What happened
Guardant Health (GH -5.19%), a diagnostic precision oncology testing company, saw its shares plummet 33.6% in May, according to data from S&P Global Market Intelligence. The stock closed at $61.70 a share on April 29, the last trading day of the month. It opened at $61.98 on Monday, May 2, then fell to a 52-week low of $27.65 on May 12, before responding a bit, closing out May at $40.98. For the year, the stock is down more than 61%.
Image source: Getty Images.
So what
That Guardant's stock would fall last month was not surprising considering the S&P 500 index fell 8.53% in May and the tech-heavy Nasdaq fell 14.94% in May. But Guardant's fall was deeper because it isn't profitable yet, and after its first-quarter earnings report it appears to be drifting farther away from being in the black.
The company did report revenue of $96.1 million, up 22% year over year. It also saw an increase on actual tests, with clinical customer testing rising by 47% and tests to biopharmaceutical customers up by 45% over the same period in 2021.
However, the company also reported a net loss of $123.2 million, and a loss of $1.21 in earnings per share (EPS), compared to a net loss of $107.2 million and EPS loss of $1.09 in the same quarter a year ago.
Now what
It's a bit early for investors to jump the ship regarding Guardant because the biotech stock still has plenty of good long-term prospects. Its Guardant360 CDx test is growing as a reimbursement product by several insurers and was recently approved in Japan for use in patients with advanced solid cancers. Guardant also just launched Shield, a blood-based test that detects colorectal cancer, and a recent study in Spain shows the test to be highly accurate.
Colorectal cancer is the second-biggest killer among cancers in the U.S., according to the American Cancer Society, and Guardant said that early colorectal screening could be a $20 billion opportunity. The test will compete with the Galleri blood-based cancer screening by the Grail unit of Illumina and a the Cologuard fecal screening by Exact Sciences.
Investors are also watching the outcome of a lawsuit, filed in March by Illumina, that claims that Guardant and two of its founders -- former employees of Illumina -- used Illumina's propriety information to help them launch Guardant. Guardant has filed a motion to dismiss the suit, contending that the suit is attempting to drive Guardant out of business to punish the company for its role in a Federal Trade Commission antitrust investigation into Illumina's deal to purchase Grail.
