Guardant Health(GH) Guidance

Investment Analysis Clubs Saul’s Investing Discussions
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GH is an exciting prospect. To me, it’s an end game to the thesis from Illumina, which has been a great investment. Crossing the chasm from promise into actual clinical usefulness. In the pre market yesterday I took a small position and was surprised by yesterday’s amazing one day gain. I put up a short GH shoutout earlier in the day on NPI here.

https://discussion.fool.com/the-gene-sequencing-endgame-guardant…

I took a deeper dive into their SEC filings and compared it to guidance and was little surprised/disappointed at what their guidance for full year and Q4 implies.

Guidance for full year 2018 is $82-84M

In their initial IPO filing here

http://investors.guardanthealth.com/static-files/305bbf7f-16…

Full year 2017 Revenue: $49.8M

From 3Q SEC filing

http://investors.guardanthealth.com/static-files/40f7ae54-87…

Revenue 9 months ended Sep 2017: $29.8M
Revenue 9 months ended Sep 2018: $57.8M

Q4 2017 Revenue would have to have been $20M ($49.8M-$29.8M)
Q4 2018 Revenue guidance would be $25.2M ($83M-$57.8M)

Based off that they are forecasting for full year revenue growth of 67% and for Q4 revenue growth of 26% over Q4 2017 ($25.2M from $20M)

Am I reading that correct? I know that they are a young biotech that is still pre FDA approval that will have lumpy results as they find their place. And maybe a lot of surprises along the way. Q3 2018 growth was almost 95%. Q3 revenue in 2017 was $11.1. That was reported in their Q3 2018 earnings release and can be confirmed by comparing 6 months ended June 2017 to 9 months Sep 2017 from the two SEC forms. 18.7 and 29.8, respectively.

Something for investors to consider. Feel free to check that math or add color.

Darth

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Hi Darth,

As a recent IPO, we do not have much history with management and how it caters to street analysts yet - whether those estimates are super conservative (and meant to be easily thrashed) or not. My guess would be that they are somewhat conservative.

Also, I personally do not believe any med tech or growth investor is paying 30x (or more) sales based on what the company is going to achieve in this quarter or the next.

FDA approval will open the proverbial floodgates for all sorts of Pan-Cancer testing. Certainly based on current data and the NILE studies, investors are betting that the expedited approval from the FDA will happen.

Guardant is definitely an exciting company and I too am hoping for big things from them. For now, my position size is very small less than 2%,(It is still not without risk, yet!). I’d like to get it to a 3-5% size if things go well and just let it grow into a much larger one. They could very well be the type of investment/company that turns small positions into big ones if everything works out.

Thats how I see it for now

Best,
Matt

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