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Here's Why Guardant Health Stock Gained 15.1% in March

By Maxx Chatsko – Apr 9, 2019 at 12:52PM

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The liquid biopsy pioneer has been riding a wave of favorable news lately.

What happened

Shares of Guardant Health (GH -2.03%) rose over 15% last month, according to data provided by S&P Global Market Intelligence. The company reported fourth-quarter and full-year 2018 operating results in March, fresh on the heels of impressive results from a clinical study demonstrating the value of its novel approach to diagnosing cancer without invasive tissue biopsies.

The liquid biopsy pioneer also acquired start-up Bellwether Bio to bolster its intellectual property position and announced that an important Medicare administrative contractor issued a draft local coverage determination expanding coverage of the company's products from one type of cancer to over one dozen. As good as March was for shares of Guardant Health, the stock has actually pulled back quite a bit from its peak. They're now up 85% since the beginning of the year, compared to a year-to-date gain that was once as high as 160%.

A mean wearing a suit drawing an ascending yellow line

Image source: Getty Images.

So what

Guardant Health reported full-year 2018 revenue of $90.6 million, representing year-over-year growth of 82%. That was accompanied by $47.4 million in gross profit, which goes to show why investors are so excited about the technology platform's potential as it scales. However, the company posted an operating loss of $92.9 million in 2018 -- worse than the total from the year-ago period, despite showing sequential quarterly improvements in the metric leading up to its IPO.

Guardant Health forecast full-year 2019 revenue in the range of $130 million to $135 million, representing growth of about 46% compared to last year. It expects to record a net loss in the neighborhood of $127.5 million for the year, compared to $85.1 million in 2018.

Now what

Guardant Health's approach to diagnosing cancers and determining effective treatment options has the potential to add significant value to the healthcare industry. That said, it will be interesting to see how patient Wall Street remains with the company's approach. It should be a little easier to give the high-growth business the benefit of the doubt considering it started this year with $418 million in cash, cash equivalents, and marketable securities. Nonetheless, investors will be watching to see if operating losses continue to pile up in 2019.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Guardant Health. The Motley Fool has a disclosure policy.

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