical companies, research institutes and international distributors. The Company evaluates the collectability of its accounts receivable and provides for an allowance for potential credit losses based on management’s best estimate of the amount of probable credit losses. Accounts receivable are written off when management determines a balance is uncollectible and no longer intends to actively pursue collection of the receivable. For the three months ended March 31, 2019 and 2018, the Company did not write off any material accounts receivable. Upon the adoption of ASC 606 on January 1, 2019, contract assets are reported as part of accounts receivable on the condensed consolidated balance sheets and are discussed in "unbilled receivables". Revenue Recognition The Company derives revenue from the provision of precision oncology testing services provided to its ordering physicians and biopharmaceutical customers, as well as from biopharmaceutical research and development services provided to its biopharmaceutical customers. Precision oncology services include genomic profiling and the delivery of other genomic information derived from the Company’s platform. Development services include the development of new platforms and information solutions, including companion diagnostic development and laboratory services. The Company currently receives payments from commercial third-party payers, certain hospitals and oncology centers and individual patients, as well as biopharmaceutical companies and research institutes. Effective January 1, 2019, the Company began recognizing revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control of services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. ASC 606 provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Precision oncology testing The Company recognizes revenue from the sale of its precision oncology tests for clinical customers, including certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians. Most precision oncology tests requested by clinical customers are sold without a written agreement; however, the Company determines an implied contract exists with its clinical patients. The Company identifies each sale of its liquid biopsy test to clinical customer as a single performance obligation. With the exception of certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per test or on the basis of an agreement to provide certain testing volume over a defined period. The Company identifies its promise to transfer a series of distinct liquid biopsy tests to biopharmaceutical customers as a single performance obligation. Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed. Revenue is recognized over time based on the number of tests performed as the performance obligation is satisfied over time. The Company’s precision oncology information services are delivered electronically, and as such there are no shipping or handling fees incurred by the Company or billed to customers. Development services The Company performs development services for its biopharmaceutical customers utilizing its precision oncology information platform. Development services typically represent a single performance obligation as the Company performs a significant integration service, such as analytical validation and regulatory submissions. The individual promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct. However, in certain contracts, a biopharmaceutical customer may engage the Company for multiple distinct development services which are both capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct performance obligations. The Company collaborates with pharmaceutical companies in the development and clinical trials of new drugs. As part of these collaborations, the Company provides services related to regulatory filings with the FDA to support companion diagnostic device submissions for the Company’s liquid biopsy panels. Under these collaborations, the Company generates revenue from achievement of milestones, as well as provision of on-going support. These collaboration arrangements include no royalty obligations. For development services performed, the Company is compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other developmental milestone payments. The transaction price of the Company's development services contracts typically represents variable consideration. Application of the constraint for variable consideration to milestone payments is an area that requires significant judgment. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone. In making this assessment, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company. The constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the constraint for variable consideration is updated at each reporting period as a revision to the estimated transaction price. The Company recognizes development services revenue over the period in which biopharmaceutical research and development services are provided. Specifically, the Company recognizes revenue using an input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of progress. For development of new products or services under these arrangements, costs incurred before technological feasibility is assured are included as research and development expenses in the Company’s condensed consolidated statements of operations, while costs incurred thereafter are recorded as cost of development services. Contracts with multiple performance obligations Contracts with biopharmaceutical customers may include multiple distinct performance obligations, such as provision of precision oncology testing, biopharmaceutical research and development services, and clinical trial enrollment assistance, among others. The Company evaluates the terms and conditions included within its contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together. The Company first identifies material promises, in contrast to immaterial promises or administrative tasks, under the contract and then evaluates whether these promises are both capable of being distinct and distinct within the context of the contract. In assessing whether a promised service is capable of being distinct, the Company considers whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party and the availability of the associated expertise in the general marketplace. In assessing whether a promised service is distinct within the context of the contract, the Company considers whether it provides a significant integration of the services, whether the services significantly modify or customize one another, or whether the services are highly interdependent or interrelated. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines standalone selling price by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each performance obligation plus appropriate margin. Unbilled receivables Unbilled receivables, which is a contract asset, consists primarily of: i) precision oncology testing revenues to clinical customers that are recognized upon delivery of the test results prior to cash collection; and ii) development services revenues to biopharmaceutical customers that are recognized prior to the establishment of billing rights or the achievement of performance-based milestones. Contract assets are relieved when the Company receives payments from clinical customers, or when it invoices the biopharmaceutical customers when milestones are achieved, thereby reclassifying the balances from contract assets to accounts receivable. Unbilled receivables are presented under accounts receivable on the Company's consolidated balance sheets. As of March 31, 2019, the Company had unbilled receivables of $3.9 million as compared to $4.9 million as of January 1, 2019. The Company did not record unbilled receivables for its contract assets prior to the adoption of ASC 606 on January 1, 2019. Deferred revenue Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue recognition from contracts with customers. For example, development services contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company's performance of the related services. Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is consequently recognized. As of March 31, 2019 and December 31, 2018, the deferred revenue balance was $17.1 million and $16.1 million, respectively, which included $12.4 million and $10.5 million, respectively, related to collaboration development efforts with two pharmaceutical companies to be recognized as the Company performs research and development services in the future periods. Revenue recognized in the three months ended March 31, 2019 that was included in the deferred revenue balance as of January 1, 2019 was $7.0 million, which represented primarily revenue from provision of development services under the collaboration agreement with a biopharmaceutical company. Transaction price allocated to the remaining performance obligations Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. The Company applied the practical expedient in accordance with Topic 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. Costs of Precision Oncology Testing Cost of precision oncology testing generally consists of cost of materials, direct labor including bonus, benefit and stock-based compensation, equipment and infrastructure expenses associated with processing liquid biopsy test samples (including sample accessioning, library preparation, sequencing, quality control analyses and shipping charges to transport blood samples), freight, curation of test results for physicians and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Costs associated with performing the Company’s tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expense at the time the related revenues are recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the applicable patent rights. Cost of Development Services Cost of development service includes costs incurred for the performance of development services requested by the Company’s customers. For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of development services. Stock‑Based Compensation Stock‑based compensation related to stock options granted to the Company’s employees and directors is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. In 2018, the Company accounted for stock options issued to nonemployees consultants based on the estimated fair value at the grant date and re-measured at each reporting period. Starting January 1, 2019, upon adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, the fair value of stock options issued to nonemployee consultants is determined as of the grant date, and compensation expense is being recognized over the period that the related services are rendered. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of its stock options. The Black-Scholes option-pricing model requires assumptions to be made related to expected term of an award, expected volatility, risk-free rate and expected dividend yield. Starting January 1, 2017, forfeitures are accounted for as they occur. Net Loss Per Share Attributable to Common Stockholders The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, convertible preferred stock, common stock warrants, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised options and contingently issuable shares are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive. Prior to the closing of the IPO in October 2018 and the conversion of its convertible preferred stock into common stock, the Company calculated its basic and diluted net loss per share attributable to common stockholders of the Company in conformity with the two-class method required for companies with participating securities. The Company considered its convertible preferred stock to be participating securities. In the event a dividend had been declared or paid on the Company’s common stock, holders of convertible preferred stock were entitled to a share of such dividend in proportion to the holders of common stock on an as-if converted basis. Under the two-class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common and preferred stockholders. The net loss attributable to common stockholders was not allocated to the convertible preferred stock under the two-class method as the convertible preferred stock did not have a contractual obligation to share in the Company’s losses. Recent Adopted Accounting Pronouncements The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments (collectively “ASC 606”) on January 1, 2019 utilizing the modified retrospective method. The cumulative effect of applying the standard to all contracts that were not completed as of the date of initial application was recognized to beginning accumulated deficit as of January 1, 2019. The Company identified certain differences in accounting for revenue recognition as a result of the adoption of ASC 606 which have impacted its financial position and results of operations. These differences are discussed below. For precision oncology testing revenue with certain clinical customers, the Company historically deferred revenue recognition until cash receipt when the price pursuant to the underlying customer arrangement became fixed and determinable and collectability became reasonably assured. Under the new standard, this is considered variable consideration and revenue is recognized at the estimated transaction price upon delivery. This results in earlier revenue recognition under the new standard as compared to previous revenue recognition. For development services revenue with certain biopharmaceutical customers, the Company historically limited revenue recognition based on the right to invoice the customer. Under the new standard, for these arrangements, the Company constrains revenue such that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For arrangements with regulatory and other developmental milestone payments, this results in a change to the timing and pattern of revenue recognition under the new standard as compared to previous revenue recognition. Effective January 1, 2019, the Company recognizes revenue in accordance with ASC 606. Comparative information from prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows:
In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company's condensed consolidated statement of operations and condensed consolidated balance sheet was as follows:
ASC 606 did not have an aggregate impact on the Company’s net cash used in operating activities but resulted in offsetting changes in certain assets presented within net cash used in operating activities in the Company’s condensed consolidated statement of cash flows, as reflected in the above table. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, with certain exceptions. The Company early adopted this new guidance effective January 1, 2019. In accordance with the transition guidance, the Company assessed its outstanding nonemployee awards for which a measurement date had not been established. These outstanding awards were re-measured to fair value as of the January 1, 2019 adoption date. For nonemployee awards that contain performance condition, the measurement is based on the outcome that is probable as opposed to the lowest aggregate fair value within a range of possible outcomes. The adoption of ASU 2018-07 provided administrative relief by fixing the measurement date of nonemployee awards and eliminating the requirement of quarterly re-measurement. The Company adopted this standard on a modified retrospective basis and recorded a cumulative-effect adjustment of 1.3 million as an increase to accumulated deficit and an equal increase to additional paid-in capital as of January 1, 2019. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new guidance will be effective for the Company beginning in 2020, at which time, the new guidance will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates the recognition of additional assets and corresponding liabilities on its condensed consolidated balance sheet related to leases. The adoption of the new standard is also expected to materially impact the Company’s condensed consolidated financial statement disclosures related to leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. The new guidance is effective for the Company beginning in 2021, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements. |
Investment in Joint Venture |
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Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Joint Venture | Investment in Joint Venture Variable Interest Entity (“VIE”) In May 2018, the Company and SoftBank formed and capitalized Guardant Health AMEA, Inc. (the “Joint Venture”) for the sale, marketing and distribution of the Company’s tests in all areas worldwide, outside of North America, Central America, South America, the United Kingdom, all other member states of the European Union as of May 2017, Iceland, Norway, Switzerland and Turkey. The Company expects to rely on the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and Africa, with an initial focus on Japan. Under the terms of the joint venture agreement, the Company paid $9.0 million for 40,000 shares of common stock, or 50% ownership interest, of the Joint Venture, and the affiliate of SoftBank contributed $41.0 million for 40,000 shares of common stock, or the other 50% ownership interest, of the Joint Venture. Neither party has the obligation to provide additional financial support to the Joint Venture. The Joint Venture is deemed to be a variable interest entity ("VIE") and the Company has been identified as the VIE’s primary beneficiary. As the primary beneficiary, the Company has consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances have been eliminated in consolidation. As of March 31, 2019 and December 31, 2018, the Joint Venture had total assets of approximately $47.0 million and $48.3 million, respectively, which were primarily comprised of cash, property and equipment and security deposits. Although the Company consolidates the Joint Venture, the legal structure of the Joint Venture limits the recourse that its creditors will have over the Company’s general credit or assets. Similarly, the assets held in the Joint Venture can be used only to settle obligations of the Joint Venture. As of March 31, 2019 and December 31, 2018, the Company has not provided financial or other support to the Joint Venture that was not previously contracted or required. Put-call arrangements The joint venture agreement includes a put-call arrangement with respect to the shares of the Joint Venture held by SoftBank and its affiliates. Under certain specified circumstances and on terms specified in the joint venture agreement, including timely written notice, SoftBank has the right to cause the Company to purchase all shares of the Joint Venture held by SoftBank and its affiliates (the “put right”), and the Company has a right to purchase all such shares (the “call right”). The Company may pay the purchase price for the shares of the Joint Venture in cash, in shares of its common stock, or in a combination thereof. In the event the Company exercises the call right, SoftBank will choose the form of consideration. In the event SoftBank exercises the put right, the Company will choose the form of consideration. The noncontrolling interest held by SoftBank contains embedded put-call redemption features that are not solely within the Company’s control and has been classified outside of permanent equity in the consolidated balance sheets. The put-call feature embedded in the redeemable noncontrolling interest do not currently require bifurcation as it does not meet the definition of a derivative and is considered to be clearly and closely related to the redeemable noncontrolling interest. The noncontrolling interest is considered probable of becoming redeemable as SoftBank has the option to exercise its put right to sell its equity ownership in the Joint Venture to the Company on or after the seventh anniversary of the formation of the Joint Venture, on each subsequent anniversary of the IPO and under certain other circumstances. The Company elected to recognize the change in redemption value immediately as they occur as if the put-call redemption feature were exercisable at the end of the reporting period. As of March 31, 2019 and December 31, 2018, the fair value of the redeemable noncontrolling interest held by SoftBank approximated $46.5 million and $41.8 million, respectively. For the three months ended March 31, 2019, the Company recorded a fair value adjustment of $4.7 million in its condensed consolidated statements of operations. As of March 31, 2019, the fair value of the redeemable noncontrolling interest held by SoftBank was determined using the combination of the income approach and the market approach. Determining the fair value of the redeemable noncontrolling interest requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include future revenue growth rates, gross profit margins, EBITDA margins, future capital expenditures, weighted average costs of capital and future market conditions, among others. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy. |
Condensed Consolidated Balance Sheet Components |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidated Balance Sheet Components | Condensed Consolidated Balance Sheet Components Property and Equipment, Net Property and equipment, net consisted of the following:
Depreciation and amortization expense related to property and equipment was $2.1 million and $1.2 million for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and December 31, 2018, total property and equipment financed under capital leases was $504,000 and $504,000, net of accumulated amortization of $324,000 and $294,000, respectively. Amortization expense related to total property and equipment financed under capital leases was $30,000 and $64,000 for the three months ended March 31, 2019 and 2018, respectively. Accrued Expenses Accrued expenses consisted of the following:
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Fair Value Measurements. Cash Equivalents and Marketable Securities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements. Cash Equivalents and Marketable Securities | Fair Value Measurements, Cash Equivalents and Marketable Securities Financial instruments consist of cash equivalents, marketable securities, prepaid expenses and other current assets, accounts payable, accrued expenses and debt. Cash equivalents and marketable securities are stated at fair value. Prepaid expenses and other current assets, accounts payable and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:
The Company measures the fair value of money market funds based on quoted prices in active markets for identical securities. Corporate bonds, U.S. government debt securities and U.S. government agency bonds are valued taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration liability include the estimated amount and timing of projected cash flows, and the risk-adjusted discount rate used to present value the cash flows. The use of different inputs in the valuation of the contingent consideration liability could result in materially different fair value estimates. There were no transfers between Level 1, Level 2 and Level 3 during the periods presented. Cash Equivalents and Marketable Securities The following tables summarizes the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category:
There have been no material realized gains or losses on marketable securities for the periods presented. None of the Company’s investments in marketable securities has been in an unrealized loss position for more than one year. The Company determined that it did have the ability and intent to hold all marketable securities that have been in a continuous loss position until maturity or recovery, thus there has been no recognition of any other-than-temporary impairment in the three months ended March 31, 2019 and 2018. The maturities of the Company’s long-term marketable securities range from 1.0 year to 1.2 years as of March 31, 2019. |
Patent License Agreement |
3 Months Ended |
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Mar. 31, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Patent License Agreement | Patent License Agreement In January 2017, the Company entered into a license agreement with a biotechnology company for an exclusive, non-transferable right to use proprietary technology related to high-throughput screening and identification of mutations in targeted gene sequences. The transaction was treated as an acquisition of an asset and the Company capitalized a total of $9.7 million under the arrangement. As of March 31, 2019 and December 31, 2018, unamortized capitalized license fees were $7.6 million and $7.8 million, respectively, which will be amortized over the remaining useful life of 7.8 and 8.0 years, respectively. Amortization of capitalized license fees totaled $243,000 and $189,000 for the three months ended March 31, 2019 and 2018, respectively. |
Commitments and Contingencies |
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Commitments and Contingencies | Commitments and Contingencies Operating Leases As of March 31, 2019, future minimum payments under the non-cancelable operating lease were as follows:
Rent expense for the facility leases was $1.3 million and $1.1 million for the three months ended March 31, 2019 and 2018, respectively. Capital Leases As of March 31, 2019, future minimum capital lease payments were as follows:
License Agreements The Company has patent license agreements with four different parties. Under these agreements, the Company has made one-time upfront and milestone payments, which it has capitalized and is amortizing to expense ratably over the useful life of the underlying patent right(s). Under some of these agreements, the Company is obligated to pay low single-digit percentage running royalties on net sales where the licensed patent right(s) are used in the product or service sold, subject to minimum annual royalties or fees in certain agreements. Royalty expenses were included in cost of precision oncology testing on the accompanying condensed consolidated statements of operations. The Company recognized royalty expenses of $633,000 and $172,000, or 2% and 1% of precision oncology testing revenue in each period, for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, future minimum royalty payments were due as follows regardless of sales amounts:
Indemnification Agreements The Company has entered into indemnification agreements with certain directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. To date, no such matters have arisen and the Company does not believe that the outcome of any claims under indemnification arrangements will have a material adverse effect on its financial positions, results of operations or cash flows. Accordingly, the Company has not recorded a liability related to such indemnifications as of March 31, 2019. Security Incidents In July 2018, the Company experienced security incidents involving an unauthorized actor obtaining access to its email system and sending phishing messages. The Company has implemented and continues to implement additional security measures to help prevent future unauthorized access to its systems and the data it maintains, including promptly engaging an independent cybersecurity firm to support its investigation, assess its systems and bolster security thereof. The Company provided timely notices to the U.S. Department of Health and Human Services, or the HHS, certain state regulators and certain credit agencies, as applicable, as well as to the individuals affected. Following such security incidents, the Company received a request for information in January 2019 regarding the incidents from the HHS Office for Civil Rights, or OCR. The Company has responded to that request in a timely manner but does not know whether OCR will request additional information or pursue any further action. The Company currently cannot predict the ultimate resolution of the security incidents or the OCR inquiry and cannot estimate the amounts or ranges of potential loss that could result therefrom. The Company has insurance coverage in place for certain potential claims, liabilities and costs relating to the security incidents, but this coverage is limited in amount and may not be adequate to protect against all claims, liabilities and costs arising from such incidents, including fines and penalties. Legal Proceedings The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. Patent Disputes In November 2017, the Company filed separate lawsuits against Foundation Medicine, Inc. (“Foundation Medicine”) and Personal Genome Diagnostics, Inc. (“Personal Genome Diagnostics”) in the United States District Court for the District of Delaware, alleging that each of the two companies has infringed a patent relating to the Company’s digital sequencing technology. The Company subsequently amended its original complaints in each case to assert infringement of three additional patents relating to its digital sequencing technology. In each lawsuit, the Company is seeking compensatory damages, injunctive relief and attorneys’ fees. Personal Genome Diagnostics and Foundation Medicine have each asserted counterclaims of patent invalidity, including subsequently unenforceabilty under the doctrine of inequitable conduct, and non-infringement. In addition, Personal Genome Diagnostics has alleged, as part of its subsequent counterclaims, that the Company’s actions related to obtaining and securing exclusive rights to the patents-in-suit violated provisions of Section 2 of the Sherman Antitrust Act. In March 2018, Personal Genome Diagnostics filed two petitions for post-grant review with the PTAB, challenging the patentability of two of the patents asserted by the Company. Prior to reaching a decision on the merits, the two post-grant review petitions were dismissed with prejudice in July 2018. Subsequently, Foundation Medicine filed six petitions for inter partes review with the PTAB, challenging the patentability of all four of the patents asserted by the Company, which actions are currently pending at the PTAB. The Company plans to vigorously defend its patent rights during such PTAB actions. At this time, the Company cannot reasonably ascertain the likelihood that any of the challenged patents will be found to be invalid or unenforceable. License Dispute In November 2018, the Company filed a request for arbitration to the International Chamber of Commerce claiming that one of its licensors, KeyGene N.V. (“Licensor”), has breached its patent license agreement with the Company. In January 2019, Licensor responded with its answer and counterclaims and alleged that the Company has breached the patent license agreement. The Company subsequently followed up with supplemental claims, for which Licensor responded with its supplemental answer. The Company is seeking damages, declaratory relief and alternative forms of relief including recession and reformation to address Licensor’s alleged breaches of the patent license agreement. Licensor is seeking damages, recovery of costs and fees and declaratory relief in addition to the dismissal of the Company’s claims. The arbitration is in preliminary stages, and no date has been set for rendering a final decision. At this time, the Company cannot reasonably ascertain the likelihood that any of its claims or Licensor’s counterclaims will succeed on the merits. Other Disputes In the first quarter of 2018, the Company settled a commercial dispute. In connection with the settlement, the Company received a payment of $4.25 million, which was reported as other income in the condensed consolidated statements of operations for the three months ended March 31, 2018. |
Common Stock |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock Common stockholders are entitled to dividends if and when declared by the Company’s Board of Directors (the “Board of Directors”). As of March 31, 2019 and December 31, 2018, no dividends on common stock had been declared by the Board of Directors. Common stock has been reserved for the following potential future issuances:
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation 2012 Stock Plan and 2018 Incentive Award Plan In June 2012 and September 2018, the Board of Directors adopted and its stockholders approved the Company’s 2012 Stock Plan (as amended and restated, the “2012 Plan”) and the Company’s 2018 Incentive Award Plan (the “2018 Plan”), respectively, under which the Company may grant cash and equity incentive awards such as stock options, restricted shares, stock units and stock appreciation rights to its employees and nonemployees. Stock options granted may be either incentive stock options or nonstatutory stock options. Shares issued under the 2018 Plan may be authorized but unissued shares, or shares purchased in the open market or treasury shares. Upon effectiveness of the 2018 Plan in connection with the IPO in October 2018, the 2012 Plan was terminated and the 508,847 shares remaining available for future grant under the 2012 Plan were not made available for grant under the 2012 Plan or the 2018 Plan. Any outstanding awards granted under the 2012 Plan remained outstanding, subject to the terms of the 2012 Plan and applicable award agreement; and if any of those awards are forfeited or cancelled without payment therefor, the shares covered by those awards will not become available for future grant or issuance under the 2012 Plan or the 2018 Plan. No further grants will be made under the 2012 Plan. As of March 31, 2019 , 3,658,602 shares were approved and reserved for issuance under the 2018 Plan. Stock Option Activity A summary of the Company’s stock option activity under the 2012 Plan and the 2018 Plan and related information is as follows:
Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised was $8.1 million and $1.3 million for the three months ended March 31, 2019 and 2018, respectively. Starting January 1, 2019, the Company adopted ASU 2018-07 which aligns the accounting treatment of nonemployee awards with employee awards, and the fair value of stock options issued to employees and nonemployee consultants are both determined as of the grant date. The weighted-average grant date fair value of options granted was $25.90 and $3.77 per share for the three months ended March 31, 2019 and 2018, respectively. Future stock-based compensation for unvested options as of March 31, 2019 and December 31, 2018 was $16.6 million and $17.5 million, respectively, which is expected to be recognized over a weighted-average period of 2.5 years and 2.7 years, respectively. Restricted Stock Units A summary of the Company’s restricted stock unit activity under the 2012 Plan and the 2018 Plan and related information is as follows:
Future stock-based compensation for unvested restricted stock units as of March 31, 2019 was $4.2 million, which is expected to be recognized over a weighted-average period of 3.6 years. Stock‑Based Compensation Expense The following table presents the effect of employee and non‑employee related stock‑based compensation expense:
Valuation of Stock Options The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions:
The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. The valuation assumptions were determined as follows: Expected Term The expected term represents the period that the options granted are expected to be outstanding. After the adoption of ASU 2018-07 on January 1, 2019, the expected term of stock options issued to employees and nonemployee consultants is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term. Prior to the adoption of ASU 2018-07, the expected term of stock options issued to employees was determined using the simplified method, and the expected term of stock options issued to nonemployee consultants was based on the contractual term of the award. Expected Volatility Prior to the commencement of trading of the Company’s common stock on the Nasdaq Global Select Market on October 4, 2018 in connection with the IPO, there was no active trading market for the Company's common stock. The Company derived the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends as the Company has limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Risk-Free Interest Rate The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock options. Expected Dividend Yield The Company does not anticipate paying any dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero. 2018 Employee Stock Purchase Plan In September 2018, the Board of Directors adopted and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”). A total of 922,250 shares of common stock are initially reserved for issuance under the ESPP. The number of shares may be increased in accordance with the terms of the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 10% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company's common stock on the first or last day of the offering period, whichever is lower. Except for the initial offering period, the ESPP provides for separate six-month offering periods beginning on February 1 and August 1 of each year. The initial offering period ran from October 2, 2018 through January 31, 2019. For the three months ended March 31, 2019, 119,702 shares of common stock were purchased under the ESPP. The total compensation expense related to the ESPP for the three months ended March 31, 2019 was $566,000. As of March 31, 2019, the unrecognized stock-based compensation expense related to the ESPP was $646,000 which is expected to be recognized over the remaining term of the offering period of 0.3 years. The fair value of the stock purchase right granted under the ESPP was estimated on the first day of each offering period using the Black-Scholes option pricing model. The valuation assumptions used were substantially consistent with the assumption used to value stock options with the exception of the expected term which was based on the term of each purchase period. For the three months ended March 31, 2019, the following assumptions were used to calculate the stock-based compensation for each stock purchase right granted under the ESPP: a weighted-average expected life of 0.5 years; expected volatility of 60.2%; a risk-free interest rate of 2.5%; and a zero dividend yield. Liabilities for Early Exercise of Employee Options The Company allowed certain stock option holders to exercise unvested options to purchase shares of common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s employment termination, at the original issuance price, until the options are fully vested. As of March 31, 2019 and December 31, 2018, 32,279 and 44,268 shares of common stock were subject to repurchase at weighted-average prices of $4.66 and $4.66 per share, respectively. As of March 31, 2019 and December 31, 2018, the cash proceeds received for unvested shares of common stock of $150,000 and $206,000, respectively, were recorded within other long-term liabilities on the condensed consolidated balance sheet. The shares issued pursuant to unvested options have been included in shares issued and outstanding on the condensed consolidated balance sheet and condensed consolidated statement of redeemable noncontrolling interest and stockholders’ equity as such shares are considered legally outstanding. |
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders | Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders The following table sets forth the computation of the basic and diluted net loss per share attributable to Guardant Health, Inc. common stockholders:
Since the Company was in a loss position for all periods presented, basic net loss per share attributable to Guardant Health, Inc. common stockholders is the same as diluted net loss per share attributable to Guardant Health, Inc. common stockholders, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to Guardant Health, Inc. common stockholders for the periods presented as they had an anti-dilutive effect:
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Segment and Geographic Information |
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Segment and Geographic Information | Segment and Geographic Information The following table sets forth the Company’s revenue by geographic areas based on the customers’ locations:
As of March 31, 2019 and December 31, 2018, substantially all of the Company’s long-lived assets are located in the United States. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As discussed in Note 3, in connection with Softbank’s purchase of its Series E convertible preferred stock in 2017, the Company entered into a joint venture agreement with an entity affiliated with SoftBank. In May 2018, the Company and SoftBank formed and capitalized the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and Africa. The Company has consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances have been eliminated in consolidation. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Acquisition of Bellwether Bio In April 2019, the Company completed its purchase of all of the outstanding shares of Bellwether Bio, Inc. ("Bellwether Bio"), a privately-held company developing a method for early blood-based cancer detection. The upfront consideration, after customary adjustments at closing, was approximately $10.1 million in cash. Subject to the achievement of certain commercialization milestones and, for certain milestones, the continued provision of services to the Company by certain former employees and consultants of Bellwether Bio, the Company will pay additional contingent consideration of up to a total of $20.0 million, which may be paid, at the Company’s election, in cash or in the Company’s common stock. At the time of the issuance of the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2019, the initial accounting for the acquisition of Bellwether Bio, including purchase price allocation, had not been completed. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements include the accounts of Guardant Health, Inc. and its consolidated Joint Venture. Other stockholders’ interests in the Joint Venture are shown in the condensed consolidated financial statements as redeemable noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The Company believes that its existing cash and cash equivalents and marketable securities as of March 31, 2019 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying condensed consolidated financial statements are issued. As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital. |
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Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Estimates are used in several areas including, but not limited to, estimation of variable consideration, standalone selling price allocation included in contracts with multiple performance obligations, estimation of potential credit losses on accounts receivable, the valuation of inventory, stock-based compensation, contingencies, certain inputs into the provision for income taxes, including related reserves, valuation of redeemable noncontrolling interest, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results may differ materially from management’s estimates. |
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Unaudited Interim Condensed Financial Statements | Unaudited Interim Condensed Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2019, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018, and the related interim condensed consolidated disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring accruals that the Company believes are necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with GAAP. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. |
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JOBS Act Accounting Election | JOBS Act Accounting Election The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Act of 2012 (the “JOBS Act”). Section 107(b) of the JOBS Act provides that an emerging growth company can leverage the extended transition period, provided in Section 102(b) of the JOBS Act, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. The Company has elected to use this extended transition period and, as a result, the consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company also intends to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. |
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Foreign Currency Translations | Foreign Currency Translation The functional currency of the subsidiaries of the consolidated Joint Venture is the local currency. The assets and liabilities of the subsidiaries are translated into U.S. dollars at exchange rates in effect at each balance sheet date, with the resulting translation adjustments recorded to a separate component of accumulated other comprehensive loss within stockholders’ equity. Income and expense accounts are translated at average exchange rates during the period. Foreign currency transaction gains and losses resulting from transactions denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. For the three months ended March 31, 2019, foreign currency translation adjustment was immaterial. |
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Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three months or less. Cash equivalents include bank demand deposits and money market accounts that invest primarily in U.S. government-backed securities and treasuries. Cash equivalents are carried at cost, which approximates their fair value. |
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Concentration of Risk | Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and investments in marketable securities. The Company limits its exposure to credit losses by investing in money market funds through a U.S. bank with high credit ratings. The Company’s cash may consist of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company also invests in investment‑grade debt instruments and has policy limits for the amount it can invest in any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. The Company is also subject to credit risk from its accounts receivable. The majority of the Company’s accounts receivable arises from the provision of precision oncology services in the United States and are primarily with biopharmaceutical companies with high credit ratings. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Accounts receivable are recorded at the invoiced amount and do not bear interest. |
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Accounts Receivable | Accounts Receivable Accounts receivable represent valid claims against biopharmaceutical companies, research institutes and international distributors. The Company evaluates the collectability of its accounts receivable and provides for an allowance for potential credit losses based on management’s best estimate of the amount of probable credit losses. Accounts receivable are written off when management determines a balance is uncollectible and no longer intends to actively pursue collection of the receivable. For the three months ended March 31, 2019 and 2018, the Company did not write off any material accounts receivable. Upon the adoption of ASC 606 on January 1, 2019, contract assets are reported as part of accounts receivable on the condensed consolidated balance sheets and are discussed in "unbilled receivables". |
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Revenue Recognition | Revenue Recognition The Company derives revenue from the provision of precision oncology testing services provided to its ordering physicians and biopharmaceutical customers, as well as from biopharmaceutical research and development services provided to its biopharmaceutical customers. Precision oncology services include genomic profiling and the delivery of other genomic information derived from the Company’s platform. Development services include the development of new platforms and information solutions, including companion diagnostic development and laboratory services. The Company currently receives payments from commercial third-party payers, certain hospitals and oncology centers and individual patients, as well as biopharmaceutical companies and research institutes. Effective January 1, 2019, the Company began recognizing revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control of services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. ASC 606 provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Precision oncology testing The Company recognizes revenue from the sale of its precision oncology tests for clinical customers, including certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians. Most precision oncology tests requested by clinical customers are sold without a written agreement; however, the Company determines an implied contract exists with its clinical patients. The Company identifies each sale of its liquid biopsy test to clinical customer as a single performance obligation. With the exception of certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per test or on the basis of an agreement to provide certain testing volume over a defined period. The Company identifies its promise to transfer a series of distinct liquid biopsy tests to biopharmaceutical customers as a single performance obligation. Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed. Revenue is recognized over time based on the number of tests performed as the performance obligation is satisfied over time. The Company’s precision oncology information services are delivered electronically, and as such there are no shipping or handling fees incurred by the Company or billed to customers. Development services The Company performs development services for its biopharmaceutical customers utilizing its precision oncology information platform. Development services typically represent a single performance obligation as the Company performs a significant integration service, such as analytical validation and regulatory submissions. The individual promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct. However, in certain contracts, a biopharmaceutical customer may engage the Company for multiple distinct development services which are both capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct performance obligations. The Company collaborates with pharmaceutical companies in the development and clinical trials of new drugs. As part of these collaborations, the Company provides services related to regulatory filings with the FDA to support companion diagnostic device submissions for the Company’s liquid biopsy panels. Under these collaborations, the Company generates revenue from achievement of milestones, as well as provision of on-going support. These collaboration arrangements include no royalty obligations. For development services performed, the Company is compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other developmental milestone payments. The transaction price of the Company's development services contracts typically represents variable consideration. Application of the constraint for variable consideration to milestone payments is an area that requires significant judgment. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone. In making this assessment, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company. The constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the constraint for variable consideration is updated at each reporting period as a revision to the estimated transaction price. The Company recognizes development services revenue over the period in which biopharmaceutical research and development services are provided. Specifically, the Company recognizes revenue using an input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of progress. For development of new products or services under these arrangements, costs incurred before technological feasibility is assured are included as research and development expenses in the Company’s condensed consolidated statements of operations, while costs incurred thereafter are recorded as cost of development services. Contracts with multiple performance obligations Contracts with biopharmaceutical customers may include multiple distinct performance obligations, such as provision of precision oncology testing, biopharmaceutical research and development services, and clinical trial enrollment assistance, among others. The Company evaluates the terms and conditions included within its contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together. The Company first identifies material promises, in contrast to immaterial promises or administrative tasks, under the contract and then evaluates whether these promises are both capable of being distinct and distinct within the context of the contract. In assessing whether a promised service is capable of being distinct, the Company considers whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party and the availability of the associated expertise in the general marketplace. In assessing whether a promised service is distinct within the context of the contract, the Company considers whether it provides a significant integration of the services, whether the services significantly modify or customize one another, or whether the services are highly interdependent or interrelated. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines standalone selling price by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each performance obligation plus appropriate margin. Unbilled receivables Unbilled receivables, which is a contract asset, consists primarily of: i) precision oncology testing revenues to clinical customers that are recognized upon delivery of the test results prior to cash collection; and ii) development services revenues to biopharmaceutical customers that are recognized prior to the establishment of billing rights or the achievement of performance-based milestones. Contract assets are relieved when the Company receives payments from clinical customers, or when it invoices the biopharmaceutical customers when milestones are achieved, thereby reclassifying the balances from contract assets to accounts receivable. Unbilled receivables are presented under accounts receivable on the Company's consolidated balance sheets. As of March 31, 2019, the Company had unbilled receivables of $3.9 million as compared to $4.9 million as of January 1, 2019. The Company did not record unbilled receivables for its contract assets prior to the adoption of ASC 606 on January 1, 2019. Deferred revenue Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue recognition from contracts with customers. For example, development services contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company's performance of the related services. Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is consequently recognized. As of March 31, 2019 and December 31, 2018, the deferred revenue balance was $17.1 million and $16.1 million, respectively, which included $12.4 million and $10.5 million, respectively, related to collaboration development efforts with two pharmaceutical companies to be recognized as the Company performs research and development services in the future periods. Revenue recognized in the three months ended March 31, 2019 that was included in the deferred revenue balance as of January 1, 2019 was $7.0 million, which represented primarily revenue from provision of development services under the collaboration agreement with a biopharmaceutical company. Transaction price allocated to the remaining performance obligations Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. The Company applied the practical expedient in accordance with Topic 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. |
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Costs of Precision Oncology Testing | Costs of Precision Oncology Testing Cost of precision oncology testing generally consists of cost of materials, direct labor including bonus, benefit and stock-based compensation, equipment and infrastructure expenses associated with processing liquid biopsy test samples (including sample accessioning, library preparation, sequencing, quality control analyses and shipping charges to transport blood samples), freight, curation of test results for physicians and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Costs associated with performing the Company’s tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of revenues generated using the associated technology are recorded as expense at the time the related revenues are recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the applicable patent rights. |
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Cost of Development Services | Cost of Development Services Cost of development service includes costs incurred for the performance of development services requested by the Company’s customers. For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of development services. |
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Stock-Based Compensation | Stock‑Based Compensation Stock‑based compensation related to stock options granted to the Company’s employees and directors is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. In 2018, the Company accounted for stock options issued to nonemployees consultants based on the estimated fair value at the grant date and re-measured at each reporting period. Starting January 1, 2019, upon adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, the fair value of stock options issued to nonemployee consultants is determined as of the grant date, and compensation expense is being recognized over the period that the related services are rendered. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of its stock options. The Black-Scholes option-pricing model requires assumptions to be made related to expected term of an award, expected volatility, risk-free rate and expected dividend yield. Starting January 1, 2017, forfeitures are accounted for as they occur. |
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Net Loss Per Share Attributable to Common Shareholders | Net Loss Per Share Attributable to Common Stockholders The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, convertible preferred stock, common stock warrants, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised options and contingently issuable shares are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive. Prior to the closing of the IPO in October 2018 and the conversion of its convertible preferred stock into common stock, the Company calculated its basic and diluted net loss per share attributable to common stockholders of the Company in conformity with the two-class method required for companies with participating securities. The Company considered its convertible preferred stock to be participating securities. In the event a dividend had been declared or paid on the Company’s common stock, holders of convertible preferred stock were entitled to a share of such dividend in proportion to the holders of common stock on an as-if converted basis. Under the two-class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common and preferred stockholders. The net loss attributable to common stockholders was not allocated to the convertible preferred stock under the two-class method as the convertible preferred stock did not have a contractual obligation to share in the Company’s losses. |
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Recent Accounting Pronouncements Not Yet Adopted | Recent Adopted Accounting Pronouncements The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all related amendments (collectively “ASC 606”) on January 1, 2019 utilizing the modified retrospective method. The cumulative effect of applying the standard to all contracts that were not completed as of the date of initial application was recognized to beginning accumulated deficit as of January 1, 2019. The Company identified certain differences in accounting for revenue recognition as a result of the adoption of ASC 606 which have impacted its financial position and results of operations. These differences are discussed below. For precision oncology testing revenue with certain clinical customers, the Company historically deferred revenue recognition until cash receipt when the price pursuant to the underlying customer arrangement became fixed and determinable and collectability became reasonably assured. Under the new standard, this is considered variable consideration and revenue is recognized at the estimated transaction price upon delivery. This results in earlier revenue recognition under the new standard as compared to previous revenue recognition. For development services revenue with certain biopharmaceutical customers, the Company historically limited revenue recognition based on the right to invoice the customer. Under the new standard, for these arrangements, the Company constrains revenue such that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For arrangements with regulatory and other developmental milestone payments, this results in a change to the timing and pattern of revenue recognition under the new standard as compared to previous revenue recognition. Effective January 1, 2019, the Company recognizes revenue in accordance with ASC 606. Comparative information from prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows:
In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company's condensed consolidated statement of operations and condensed consolidated balance sheet was as follows:
ASC 606 did not have an aggregate impact on the Company’s net cash used in operating activities but resulted in offsetting changes in certain assets presented within net cash used in operating activities in the Company’s condensed consolidated statement of cash flows, as reflected in the above table. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, with certain exceptions. The Company early adopted this new guidance effective January 1, 2019. In accordance with the transition guidance, the Company assessed its outstanding nonemployee awards for which a measurement date had not been established. These outstanding awards were re-measured to fair value as of the January 1, 2019 adoption date. For nonemployee awards that contain performance condition, the measurement is based on the outcome that is probable as opposed to the lowest aggregate fair value within a range of possible outcomes. The adoption of ASU 2018-07 provided administrative relief by fixing the measurement date of nonemployee awards and eliminating the requirement of quarterly re-measurement. The Company adopted this standard on a modified retrospective basis and recorded a cumulative-effect adjustment of 1.3 million as an increase to accumulated deficit and an equal increase to additional paid-in capital as of January 1, 2019. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new guidance will be effective for the Company beginning in 2020, at which time, the new guidance will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates the recognition of additional assets and corresponding liabilities on its condensed consolidated balance sheet related to leases. The adoption of the new standard is also expected to materially impact the Company’s condensed consolidated financial statement disclosures related to leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. The new guidance is effective for the Company beginning in 2021, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | For each significant customer, revenue as a percentage of revenue and accounts receivable as a percentage of accounts receivable are as follows:
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Schedule of the Cumulative Effect on Financial Information Related to the Adoption of ACS 606 | The cumulative effect of changes made to the condensed consolidated balance sheet as of January 1, 2019 related to the adoption of ASC 606 were as follows:
In accordance with ASC 606 requirements under the modified retrospective method of adoption, the disclosure of the impact of adoption on the Company's condensed consolidated statement of operations and condensed consolidated balance sheet was as follows:
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Condensed Consolidated Balance Sheet Components (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and equipment, net consisted of the following:
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Schedule of Accrued Liabilities | Accrued expenses consisted of the following:
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Fair Value Measurements. Cash Equivalents and Marketable Securities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:
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Debt Securities, Available-for-sale | The following tables summarizes the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category:
|
Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | As of March 31, 2019, future minimum payments under the non-cancelable operating lease were as follows:
|
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Schedule of Future Minimum Lease Payments for Capital Leases | As of March 31, 2019, future minimum capital lease payments were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Royalty Payments | As of March 31, 2019, future minimum royalty payments were due as follows regardless of sales amounts:
|
Common Stock (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | Common stock has been reserved for the following potential future issuances:
|
Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Stock Options, Activity | A summary of the Company’s stock option activity under the 2012 Plan and the 2018 Plan and related information is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Activity | A summary of the Company’s restricted stock unit activity under the 2012 Plan and the 2018 Plan and related information is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The following table presents the effect of employee and non‑employee related stock‑based compensation expense:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions:
|
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of the basic and diluted net loss per share attributable to Guardant Health, Inc. common stockholders:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to Guardant Health, Inc. common stockholders for the periods presented as they had an anti-dilutive effect:
|
Segment and Geographic Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table sets forth the Company’s revenue by geographic areas based on the customers’ locations:
|
Description of Business (Details) |
1 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
May 31, 2018 |
Apr. 30, 2018 |
|
Subsidiary, Sale of Stock [Line Items] | |||
Stock split conversion rate | 0.7378 | ||
Guardant Health AMEA, Inc | |||
Subsidiary, Sale of Stock [Line Items] | |||
Ownership interest in joint venture | 50.00% | 50.00% |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Unbilled receivables | $ 3,900 | $ 4,900 | |
Accumulated deficit | (303,209) | (275,892) | $ (280,799) |
Deferred revenue | 17,100 | 16,100 | |
Deferred revenue recognized | 7,000 | ||
Collaborative Arrangement | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Deferred revenue | $ 12,400 | $ 10,500 | |
ASU 2018-07 adoption | Accumulated Deficit | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Cumulative effect adjustment for new ASU's | $ (1,266) |
Summary of Significant Accounting Policies - Schedule of Concentration Risk (Details) - Credit Concentration Risk |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Customer A | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.00% | |
Customer B | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 24.00% | |
Customer B | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 35.00% | 65.00% |
Customer C | Revenue | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.00% | |
Customer D | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.00% |
Summary of Significant Accounting Policies - Adoption of ACS 606 (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Accounts receivable | $ 28,989 | $ 40,597 | $ 35,690 | |
Accumulated deficit | (303,209) | (275,892) | $ (280,799) | |
Precision oncology testing | 28,837 | $ 14,191 | ||
Development services | 7,818 | $ 2,501 | ||
Topic 606 adoption | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Accounts receivable | 4,907 | |||
Accumulated deficit | $ 4,907 | |||
Effect of Change | Topic 606 adoption | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Accounts receivable | 994 | |||
Accumulated deficit | 994 | |||
Precision oncology testing | 994 | |||
Development services | 0 | |||
Balances Without Adoption of ASC606 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Accounts receivable | 29,983 | |||
Accumulated deficit | (302,215) | |||
Precision oncology testing | 29,831 | |||
Development services | $ 7,818 |
Investment in Joint Venture (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
May 31, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Apr. 30, 2018 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Variable interest entity, assets | $ 47,000 | $ 48,300 | |||
Redeemable noncontrolling interest | 46,500 | $ 41,800 | |||
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest | $ 4,700 | $ 0 | |||
Guardant Health AMEA, Inc | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire interest in joint venture | $ 9,000 | ||||
Equity method investment, shares purchased | 40,000 | ||||
Equity method investment, ownership percentage | 50.00% | 50.00% | |||
SoftBank | Guardant Health AMEA, Inc | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment, shares purchased | 40,000 | ||||
Equity method investment, ownership percentage | 50.00% | ||||
Redeemable noncontrolling interest, redemption value | $ 41,000 |
Condensed Consolidated Balance Sheet Components - Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 46,884 | $ 47,637 |
Less: accumulated depreciation and amortization | (16,303) | (16,634) |
Property and equipment, net | 30,581 | 31,003 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 23,742 | 23,440 |
Computer hardware | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,293 | 4,949 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 14,163 | 13,965 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,540 | 1,522 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 741 | 643 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,405 | $ 3,118 |
Condensed Consolidated Balance Sheet Components - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Balance Sheet Related Disclosures [Abstract] | |||
Depreciation and amortization expense | $ 2,100 | $ 1,200 | |
Capital leases, balance sheet, assets, net | 504 | $ 504 | |
Capital leases, balance sheet, assets, accumulated depreciation | 324 | $ 294 | |
Amortization expense | $ 30 | $ 64 |
Condensed Consolidated Balance Sheet Components - Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accrued royalty obligations | $ 853 | $ 707 |
Accrued legal expenses | 2,400 | 814 |
Accrued tax liabilities | 1,410 | 1,470 |
Accrued professional services | 1,988 | 1,791 |
Purchases of property and equipment included in accrued expenses | 137 | 343 |
Other | 2,349 | 1,956 |
Total accrued expenses | $ 9,137 | $ 7,081 |
Fair Value Measurements. Cash Equivalents and Marketable Securities - Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 10,093 | $ 25,796 |
Debt securities, short-term | 313,069 | 278,417 |
Debt securities, long-term | 25,916 | 77,563 |
Total assets | 349,078 | 381,776 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 10,093 | 25,796 |
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
Total assets | 10,093 | 25,796 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Debt securities, short-term | 313,069 | 278,417 |
Debt securities, long-term | 25,916 | 77,563 |
Total assets | 338,985 | 355,980 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
Total assets | 0 | 0 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 43,083 | 38,397 |
Debt securities, long-term | 2,005 | 3,805 |
Corporate bonds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
Corporate bonds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 43,083 | 38,397 |
Debt securities, long-term | 2,005 | 3,805 |
Corporate bonds | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
U.S. government debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 264,992 | 235,016 |
Debt securities, long-term | 23,911 | 73,758 |
U.S. government debt securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
U.S. government debt securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 264,992 | 235,016 |
Debt securities, long-term | 23,911 | 73,758 |
U.S. government debt securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
Debt securities, long-term | 0 | 0 |
U.S. government agency bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 4,994 | 5,004 |
U.S. government agency bonds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
U.S. government agency bonds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 4,994 | 5,004 |
U.S. government agency bonds | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, short-term | 0 | 0 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 10,093 | 25,796 |
Money market funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 10,093 | 25,796 |
Money market funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Money market funds | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements. Cash Equivalents and Marketable Securities - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Minimum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Maturity period (years) | 1 year |
Maximum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Maturity period (years) | 1 year 2 months |
Fair Value Measurements. Cash Equivalents and Marketable Securities - Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | $ 153,790 | $ 140,544 |
Amortized cost, cash and cash equivalents and debt securities available-for-sale | 348,675 | 381,858 |
Gross Unrealized Gain | 481 | 235 |
Gross Unrealized Loss | (78) | (317) |
Cash, Cash Equivalents and Debt Securities, Fair Value | 349,078 | 381,776 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 10,093 | 25,796 |
Estimated Fair Value, Cash and Cash Equivalents | 10,093 | 25,796 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 45,065 | 42,273 |
Gross Unrealized Gain | 26 | 0 |
Gross Unrealized Loss | (3) | (71) |
Estimated Fair Value, Debt Securities | 45,088 | 42,202 |
U.S. government debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 288,522 | 308,775 |
Gross Unrealized Gain | 455 | 235 |
Gross Unrealized Loss | (74) | (236) |
Estimated Fair Value, Debt Securities | 288,903 | 308,774 |
U.S. government agency bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, debt securities, available-for-sale | 4,995 | 5,014 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | (1) | (10) |
Estimated Fair Value, Debt Securities | $ 4,994 | $ 5,004 |
Patent License Agreement (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jan. 31, 2017 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Payment in connection with patent licensing agreement | $ 9,700 | |||
Capitalized license fees | $ 7,557 | $ 7,800 | ||
Useful life (years) | 7 years 9 months | 8 years | ||
Amortization of intangible assets | $ 243 | $ 189 |
Commitments and Contingencies - Schedule of Future Minimum Payments For Operating Leases (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 3,693 |
2020 | 7,276 |
2021 | 8,161 |
2022 | 8,388 |
2023 | 9,023 |
2024 and thereafter | 26,076 |
Total | $ 62,617 |
Commitments and Contingencies - Narrative (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018
patent
|
Nov. 30, 2017
patent
|
Mar. 31, 2019
USD ($)
party
|
Mar. 31, 2018
USD ($)
|
|
Other Commitments [Line Items] | ||||
Operating leases, rent expense | $ | $ 1,300 | $ 1,100 | ||
Number of parties with patent license agreement | party | 4 | |||
Royalty expense | $ | $ 633 | $ 172 | ||
Percentage of precision oncology testing revenue | 2.00% | 1.00% | ||
Personal Genome Diagnostics, Inc. and Foundation Medicine, Inc, vs. Guardant Health, Inc. Subsequent Filing | ||||
Other Commitments [Line Items] | ||||
Number of asserted patents | 3 | |||
Personal Genome Diagnostics, Inc. vs. Guardant Health, Inc. | ||||
Other Commitments [Line Items] | ||||
Number of asserted patents | 2 | |||
Number of petitions filed | 2 | |||
Personal Genome Diagnostics, Inc. vs. Guardant Health, Inc. Subsequent Filing | ||||
Other Commitments [Line Items] | ||||
Number of asserted patents | 4 | |||
Number of petitions filed | 6 | |||
Other Income | ||||
Other Commitments [Line Items] | ||||
Amount awarded from other party | $ | $ 4,250 |
Commitments and Contingencies - Schedule of Future Minimum Payments For Capital Leases (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2019 | $ 107 | |
2020 | 108 | |
2021 | 36 | |
Total minimum capital lease payments | 251 | |
Less: amount representing interest | (55) | |
Present value of net minimum capital lease payments | 196 | |
Less: current installments of obligations under capital lease | (96) | $ (97) |
Capital lease, net of current portion | $ 100 | $ 119 |
Commitments and Contingencies - Schedule of Future Royalty Payments (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 1,052 |
2020 | 1,402 |
2021 | 1,402 |
2022 | 1,683 |
2023 | 1,683 |
2024 and thereafter | 5,609 |
Total future minimum royalty payments | 12,831 |
Less: amount representing interest | (5,711) |
Present value of future minimum royalty payments | $ 7,120 |
Common Stock (Details) - shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Class of Stock [Line Items] | ||
Common stock, shares reserved for future issuance (in shares) | 11,719,565 | 12,067,162 |
Stock options | ||
Class of Stock [Line Items] | ||
Common stock, shares reserved for future issuance (in shares) | 7,378,068 | 7,588,405 |
Restricted stock units | ||
Class of Stock [Line Items] | ||
Common stock, shares reserved for future issuance (in shares) | 102,498 | 0 |
2018 Incentive Award Plan | ||
Class of Stock [Line Items] | ||
Common stock, shares reserved for future issuance (in shares) | 3,436,451 | 3,556,507 |
2018 Employee Stock Purchase Plan | ||
Class of Stock [Line Items] | ||
Common stock, shares reserved for future issuance (in shares) | 802,548 | 922,250 |
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Oct. 31, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares canceled (shares) | 508,847 | 812 | ||
Weighted average grant date fair value, grants in period (in dollars per share) | $ 25.90 | $ 3.77 | ||
Stock based compensation not recognized, options | $ 16,600 | $ 17,500 | ||
Stock based compensation not recognized, period for recognition (years) | 2 years 5 months 27 days | 2 years 8 months 21 days | ||
Number of shares outstanding (in shares) | 7,378,068 | 7,588,405 | ||
Number of shares granted (in shares) | 18,370 | |||
Stock-based compensation | $ 3,182 | $ 1,277 | ||
Weighted-average expected life | 6 years 2 months 21 days | |||
Expected volatility | 66.70% | |||
Risk-free interest rate | 2.70% | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercises in period, intrinsic value | $ 8,100 | $ 1,300 | ||
Shares authorized (in shares) | 3,658,602 | |||
Expected dividend yield | 0.00% | 0.00% | ||
2018 Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation not recognized, other than options | $ 646 | |||
Stock based compensation not recognized, period for recognition (years) | 4 months | |||
Stock-based compensation | $ 566 | |||
Shares authorized (in shares) | 922,250 | |||
Maximum employee subscription rate, ESPP | 10.00% | |||
ESPP purchase price of common stock (as a percent of the fair value of common stock) | 85.00% | |||
Common stock issued under employee stock purchase plan (in shares) | 119,702 | |||
Weighted-average expected life | 5 months 29 days | |||
Expected volatility | 60.20% | |||
Risk-free interest rate | 2.50% | |||
Expected dividend yield | 0.00% | |||
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation not recognized, other than options | $ 4,200 | |||
Stock based compensation not recognized, period for recognition (years) | 3 years 7 months 24 days | |||
Nonemployee stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock subject to repurchase (in shares) | 32,279 | 44,268 | ||
Stock subject to repurchase, per share (in dollars per share) | $ 4.66 | $ 4.66 | ||
Cash proceeds received for unvested shares | $ 150 | $ 206 |
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended |
---|---|---|---|
Oct. 31, 2018 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Shares Available for Grant | |||
Beginning number of shares, available for grant (shares) | 3,556,507 | ||
Granted (shares) | (18,370) | ||
Canceled (shares) | 508,847 | 812 | |
Ending number of shares, available for grant (shares) | 3,436,451 | 3,556,507 | |
Shares Subject to Options Outstanding | |||
Beginning number of shares, outstanding (shares) | 7,588,405 | ||
Granted (shares) | 18,370 | ||
Exercised (shares) | (146,318) | ||
Canceled (shares) | (82,389) | ||
Ending number of shares, outstanding (shares) | 7,378,068 | 7,588,405 | |
Options vested and exercisable, number of options (shares) | 3,361,540 | ||
Weighted-Average Exercise Price | |||
Beginning balance of options outstanding (in dollars per share) | $ 4.58 | ||
Granted (unaudited) (in dollars per share) | 41.25 | ||
Exercised (unaudited) (in dollars per share) | 3.49 | ||
Canceled (unaudited) (in dollars per share) | 4.77 | ||
Ending balance of options outstanding (in dollars per share) | 4.69 | $ 4.58 | |
Options vested and exercisable, weighted average exercise price per share (in dollars per share) | $ 3.61 | ||
Weighted-Average Remaining Contractual Life and Aggregate Intrinsic Value | |||
Options outstanding, Weighted average remaining contractual term (in years) | 8 years 14 days | 8 years 3 months 6 days | |
Options outstanding, Aggregate intrinsic value | $ 531,281 | $ 250,495 | |
Options vested and exercisable, Weighted average remaining contractual term (in years) | 7 years 4 months 17 days | ||
Options vested and exercisable, Aggregate intrinsic value | $ 245,680 | ||
Restricted Stock Units | |||
Shares Available for Grant | |||
Granted (shares) | (120,835) | ||
Canceled (shares) | 18,337 |
Stock-Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 3,182 | $ 1,277 |
Precision oncology testing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 170 | 63 |
Research and development expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 1,210 | 204 |
Sales and marketing expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 826 | 374 |
General and administrative expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 976 | $ 636 |
Stock-Based Compensation - Valuation of Stock Options (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 6 years 2 months 21 days | |
Expected volatility | 66.70% | |
Risk-free interest rate | 2.70% | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Stock options | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 5 years 4 days | |
Expected volatility | 81.60% | |
Risk-free interest rate | 2.50% | |
Stock options | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 10 years | |
Expected volatility | 86.50% | |
Risk-free interest rate | 2.70% | |
2018 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 5 months 29 days | |
Expected volatility | 60.20% | |
Risk-free interest rate | 2.50% | |
Expected dividend yield | 0.00% |
Stock-Based Compensation - Restricted Stock Activity (Details) - Restricted stock units |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning unvested balance (shares) | shares | 0 |
Granted (shares) | shares | 120,835 |
Canceled (shares) | shares | (18,337) |
Ending unvested balance (shares) | shares | 102,498 |
Beginning balance of options outstanding (in dollars per share) | $ / shares | $ 0.00 |
Granted (unaudited) (in dollars per share) | $ / shares | 44.02 |
Canceled (unaudited) (in dollars per share) | $ / shares | 41.30 |
Ending balance of options outstanding (in dollars per share) | $ / shares | $ 44.50 |
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Net loss | $ (21,351) | $ (13,844) |
Fair value adjustment of redeemable noncontrolling interest | 4,700 | 0 |
Net loss attributable to Guardant Health, Inc. common stockholders | $ (26,051) | $ (13,844) |
Net loss per share attributable to common stockholders, basic and diluted (in usd per share) | $ (0.30) | $ (1.16) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 85,935 | 11,920 |
Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders - Schedule of Antidilutive Securities (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,681 | 66,061 |
Convertible preferred stock (on an as if converted basis) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 58,265 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,503 | 7,457 |
Unvested restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 78 | 0 |
ESPP obligation | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 59 | 0 |
Stock warrants | Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 8 |
Stock warrants | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 312 |
Common stock subject to repurchase | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 41 | 19 |
Segment and Geographic Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Total revenue | $ 36,655 | $ 16,692 |
United States | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 31,245 | 12,902 |
International | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ 5,410 | $ 3,790 |
Subsequent Events (Details) - Bellweather Bio, Inc. - Subsequent Event $ in Millions |
1 Months Ended |
---|---|
Apr. 30, 2019
USD ($)
| |
Subsequent Event [Line Items] | |
Payments to acquire business | $ 10.1 |
Contingent payment payable | $ 20.0 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,907,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 4,907,000 |
Accounting Standards Update 2018-07 [Member] | Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,266,000 |
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