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Here's Why Guardant Health Gained 11.8% in November

By Maxx Chatsko - Dec 3, 2019 at 8:53PM

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The diagnostic company reported third-quarter 2019 operating results.

What happened

Shares of Guardant Health ( GH 2.04% ) increased nearly 12% last month, according to data provided by S&P Global Market Intelligence. The liquid biopsy pioneer reported solid third-quarter 2019 operating results highlighted by revenue growth that continues to impress. In fact, the business increased full-year 2019 revenue guidance for the fourth consecutive quarter. 

Importantly, the diagnostic company's revenue growth is resulting in shrinking operating losses each quarter despite soaring operating expenses. Guardant Health ended September with over $825 million in cash, suggesting it has more than enough financial wiggle room to sacrifice near-term profitability for faster growth. The growth stock is now up 100% since the beginning of the year.

A woman sitting cross-legged on the floor with a laptop in her lap, pumping her fist in the air and smiling.

Image source: Getty Images.

So what

Guardant Health reported third-quarter 2019 revenue of $60.8 million and an operating loss of $17 million, compared to sales of $21.7 million and an operating loss of $24 million in the year-ago period. That translates to year-over-year revenue growth of 180%. Better yet, gross profit is expanding faster than operating expenses, which provides confidence in management's strategy.

The results from the first nine months of 2019 are similarly impressive. 

Metric

First Nine Months 2019

First Nine Months 2018

Change

Revenue

$151.5 million

$57.8 million

162%

Total costs and operating expenses

$207.9 million

$123.3 million

68%

Operating income

($56.4 million)

($65.5 million)

N/A

Cash flow from operations

($16.8 million)

($45.6 million)

N/A

Data source: SEC filing.

As a result of the strong quarter, Guardant Health increased full-year 2019 revenue guidance to a range of $202 million to $207 million. That marks an increase of at least 123% from last year and well above the original revenue guidance range of $130 million to $135 million. 

Now what

Guardant Health remains the most promising opportunity in the liquid biopsy space for individual investors. It sports a rapidly growing business, is loaded with cash, and expects to earn regulatory approval for diagnostic tests addressing much larger market opportunities. That said, we're only scratching the surface of what blood-based diagnostics can likely do, which means there are numerous opportunities -- and plenty of competition -- on the horizon.

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