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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________
FORM 10-Q
_____________________
(Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to                        
Commission File Number: 001-38683
_____________________
GUARDANT HEALTH, INC.
(Exact Name of Registrant as Specified in its Charter)
_____________________
Delaware
45-4139254
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
505 Penobscot Dr.
Redwood City, California, 94063
Registrant’s telephone number, including area code: (855) 698-8887
_______________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filer
 (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to Section 12(b) of the Act:



Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.00001
GH
The Nasdaq Global Select Market

As of July 31, 2020, the registrant had 99,424,269 shares of common stock, $0.00001 par value per share, outstanding.



GUARDANT HEALTH, INC.
FORM 10-Q
TABLE OF CONTENTS
Page

FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the section titled “Managements Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are based on our current expectations, estimates, forecasts and projections as well as the current beliefs and assumptions of our management, including about our business, our financial condition, our results of operations, our cash flows, and the industry and environment in which we operate. Statements that include words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “would,” “could,” “should,” “intend” and “expect,” variations of these words, and similar expressions, are intended to identify forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A,“Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019, in Part II, Item 1A, “Risk Factors” and elsewhere in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, and in other reports we file with the U.S. Securities and Exchange Commission, or the SEC. While forward-looking statements are based on the reasonable expectations of our management at the time that they are made, you should not rely on them. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, whether as a result of new information, future events or otherwise, except as may be required by law.

Each of the terms the “Company,” “we,” “our,” “us” and similar terms used herein refer collectively to Guardant Health, Inc., a Delaware corporation, and its consolidated subsidiaries, unless otherwise stated. 


PART I—FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Guardant Health, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share data)
June 30, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$164,671  $143,228  
Short-term marketable securities
773,160  379,574  
Accounts receivable, net
41,017  47,986  
Inventory
20,354  15,181  
Prepaid expenses and other current assets
11,101  11,389  
Total current assets
1,010,303  597,358  
Long-term marketable securities
146,118  268,783  
Property and equipment, net
56,995  43,668  
Right-of-use assets38,503  29,140  
Intangible assets, net
17,148  8,524  
Goodwill
3,290  3,290  
Capitalized license fees
55  6,890  
Other assets
5,124  4,882  
Total Assets(1)
$1,277,536  $962,535  
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$15,982  $16,197  
Accrued compensation
18,526  18,557  
Accrued expenses
24,055  25,703  
Deferred revenue
11,485  12,277  
Total current liabilities
70,048  72,734  
Long-term operating lease liabilities41,117  33,256  
Obligation related to royalty
  6,880  
Other long-term liabilities
1,382  1,672  
Total Liabilities(1)
112,547  114,542  
Redeemable noncontrolling interest
50,400  49,600  
Stockholders’ equity:
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 99,312,237 and 94,261,414 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
1  1  
Additional paid-in capital
1,544,373  1,150,090  
Accumulated other comprehensive income
5,392  1,111  
Accumulated deficit
(435,177) (352,809) 
Total Stockholders’ Equity
1,114,589  798,393  
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity
$1,277,536  $962,535  
(1) As of June 30, 2020 and December 31, 2019, includes $38.4 million and $45.1 million of assets, respectively, that can be used only to settle obligations of the consolidated variable interest entity (“VIE”) and VIE’s subsidiaries, and $4.0 million and $5.7 million of liabilities of the consolidated VIE and VIE’s subsidiaries, respectively, for which their creditors do not have recourse to the general credit of the Company. See Note 3, Investment in Joint Venture.
The accompanying notes are an integral part of these condensed consolidated financial statements.


Guardant Health, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Revenue:
Precision oncology testing
$50,991  $42,064  $111,237  $70,901  
Development services
15,344  11,911  22,608  19,729  
Total revenue
66,335  53,975  133,845  90,630  
Costs and operating expenses:
Cost of precision oncology testing
17,809  14,650  36,000  25,673  
Cost of development services
4,626  2,183  6,941  4,695  
Research and development expense
36,319  19,532  73,335  35,848  
Sales and marketing expense
25,015  19,439  50,130  37,246  
General and administrative expense
37,186  13,439  56,971  26,100  
Total costs and operating expenses
120,955  69,243  223,377  129,562  
Loss from operations
(54,620) (15,268) (89,532) (38,932) 
Interest income2,640  3,099  5,958  5,584  
Interest expense(10) (287) (22) (580) 
Other income (expense), net2,285  (51) 2,076  96  
Loss before provision for income taxes
(49,705) (12,507) (81,520) (33,832) 
Provision for (benefit from) income taxes
34  (1,207) 48  (1,181) 
Net loss
(49,739) (11,300) (81,568) (32,651) 
Adjustment of redeemable noncontrolling interest
(4,900) (300) (800) (5,000) 
Net loss attributable to Guardant Health, Inc. common stockholders
$(54,639) $(11,600) $(82,368) $(37,651) 
Net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted
$(0.57) $(0.13) $(0.87) $(0.43) 
Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc. common stockholders, basic and diluted
96,011  89,036  95,196  87,494  
The accompanying notes are an integral part of these condensed consolidated financial statements.



5

Guardant Health, Inc.
Condensed Consolidated Statements of Comprehensive Loss (unaudited)
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Net loss
$(49,739) $(11,300) $(81,568) $(32,651) 
Other comprehensive income (loss), net of tax impact:
Unrealized gain (loss) on available-for-sale securities
(2,338) 852  4,233  1,337  
Foreign currency translation adjustments
25  159  48  90  
Other comprehensive income (loss)(2,313) 1,011  4,281  1,427  
Comprehensive loss
$(52,052) $(10,289) $(77,287) $(31,224) 
Comprehensive loss attributable to redeemable noncontrolling interest
(4,900) (300) (800) (5,000) 
Comprehensive loss attributable to Guardant Health, Inc.
$(56,952) $(10,589) $(78,087) $(36,224) 
The accompanying notes are an integral part of these condensed consolidated financial statements.



6


Guardant Health, Inc.

Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders’ Equity (unaudited)
(in thousands, except share data)
Three Months Ended June 30, 2020
Redeemable Noncontrolling InterestCommon Stock Additional
Paid-in
Capital
Accumulated Other
Comprehensive Income (Loss)
 
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance as of March 31, 2020
$45,500  94,509,011  $1  $1,157,945  $7,705  $(380,538) $785,113  
Issuance of common stock in public offering, net of offering costs of $1,130
—  4,312,500  —  354,600  —  —  354,600  
Issuance of common stock upon exercise of stock options
—  412,554  —  2,044  —  —  2,044  
Vesting of restricted stock units
—  20,008  —  —  —  —  —  
Vesting of common stock exercised early
—  —  —  13  —  —  13  
Common stock issued under employee stock purchase plan
—  58,164  —  3,956  —  —  3,956  
Stock-based compensation—  —  —  25,815  —  —  25,815  
Adjustment of redeemable noncontrolling interest
4,900  —  —  —  —  (4,900) (4,900) 
Other comprehensive loss—  —  —  —  (2,313) —  (2,313) 
Net loss—  —  —  —  —  (49,739) (49,739) 
Balance as of June 30, 2020
$50,400  99,312,237  $1  $1,544,373  $5,392  $(435,177) $1,114,589  

Three Months Ended June 30, 2019
Redeemable Noncontrolling InterestCommon StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive Income (Loss)
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance as of March 31, 2019
$46,500  86,098,474  $1  $771,009  $333  $(303,209) $468,134  
Issuance of common stock in public offering, net of offering costs of $723
—  5,175,000  —  349,709  —  —  349,709  
Issuance of common stock upon exercise of stock options
—  1,531,672  —  4,992  —  —  4,992  
Vesting of restricted stock units
—  1,106  —  —  —  —  —  
Vesting of common stock exercised early
—  —  —  13  —  —  13  
Stock-based compensation—  —  —  3,215  —  —  3,215  
Adjustment of redeemable noncontrolling interest
300  —  —  —  —  (300) (300) 
Other comprehensive loss—  —  —  —  1,011  —  1,011  
Net loss—  —  —  —  —  (11,300) (11,300) 
Balance as of June 30, 2019
$46,800  92,806,252  $1  $1,128,938  $1,344  $(314,809) $815,474  
7


Six Months Ended June 30, 2020
Redeemable Noncontrolling InterestCommon Stock Additional
Paid-in
Capital
Accumulated Other
Comprehensive Income (Loss)
 
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance as of December 31, 2019
$49,600  94,261,414  $1  $1,150,090  $1,111  $(352,809) $798,393  
Issuance of common stock in public offering, net of offering costs of $1,130
—  4,312,500  —  354,600  —  —  354,600  
Issuance of common stock upon exercise of stock options
—  654,557  —  3,548  —  —  3,548  
Vesting of restricted stock units
—  25,602  —  —  —  —  —  
Vesting of common stock exercised early
—  —  —  26  —  —  26  
Common stock issued under employee stock purchase plan
—  58,164  —  3,956  —  —  3,956  
Stock-based compensation—  —  —  32,153  —  —  32,153  
Adjustment of redeemable noncontrolling interest
800  —  —  —  —  (800) (800) 
Other comprehensive loss—  —  —  —  4,281  —  4,281  
Net loss—  —  —  —  —  (81,568) (81,568) 
Balance as of June 30, 2020
$50,400  99,312,237  $1  $1,544,373  $5,392  $(435,177) $1,114,589  

Six Months Ended June 30, 2019
Redeemable Noncontrolling InterestCommon Stock Additional
Paid-in
Capital
Accumulated Other Comprehensive Income (Loss) 
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
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 in public offering, net of offering costs of $723
—  5,175,000  —  349,709  —  —  349,709  
Issuance of common stock upon exercise of stock options
—  1,677,990  —  5,530  —  —  5,530  
Vesting of restricted stock units
—  1,106  —  —  —  —  —  
Vesting of common stock exercised early
—  —  —  69  —  —  69  
Common stock issued under employee stock purchase plan
—  119,702  —  1,933  —  —  1,933  
Stock-based compensation—  —  —  6,398  —  —  6,398  
Adjustment of redeemable noncontrolling interest5,000  —  —  —  —  (5,000) (5,000) 
Other comprehensive gain, net of tax impact—  —  —  —  1,427  —  1,427  
Net loss—  —  —  —  —  (32,651) (32,651) 
Balance as of June 30, 2019
$46,800  92,806,252  $1  $1,128,938  $1,344  $(314,809) $815,474  
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Guardant Health, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Six Months Ended June 30,
20202019
OPERATING ACTIVITIES:
Net loss
$(81,568) $(32,651) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
7,109  5,011  
Amortization of right-of-use assets
3,386  1,633  
Charge of in-process research and development costs with no alternative future use
8,500    
Unrealized translation gains (loss) on obligation related to royalty
  (51) 
Re-valuation of contingent consideration
(190)   
Non-cash stock-based compensation
32,153  6,398  
Amortization of premium (discount) on marketable securities
1,065  (1,276) 
Benefit from income tax differences
  (1,235) 
Others
(19)   
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable, net
6,894  234  
Inventory
(5,173) (5,040) 
Prepaid expenses and other current assets
438  1,122  
Other assets
(242) (1,129) 
Accounts payable
(2,476) 3,412  
Accrued compensation
(31) 701  
Accrued expenses and other liabilities(1,820) 2,939  
Operating lease liabilities
(3,881) 1,435  
Deferred revenue
(792) 358  
Net cash used in operating activities(36,647) (18,139) 
INVESTING ACTIVITIES:
Purchases of marketable securities
(465,302) (418,841) 
Maturity of marketable securities
197,548  129,160  
Business acquisition, net of cash acquired
  (9,765) 
Purchases of property and equipment
(19,105) (5,752) 
Purchase of intangible assets
(17,886)   
Net cash used in investing activities(304,745) (305,198) 
FINANCING ACTIVITIES:
Payments made on royalty obligations
  (151) 
Payments made on capital lease obligations
(79) (62) 
Proceeds from issuance of common stock upon exercise of stock options
3,548  5,530  
Proceeds from issuances of common stock under employee stock purchase plan
3,956  1,933  
Proceeds from public offering, net of underwriting discounts and commissions
355,730  350,432  
Payment of offering costs related to public offering
(369) (326) 
9

Net cash provided by financing activities
362,786  357,356  
Net effect of foreign exchange rate changes on cash and cash equivalents
49  90  
Net increase in cash and cash equivalents
21,443  34,109  
Cash and cash equivalents—Beginning of period
143,228  140,544  
Cash and cash equivalents—End of period
$164,671  $174,653  
Supplemental Disclosures of Cash Flow Information:
Operating lease liabilities arising from obtaining right-of-use assets$11,373  $1,565  
Supplemental Disclosures of Noncash Investing and Financing Activities:
Purchases of property and equipment included in accounts payable and accrued expenses
$5,396  $3,874  
Follow-on public offering issuance costs included in accounts payable and accrued expenses$761  $486  
Initial fair value of contingent consideration at acquisition date$  $1,135  
The accompanying notes are an integral part of these condensed consolidated financial statements.
10

 Guardant Health, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. 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 the Company 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 and reimbursement to drive commercial adoption, accelerate drug development, improve patient clinical outcomes and lower healthcare costs. In pursuit of its goal to manage cancer across all stages of the disease, the Company has launched its Guardant360 and GuardantOMNI liquid biopsy-based tests for advanced stage cancer and is developing tests from its LUNAR program which aims to address the needs of early stage cancer patients with neoadjuvant and adjuvant treatment selection, cancer survivors with surveillance, and asymptomatic individuals eligible for cancer screening and individuals at a higher risk for developing cancer with early detection and is developing tests from its LUNAR program which aims to address the needs of early stage cancer patients with neoadjuvant and adjuvant treatment selection, cancer survivors with surveillance, and asymptomatic individuals eligible for cancer screening and individuals at a higher risk for developing cancer with early detection. Using data collected from the Company's Guardant360 tests, the Company has also developed GuardantINFORM platform to further accelerate precision oncology drug development by biopharmaceutical companies by offering them an in-silico research platform to further unlock insights into tumor evolution and treatment resistance across various biomarker-driven cancers.
The Company was incorporated in Delaware in December 2011 and is headquartered in Redwood City, California. In May 2018, the Company formed and capitalized Guardant Health AMEA, Inc. (the “Joint Venture”) in the United States with an affiliate of SoftBank Vision Fund (AIV M1) L.P. (“SoftBank”). Under the terms of the joint venture agreement, the Company held a 50% ownership interest in the Joint Venture. As of June 30, 2020, the Joint Venture has subsidiaries in Singapore and Japan (see Note 3, Investment in Joint Venture) and the Company has a subsidiary in Switzerland, which was incorporated in 2019.

2. 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 June 30, 2020 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.