NEW YORK – Guardant Health reported after the close of the market on Wednesday a 34 percent year-over-year increase in third quarter revenues, prompting the company to up its full-year revenue guidance for the third consecutive quarter.
Investors reacted positively to the results, sending shares of the company up approximately 17 percent to $29.62 in mid-morning Thursday trading on the Nasdaq.
For the three months ended Sept. 30, the Palo Alto, California-based precision oncology testing company tallied $191.5 million in revenues compared to $143.0 million a year ago and well above analysts' consensus estimate of $170.6 million.
Precision oncology revenue increased 35 percent to $180.6 million from $133.4 million, while development services and other revenue grew 14 percent to $10.9 million from $9.6 million.
The company reported 53,100 clinical tests (excluding its recently launched Guardant Shield blood-based colorectal cancer screening assay) and 10,500 biopharma tests in Q3, representing year-over-year increases of 21 percent and 40 percent, respectively.
In addition to test volume growth, the increase in precision oncology revenue was attributable to an increase in test reimbursement due to improved Medicare reimbursement for the laboratory-developed Guardant360 therapy selection test to $5,000, effective Jan. 1, 2024; and an increase in both Medicare Advantage and commercial payer reimbursement, Guardant co-CEO and Cofounder Helmy Eltoukhy noted in a statement.
"With this momentum, we are raising revenue guidance for the third time this year and improving our free cash flow outlook for the full year," Eltoukhy said. "The upgrade of Guardant360 LDT to Smart Liquid Biopsy has already contributed to an increase in both breadth and depth of accounts, and we expect this to be a strong growth driver for our therapy selection business going forward."
Guardant said that it now expects full-year revenues of $720 million to $725 million, representing growth of 28 percent to 29 percent, compared to a previous range of $690 million to $700 million (22 percent to 24 percent growth).
During a call with investors, Eltoukhy said that the company isn't yet ready to break out test volumes or revenue contribution for the firm's minimal residual disease assay Guardant Reveal. However, he did hint that it was the second biggest driver of the firm's sequential revenue growth from Q2 to Q3, after Guardant360.
"It's still growing very nicely even though we're managing those volumes, and … we're really looking forward to 2025 being a pivotal year for Reveal," he said.
The company is still in discussion with the US Centers for Medicare and Medicaid Services regarding an expansion of coverage for Reveal for longitudinal monitoring. It is already reimbursed when used as a one-time test after surgical treatment of early-stage colorectal cancer. Eltoukhy said the firm believes it can negotiate coverage by early next year.
Eltoukhy noted that Guardant also has a study that it hopes to soon publish on the test's performance in detecting MRD in early-stage breast cancer, which would support another application for expansion of Medicare coverage in that population.
Regarding Guardant Shield, Eltoukhy said that after only a little more than two months on the market, uptake is still in its infancy.
"We'll see how the market shapes out," he said. "We don't expect to see any other competing tests to get FDA approval and Medicare reimbursement for at least the next two years, so we think we're in very good shape."
Co-CEO AmirAli Talasaz added that initial test volumes after the screening assay was launched have been ahead of Guardant's expectations.
During the third quarter the company trimmed its R&D expenditures 7 percent to $87.3 million from $93.9 million a year ago, while its SG&A spending grew 40 percent to $147.0 million from $105.1 million.
The company's Q3 net loss swelled to $107.8 million, or $.88 per share, from a net loss of $86.1 million, or $.73 per share, a year ago. Adjusted loss per share was $.45, bettering analysts' estimate of a $.74 loss per share.
Guardant finished the quarter with $688.4 million in cash, cash equivalents, and restricted cash, and $310.7 million in short-term marketable debt securities.