What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 249 added, 285 removed, 1076 unchanged (33% of the section changed)

9 unchanged sentences

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity

Consolidated Statements of Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Guardant Health, Inc.

and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive loss, redeemable noncontrolling interest and stockholders’ equity, and cash flows, for the year ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Guardant Health, Inc.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

1 unchanged sentence

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

6 unchanged sentences

however, the Company determines an implied contract exists with its clinical customers.

With the exception of certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration.

Except for certain limited contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and the transaction price for each implied contract with clinical customers represents variable consideration.

The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data.

The transaction price estimate under the portfolio approach represents consideration the Company expects to receive based on historical payment data from third-party payers and patients, adjusted for known and forecasted changes in payment patterns and subject to a constraint such that revenue recognized is not expected to be reversed.

Company analyzes its actual cash collections over the expected reimbursement period and compares it with the estimated variable consideration for each portfolio and any difference is recognized as an adjustment to estimated revenue after the expected reimbursement period, subject to assessment of the risk of future revenue reversal.

The estimated transaction price under the portfolio approach represents consideration the Company expects to receive based on historical payment data from third-party payers and patients, adjusted for known and forecasted changes in payment patterns and subject to a constraint such that revenue recognized is not expected to be reversed.

The Company analyzes its actual cash collections over the expected reimbursement period and compares it with the estimated variable consideration for each portfolio and any difference is recognized as an adjustment to estimated revenue after the expected reimbursement period, subject to assessment of the risk of future revenue reversal.

Both the estimate and any subsequent revision contain uncertainty and require the use of significant judgment in the estimation of the variable consideration and application of the constraint for such variable consideration.

3 unchanged sentences

Our audit procedures related to estimated transaction prices for precision oncology tests for clinical customers, included the following, among others:

• We understood and tested the design, implementation, and operating effectiveness of controls over management’s determination of the assumptions used and the related review and approval of the transaction price estimate.

• We developed an independent expectation of the estimated transaction prices for precision oncology tests for clinical customers in developing an independent expectation of revenue and comparing the recorded amount to our expectation.

• We tested the assumptions used in our independent expectation of the estimated transaction prices for precision oncology tests for clinical customer by:

◦ Testing the historical test data such as the cancer type, the test type, and the insurance and payer, used in the estimate of transaction prices, by making selections and agreeing the selected information to source documents.

• Testing the historical cash receipts from payers used in the estimate of transaction prices, by making selections and agreeing the selected information to source documents.

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• We tested management’s ability to estimate transaction prices accurately by comparing recorded revenue to cash receipts received through December 2024.

• We evaluated trends in transaction price estimates and revenue compared to previous periods to identify evidence that is inconsistent with management’s assumptions regarding estimated transaction prices.

• We evaluated trends in estimated transaction prices and revenue compared to previous periods to identify evidence that is inconsistent with management’s assumptions regarding estimated transaction prices.

/s/ Deloitte & Touche LLP

5 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Guardant Health, Inc.

(the Company) as of December 31, 2022, the related consolidated statements of operations, comprehensive loss, redeemable noncontrolling interest and stockholders' equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S.

We have audited the consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows of Guardant Health, Inc.

(the Company) for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

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February 23, 2023

except for Note 15, as to which the date is

February 20, 2025

Guardant Health, Inc.

15 unchanged sentences

1,055,114 1,347,106

Restricted cash 104,215 150

Property and equipment, net

6 unchanged sentences

$ 1,485,609 $ 1,786,421

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable and accrued liabilities 187,952 175,817

Accounts payable

$ 38,551 $ 51,741

Accrued compensation

83,219 72,736

Accrued expenses

68,345 63,475

Deferred revenue

6 unchanged sentences

Other long-term liabilities

92,834 96,006

Total Liabilities

1 unchanged sentence

Commitments and contingencies (Note 9)

Stockholders’ equity:

Stockholders’ equity (deficit):

Preferred stock, par value of $ 0.00001 per share;

9 unchanged sentences

( 2,578,235 ) ( 2,141,862 )

Total Stockholders’ Equity

Total Stockholders’ Equity (Deficit)

( 139,647 ) 158,684

Total Liabilities and Stockholders’ Equity

Total Liabilities and Stockholders’ Equity (Deficit)

$ 1,485,609 $ 1,786,421

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$ ( 436,373 ) $ ( 479,449 ) $ ( 654,588 )

Adjustment of redeemable noncontrolling interest

— — ( 20,900 )

Net loss attributable to Guardant Health, Inc.

common stockholders

$ ( 479,449 ) $ ( 654,588 ) $ ( 405,670 )

Net loss per share attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Net loss per share, basic and diluted

$ ( 3.56 ) $ ( 4.28 ) $ ( 6.41 )

Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Weighted-average shares used in computing net loss per share, basic and diluted

122,745 111,988 102,178

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( 1,770 ) ( 911 ) ( 1,600 )

Other comprehensive income (loss) 15,847 ( 14,758 ) ( 7,461 )

Comprehensive loss

$ ( 463,602 ) $ ( 669,346 ) $ ( 392,231 )

Comprehensive loss attributable to redeemable noncontrolling interest

Other comprehensive (loss) income

( 1,526 ) 15,847 ( 14,758 )

Comprehensive loss attributable to Guardant Health, Inc.

common stockholders

Comprehensive loss

$ ( 437,899 ) $ ( 463,602 ) $ ( 669,346 )

1 unchanged sentence

Guardant Health, Inc.

Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share data)

Redeemable Noncontrolling Interest Common Stock Additional

Common Stock Additional

Capital Accumulated

Comprehensive Gain (Loss)

Deficit Total Stockholders’ Equity

Comprehensive Loss

Deficit Total Stockholders’ Equity (Deficit)

Shares Amount

1 unchanged sentence

101,767,446 $ 1 $ 1,657,593 $ ( 4,764 ) $ ( 1,007,825 ) $ 645,005

Cumulative effect adjustment for ASU 2020-06 adoption — — — ( 330,403 ) — 4,437 ( 325,966 )

Issuance of common stock upon exercise of stock options 228,311 — 2,625 — — 2,625

2 unchanged sentences

Issuance of common stock under employee stock purchase plan 307,953 — 9,316 — — 9,316

Taxes paid related to net share settlement of restricted stock units — — — ( 83,759 ) — — ( 83,759 )

Employee taxes paid related to settlement of restricted stock units

— — ( 7,878 ) — — ( 7,878 )

Stock-based compensation — — 94,685 — — 94,685

Adjustment of redeemable noncontrolling interest 20,900 — — — — ( 20,900 ) ( 20,900 )

Reclassification of redeemable noncontrolling interest to noncontrolling interest liability ( 78,000 ) — — — — — —

Other comprehensive loss, net of tax impact — — — — ( 7,461 ) — ( 7,461 )

Tender offer issued in connection with the Joint Venture Acquisition and acquisition related costs — — ( 14,235 ) — — ( 14,235 )

Other comprehensive loss

— — — ( 14,758 ) — ( 14,758 )

Net loss — — — — ( 654,588 ) ( 654,588 )

1 unchanged sentence

102,619,383 1 1,742,114 ( 19,522 ) ( 1,662,413 ) 60,180

Issuance of common stock upon follow-on offering, net of offering costs of $ 21,131

14,375,000 — 381,369 — — 381,369

Issuance of common stock upon registered direct offering 3,387,446 — 90,616 — — 90,616

Issuance of common stock upon exercise of stock options 51,124 — 405 — — 405

Vesting of restricted stock units 732,038 — — — — —

Vesting of common stock exercised early — — — 8 — — 8

Issuance of common stock under employee stock purchase plan 464,870 — 10,154 — — 10,154

Taxes paid related to net share settlement of restricted stock units — — — ( 7,878 ) — — ( 7,878 )

Employee taxes paid related to settlement of restricted stock units

— — ( 11,197 ) — — ( 11,197 )

Stock-based compensation — — 90,759 — — 90,759

Tender offer issued in connection with the Joint Venture Acquisition and acquisition related costs — — — ( 14,235 ) — — ( 14,235 )

Other comprehensive loss — — — — ( 14,758 ) — ( 14,758 )

Other comprehensive income

— — — 15,847 — 15,847

Net loss — — — — ( 479,449 ) ( 479,449 )

1 unchanged sentence

121,629,861 1 2,304,220 ( 3,675 ) ( 2,141,862 ) 158,684

Issuance of common stock upon follow-on public offering, net of offering costs of $ 21,131

— 14,375,000 — 381,369 — — 381,369

Issuance of common stock upon registered direct offering — 3,387,446 — 90,616 — — 90,616

Issuance of common stock upon exercise of stock options 609,495 — 3,119 — — 3,119

1 unchanged sentence

Issuance of common stock under employee stock purchase plan 577,758 — 11,719 — — 11,719

Taxes paid related to net share settlement of restricted stock units — — — ( 11,197 ) — — ( 11,197 )

Employee taxes paid related to settlement of restricted stock units

— — ( 15,681 ) — — ( 15,681 )

Stock-based compensation — — 140,411 — — 140,411

Other comprehensive income — — — — 15,847 — 15,847

Other comprehensive loss

— — — ( 1,526 ) — ( 1,526 )

Net loss — — — — ( 436,373 ) ( 436,373 )

16 unchanged sentences

Amortization of (discount) premium on marketable debt securities ( 6,774 ) ( 13,552 ) 4,595

Unrealized (gains) losses on marketable equity securities ( 79,710 ) 7,793 —

Unrealized and realized losses (gains) on marketable equity securities

44,401 ( 79,710 ) 7,793

Impairment of non-marketable equity securities and other related assets — 29,054 5,261

1 unchanged sentence

Other 2,228 ( 1,182 ) 21

Cash effect of changes in operating assets and liabilities:

Changes in operating assets and liabilities:

Accounts receivable, net ( 21,389 ) 8,378 375

3 unchanged sentences

Accounts payable and accrued liabilities ( 2,820 ) 5,191 60,328

Other legal liabilities

Operating lease liabilities ( 36,115 ) ( 31,478 ) ( 20,228 )

2 unchanged sentences

INVESTING ACTIVITIES:

Purchase of marketable debt securities ( 629,902 ) ( 303,757 ) ( 900,808 )

Maturity of marketable debt securities 1,494,700 555,000 952,110

Purchase of non-marketable equity securities and other related assets ( 5,593 ) ( 23,966 ) ( 39,422 )

Purchase of property and equipment ( 20,486 ) ( 77,461 ) ( 75,035 )

Other 1,531 — —

Net cash provided by (used in) investing activities 840,250 149,816 ( 63,155 )

Purchases of marketable debt securities

( 307,323 ) ( 629,902 ) ( 303,757 )

Maturities of marketable debt securities

35,000 1,494,700 555,000

Sales of marketable equity securities and other related assets

53,600 1,531 —

Purchases of non-marketable equity securities and other related assets

( 7,500 ) ( 5,593 ) ( 23,966 )

Purchases of property and equipment

( 35,085 ) ( 20,486 ) ( 77,461 )

Net cash (used in) provided by investing activities

( 261,308 ) 840,250 149,816

FINANCING ACTIVITIES:

1 unchanged sentence

Proceeds from issuance of common stock upon exercise of stock options 3,119 405 2,625

Taxes paid related to net share settlement of restricted stock units ( 11,197 ) ( 7,878 ) ( 83,759 )

Employee taxes paid related to settlement of restricted stock units

( 15,681 ) ( 11,197 ) ( 7,878 )

Proceeds from equity offerings — 493,116 —

3 unchanged sentences

Other ( 153 ) 6,028 ( 1,136 )

Net cash provided by (used in) financing activities 477,375 ( 189,093 ) ( 66,824 )

Net cash (used in) provided by financing activities

( 996 ) 477,375 ( 189,093 )

Net effect of foreign exchange rate changes on cash, cash equivalents and restricted cash ( 1,770 ) ( 911 ) ( 1,600 )

Net increase (decrease) in cash, cash equivalents and restricted cash 991,739 ( 350,340 ) ( 340,689 )

Net (decrease) increase in cash, cash equivalents and restricted cash

( 503,932 ) 991,739 ( 350,340 )

Cash, cash equivalents and restricted cash – Beginning of period 1,133,687 141,948 492,288

4 unchanged sentences

Operating lease liabilities arising from obtaining right-of-use assets $ 7,899 $ 5,015 $ 4,073

Purchase of property and equipment included in accounts payable and accrued liabilities $ 5,279 $ 8,291 $ 8,892

Reclassification of redeemable noncontrolling interest to noncontrolling interest liability

Purchases of property and equipment included in accounts payable and accrued liabilities

$ 3,809 $ 5,279 $ 8,291

1 unchanged sentence

Cash and cash equivalents $ 525,540 $ 1,133,537 $ 141,647

Restricted cash – included in restricted cash

104,215 150 —

Restricted cash – included in other assets, net — — 301

16 unchanged sentences

In addition, in March 2023, the Company submitted a premarket approval application, or PMA, for its Shield blood test to the FDA.

The FDA’s Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee intends to review the PMA.

In July 2024, the Company received FDA approval of its Shield blood test for colorectal cancer screening in adults age 45 and older who are at average risk for the disease, and in August 2024, the Company's Shield blood test became commercially available in the U.S.

as the first blood test approved by the FDA for primary colorectal cancer screening, meaning healthcare providers can offer Shield in a manner similar to all other non-invasive methods recommended in screening guidelines.

Shield is also the first blood test for colorectal cancer screening that meets coverage requirements by Medicare.

The Company was incorporated in Delaware in December 2011 and is headquartered in Palo Alto, California.

3 unchanged sentences

The accompanying consolidated financial statements include the accounts of Guardant Health, Inc., its consolidated Joint Venture (see Note 3, Joint Venture ), and its wholly owned subsidiaries.

Other stockholders’ interests in the Joint Venture were shown in the consolidated financial statements as noncontrolling interest liability before the Joint Venture Acquisition was completed in June 2022.

All intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications of prior period amounts were made to conform with the current period presentation.

The Company believes that its existing cash and cash equivalents and marketable debt securities as of December 31, 2023 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying consolidated financial statements are issued.

As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure.

The Company adjusted the accompanying consolidated balance sheet as of December 31, 2023 to separately present accounts payable and accrued expenses, inclusive of accrued compensation.

In addition, certain other reclassifications of prior period amounts were made to conform with the current period presentation.

The Company determined the adjustment is immaterial based on consideration of quantitative and qualitative factors.

The Company believes that its existing cash, cash equivalents, and marketable debt securities as of December 31, 2024 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the accompanying consolidated financial statements are issued.

As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost

If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital.

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The Company's chief operating decision makers are its Co-Chief Executive Officers, who review financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources.

Cash and Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three months or less.

2 unchanged sentences

Cash equivalents are carried at cost, which approximates their fair value.

Restricted cash consists of payroll withholding related to the Company's enrollment in certain voluntary disability insurance plan.

Restricted cash balance was $ 0.2 million and $ 0.3 million as of December 31, 2023, and 2022, respectively, which was included in other assets in the accompanying consolidated balance sheets.

As of December 31, 2024, the Company had restricted cash balance of $ 104.2 million, of which $ 103.6 million was related to cash held as collateral under surety bond requirements related to the intellectual property dispute with TwinStrand Biosciences, Inc.

and the University of Washington, as described in Note 9 Commitments and Contingencies - Legal Proceedings to the Company's consolidated financial statements.

As of December 31, 2023, the Company's restricted cash balance was immaterial.

Marketable Debt Securities

3 unchanged sentences

The Company classifies all marketable debt securities as available-for-sale, which are recorded at fair value.

Unrealized gains and losses are included in accumulated other comprehensive gain (loss) in stockholders’ equity.

Unrealized gains and losses are included in accumulated other comprehensive gain (loss) in stockholders’ equity (deficit).

Any premium or discount arising at purchase is amortized or accreted to interest income or expense.

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An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in other income (expense), net on the consolidated statements of operations.

Impairment losses that are not credit-related are included in accumulated other comprehensive gain (loss) in stockholders’ equity.

Impairment losses that are not credit-related are included in accumulated other comprehensive gain (loss) in stockholders’ equity (deficit).

Non-Marketable Securities

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The Company's investments in non-marketable equity securities do not give the Company the ability to control or exercise significant influence over the investees.

One of the investees is concluded to be a variable interest entity, or VIE, but the Company is deemed not to be the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact the VIE’s economic performance.

One of the investees is concluded to be a variable interest entity, or

VIE, but the Company is deemed not to be the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact the VIE’s economic performance.

The Company's non-marketable equity and other related investments totaled $ 16.1 million and $ 8.6 million as of December 31, 2024, and 2023, respectively, and are included in other assets, net on the accompanying consolidated balance sheets.

Non-marketable securities are recorded at cost, subject to periodic impairment reviews and adjustments for observable price changes from orderly transactions.

The Company's evaluation of impairment of such non-marketable securities is based on adverse changes in market conditions and the regulatory or economic environment, qualitative and quantitative analysis of the operating performance and financial condition of the investee;

The Company's evaluation of impairment of such non-marketable securities is based on adverse changes in market conditions and the regulatory or economic environment;

qualitative and quantitative analysis of the operating performance and financial condition of the investee;

changes in operating structure or management of the investee;

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Concentration of Risk

The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and investments in marketable debt securities.

The Company is subject to credit risk from its portfolio of cash equivalents, restricted cash and investments in marketable debt securities.

The Company limits its exposure to credit losses by investing in money market funds through a U.S.

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29 % 31 % 30 % 12 % 12 %

* less than 10%

The Company is also subject to credit risk from its other receivables and other assets.

The Company's other receivables and other assets include payments due from a third-party in relation to the settlement of a patent dispute reached in August 2020 for $ 8.0 million payable over a period of 6 years.

As of December 31, 2023, the Company has received $ 4.3 million payments from the third-party, and evaluated and recorded a credit loss for the remaining $ 3.7 million considering the third-party's credit worthiness and lack of financial history.

The following table presents the receivable and the related credit loss amounts:

As of December 31,

(in thousands)

Prepaid expenses and other current assets:

Allowance for Credit Losses

Other assets:

* * * 11 % 10 %

Allowance for Credit Losses

( 3,700 ) ( 4,800 )

The following table summarizes the allowance for credit losses activities for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31,

2023 2022 2021

(in thousands)

Prepaid expenses and other current assets:

Allowance for credit losses—Beginning of period

Charged to (reversed from) other income (expense), net

( 1,100 ) ( 1,100 ) ( 1,100 )

Reclassification

1,100 1,100 1,100

Allowance for credit losses—End of period

Other assets:

Allowance for credit losses—Beginning of period

$ 4,800 $ 5,900 $ 7,000

Reclassification

( 1,100 ) ( 1,100 ) ( 1,100 )

Allowance for credit losses—End of period

$ 3,700 $ 4,800 $ 5,900

* less than 10%

Accounts Receivable, Net

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Goodwill and Intangible Assets, net

Intangible assets related to in-process research and development costs, or IPR&D, acquired in a business combination are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts.

If and when development is complete, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

Prior to completion of the research and development efforts, the assets are considered indefinite-lived.

During this period, the assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.

In connection with the launch of Shield LDT in May 2022, the Company's IPR&D of $ 1.6 million was reclassified as an intangible asset with a useful life of 2 years.

Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities.

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The Company had immaterial amount of impairment for long-lived assets for the years ended December 31, 2024, 2023 and 2022.

Post-acquisition Contingent Consideration

Post-acquisition contingent consideration is recognized over the service period, subject to meeting the respective service requirements and performance metrics.

For the years ended December 31, 2023 and 2022, the Company recorded post-acquisition contingent consideration expense of $ 2.1 million and $ 5.2 million, respectively, included in research and development expenses on the accompanying consolidated statements of operations.

The Company did no t record any post-acquisition contingent consideration expense for the year ended December 31, 2021.

The Company determines if an arrangement contains a lease at inception.

8 unchanged sentences

Convertible Senior Notes

Upon adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity on January 1, 2021, the Company reclassified the carrying amount of the equity component of the cash conversion feature including the allocated debt issuance costs from additional paid-in capital to convertible senior notes, net.

Convertible senior notes are accounted for as a liability and measured at their amortized cost.

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The Company derives revenue from the provision of precision oncology testing services, as well as from development services and other.

Precision oncology testing revenue includes amount derived from the delivery of the Company's precision oncology tests, including those tests delivered by labs operated by our strategic partners.

Precision oncology testing revenue includes amounts derived from the delivery of the Company's precision oncology tests, including those tests delivered by labs operated by our strategic partners.

Development services include companion diagnostic development and regulatory approval, clinical study setup, monitoring and maintenance, testing development and support, GuardantConnect and GuardantINFORM.

Other revenue includes amounts derived from licensing the Company's technologies, and kit fulfillment.

Other revenue includes amounts derived from licensing the Company's technologies, kit fulfillment, and delivery of the Company's Shield screening tests.

The Company currently receives payments from third-party commercial and governmental payers, certain hospitals and oncology centers and individual patients, as well as biopharmaceutical companies, research institutes, international laboratory partners and distributors.

10 unchanged sentences

Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per test or on the basis of an agreement to provide certain testing volume over a defined period.

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In making this assessment, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company.

The constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved.

The constraint for variable consideration is applied to the contract price such that it is probable a significant cumulative reversal of revenue will not occur when the uncertainty associated with the contingency is resolved.

Application of the constraint for variable consideration is assessed and updated at each reporting period as a revision to the estimated transaction price.

9 unchanged sentences

Other revenue also includes kit fulfillment, which is recognized when such products are delivered.

In addition, other revenue includes amounts derived from delivery of the Company's Shield screening tests.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 35.3 million, $ 14.2 million and $ 8.8 million, respectively, as revenue related to performance obligations satisfied in prior periods.

Contracts with multiple performance obligations

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For example, development services and other contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company’s performance of the related services.

Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is consequently recognized.

Contract liabilities are

relieved as the Company performs its obligations under the contract and revenue is consequently recognized.

As of December 31, 2024 and 2023, the Company's deferred revenue balance was $ 41.6 million and $ 22.9 million, respectively, of which $ 6.1 million and $ 5.0 million was considered long-term and recorded within other long-term liabilities on the accompanying consolidated balance sheets.

8 unchanged sentences

Cost of Development Services and Other

Cost of development services and other primarily includes costs incurred for the performance of development services requested by the Company’s biopharmaceutical customers, and costs associated with the Company's partnership agreements and delivery of screening tests.

For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of development services and other.

6 unchanged sentences

The Company expenses advertising costs as incurred.

The Company incurred advertising costs of $ 2.1 million, $ 8.9 million and $ 2.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

For the years ended December 31, 2024, 2023 and 2022, the Company's advertising costs were no t material to the consolidated financial statements.

Stock‑Based Compensation

2 unchanged sentences

Compensation expense for stock options with performance metrics is calculated based upon expected achievement of the metrics specified in the grant.

The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of stock options granted under the 2012 Stock Plan (as amended and restated), or the 2012 Plan, the 2018 Incentive Award Plan, or the 2018 Plan, the former Joint Venture's 2020 Equity Incentive Plan (see Note 11, Stock-Based Compensation ), and the 2023 Employment Inducement Incentive Award Plan, or the 2023 Plan, and stock purchase rights granted under the 2018 Employee Stock Purchase Plan.

Employee Stock Purchase Plan.

The Black-Scholes option-pricing model requires assumptions to be made related to the expected term of an award, expected volatility, risk-free rate and expected dividend yield.

The board of directors of the Joint Venture determined the fair value of common stock of the Joint Venture.

The Company measures the grant date fair value of its service-based and performance-based restricted stock units issued to employees and non-employees based on the closing market price of the common stock on the date of grant.

2 unchanged sentences

No stock-based compensation expense is recorded for PSUs, unless it is determined to be probable that the related performance metrics will be met.

In addition, a cumulative adjustment will be recorded in the period when the probability of achieving the related performance metrics is adjusted.

Any PSUs that remain unvested at the end of the performance period will be forfeited.

Forfeitures are accounted for as they occur.

For market-based restricted stock units, or MSU, the Company derived the requisite service period using the Monte Carlo simulation model and the related compensation expense was recognized over the derived service period using an accelerated attribution model commencing on the grant date.

For market-based restricted stock units, or MSUs, the Company derived the grant date fair value and requisite service period using the Monte Carlo simulation model and the related compensation expense was recognized over the derived service period using an accelerated attribution model commencing on the grant date.

Stock-based compensation expense was recorded regardless of whether the market conditions were achieved or not.

11 unchanged sentences

The provision for income taxes includes the effects of any accruals that the Company believes are appropriate, as well as the related net interest and penalties.

Net Loss Per Share Attributable to Common Stockholders

The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method or the as-if converted method, as appropriate.

For purposes of this calculation, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised options and contingently issuable shares under the convertible senior notes are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is anti-dilutive.

New Accounting Pronouncements Not Yet Adopted

Net Loss Per Share

The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.

The diluted net loss per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method or the as-if converted method, as appropriate.

For purposes of this calculation, stock options, restricted stock units, shares issuable pursuant to the employee stock purchase plan, and contingently issuable shares under the convertible senior notes are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.

Accounting Pronouncements Adopted

In November 2023, the Financial Accounting Standards Board, or FASB, issued ASU No.

1 unchanged sentence

Improvements to Reportable Segment Disclosures , which requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

This guidance will be effective for the annual reporting periods beginning the year ended December 31, 2024, and for interim reporting periods beginning January 1, 2025, with early adoption permitted, and should be applied retrospectively.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

This guidance is effective for the annual reporting periods beginning the year ended December 31, 2024, and will be effective for interim reporting periods beginning January 1, 2025, and should be applied retrospectively.

The Company adopted this pronouncement retrospectively in

the fiscal year of 2024 and provided required disclosures in Note 15 Segment and Geographic Information to the consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

2 unchanged sentences

This guidance will be effective for annual reporting periods beginning the year ended December 31, 2025, with early adoption permitted and can be applied on either a prospective or retroactive basis.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

The Company expects to provide required disclosures upon the effective date.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement-Reporting Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures , which requires additional disclosures of specified information about certain costs and expenses in the notes to financial statements.

This guidance will be effective for annual reporting periods beginning the year ended December 31, 2027, and for interim reporting periods beginning January 1, 2028, with early adoption permitted and can be applied on either a prospective or retroactive basis.

The Company is currently assessing the impact of adopting this accounting pronouncement on its consolidated financial statements.

Joint Venture

1 unchanged sentence

Under the terms of the joint venture agreement, each party held an approximately 50 % ownership interest in the Joint Venture and two seats on the board of the Joint Venture.

The joint venture agreement included a put-call arrangement with respect to the shares of the Joint Venture held by SoftBank and its affiliates.

Under certain specified circumstances and on terms specified in the joint venture agreement, including timely written notice, SoftBank had the right to cause the Company to purchase all shares of the Joint Venture held by SoftBank and its affiliates, or the put right, and the Company had a right to purchase all such shares, or the call right.

Prior to November 2021, the noncontrolling interest held by SoftBank contained embedded put-call redemption features that were not solely within the Company’s control and had been classified outside of permanent equity in the consolidated balance sheets.

The put-call feature embedded in the redeemable noncontrolling interest did not require bifurcation as it did not meet the definition of a derivative and was considered to be clearly and closely related to the redeemable noncontrolling interest.

The Company elected to recognize the changes in redemption value immediately as they occur as if the put-call redemption feature were exercisable at the end of the reporting period.

The adjustment of redeemable noncontrolling interest was recorded as an adjustment to net loss attributable to Guardant Health, Inc.

common stockholders in the Company's consolidated statement of operations.

In November 2021, the Company exercised its call right contained in the joint venture agreement with SoftBank to purchase all of the shares held by SoftBank and its affiliates in consideration for the payment of the aggregate purchase price to be determined based on an independent third-party valuation.

Upon the Company's exercise of the call right in November 2021, SoftBank no longer had the option to exercise its put right.

In connection with exercising the call right, the Company reclassified $ 78.0 million from redeemable noncontrolling interest to noncontrolling interest liability.

In June 2022, the Company purchased all of the shares held by SoftBank and its affiliates in consideration for a cash payment of the aggregate purchase price of $ 177.8 million, which resulted in $ 99.8 million of fair value adjustments to the noncontrolling interest liability for the year ended December 31, 2022.

25 unchanged sentences

Depreciation expense related to property and equipment was $ 40.1 million, $ 40.0 million and $ 33.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

Accrued Expenses

Accrued expenses consist of the following:

As of December 31,

(in thousands)

Accounts payable $ 51,741 $ 68,911

Accrued compensation 72,736 55,788

Operating lease liabilities

1 unchanged sentence

39,132 35,525

Total accounts payable and accrued liabilities

Total accrued expenses

$ 68,345 $ 63,475

20 unchanged sentences

$ 57,151 $ 57,151 $ — $ —

Total cash equivalents

Income deposit funds

103,581 — 103,581 —

1 unchanged sentence

429,294 — 429,294 —

Total cash equivalents and restricted cash

590,026 57,151 532,875 —

government debt securities

314,438 — 314,438 —

Total short-term marketable debt securities

314,438 — 314,438 —

Long-term marketable equity securities $ 98,002 $ 98,002 $ — $ —

$ 904,464 $ 57,151 $ 847,313 $ —

9 unchanged sentences

$ 1,032,500 $ 1,032,500 $ — $ —

government debt securities 14,987 — 14,987 —

Total cash equivalents

12 unchanged sentences

The Company measures the fair value of money market funds based on quoted prices in active markets for identical securities.

Income deposit funds and U.S.

government debt securities are valued taking into consideration valuations obtained from third-party pricing services.

4 unchanged sentences

and other observable inputs.

In July 2022, one of the Company's equity investees, Lunit Inc., or Lunit, completed its initial public offering, or IPO, subsequent to which, the Company started to account for the investment in Lunit at fair value on a recurring basis, and classified the investment as marketable equity securities within Level 1 of the fair value hierarchy as the investment is valued using the quoted market price.

The Company is subject to a 2-year lock-up period from Lunit's IPO date, during which the Company shall not transfer Lunit's shares between accounts, establish or cancel pledges, sell, or withdraw such shares, without approval from the Korea Exchange.

In November 2023, Lunit issued bonus shares to its existing shareholders by allocating one new share for each existing share, and the Company is subject to the same lock-up period with the same restrictions for these bonus shares.

As of December 31, 2023 and 2022, the balance of the investment in Lunit was $ 98.0 million and $ 18.3 million, respectively, included in other assets, net, on the accompanying consolidated balance sheets.

In addition, the Company recorded $ 79.7 million unrealized gains and $ 7.8 million unrealized losses on the investment in Lunit for the years ended December 31, 2023 and 2022, respectively, included in other income (expense), net on the accompanying consolidated statements of operations.

The Company did no t record any unrealized gains or losses on the investment in Lunit for the year ended December 31, 2021.

investment is valued using the quoted market price.

The Company was subject to a 2-year lock-up period from Lunit's IPO date, during which the Company shall not transfer Lunit's shares between accounts, establish or cancel pledges, sell, or withdraw such shares, without approval from the Korea Exchange.

In November 2023, Lunit issued bonus shares to its existing shareholders by allocating one new share for each existing share, and the Company was subject to the same lock-up period with the same restrictions for these bonus shares which expired in July 2024.

In 2024, the Company sold all of its investment in Lunit.

As of December 31, 2023, the balance of the Company's investment in Lunit was $ 98.0 million, included in other assets, net, on the accompanying consolidated balance sheets.

In addition, the Company recorded $ 79.7 million unrealized gains and $ 7.8 million unrealized losses for the years ended December 31, 2023 and 2022, on its investment in Lunit, respectively, included in other income (expense), net on the accompanying consolidated statements of operations.

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.

16 unchanged sentences

Fair value — end of period $ 6,050 $ 6,540 $ 6,430

Noncontrolling

Interest Liability

Redeemable Noncontrolling Interest

Year Ended December 31, Year Ended December 31,

Noncontrolling Interest Liability

Year Ended December 31,

2024 2023 2022

2 unchanged sentences

Increase in fair value — — 99,785

Net loss for the period — — ( 6,344 )

Settlement — — ( 177,785 )

Reclassification of redeemable noncontrolling interest to noncontrolling interest liability — 78,000 ( 78,000 )

Fair value — end of period $ — $ — $ —

2 unchanged sentences

As such, the carrying value of the Convertible Notes does not reflect the market rate.

See Note 7, Debt , for additional information related to the fair value of the Convertible Notes.

The following tables summarize the Company’s cash equivalents and marketable debt securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category:

See Note 7, Debt , for additional information related to the Convertible Notes.

The following tables summarize the Company’s cash equivalents, restricted cash and marketable debt securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category:

December 31, 2024

1 unchanged sentence

(in thousands)

Money market fund

Money market funds

$ 57,151 $ — $ — $ 57,151

Income deposit funds

103,581 — — 103,581

government debt securities

4 unchanged sentences

(in thousands)

Money market fund

$ 3,104 $ — $ — $ 3,104

government debt securities

901,342 8 ( 16,779 ) 884,571

Money market funds

$ 1,032,500 $ — $ — $ 1,032,500

None of the Company’s marketable debt securities had been in an unrealized loss position for more than one year as of December 31, 2023.

The following table presents the estimated fair values and gross unrealized losses of the Company's marketable debt securities that had been in an unrealized loss position as of December 31, 2022.

December 31, 2022

Less Than 12 Months 12 Months or Greater Total

Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss

(in thousands)

government debt securities

1 unchanged sentence

$ 1,067,608 $ — $ ( 11 ) $ 1,067,597

None of the Company’s marketable debt securities had been in a continuous unrealized loss position for more than one year as of December 31, 2024 and 2023, respectively.

There have been no material realized gains or losses on marketable debt securities for the periods presented.

The Company determined that it did have the ability and intent to hold all marketable debt securities that had been in a continuous loss position until maturity or recovery and the loss position was temporary due to market volatility, thus there has been no recognition of credit losses for the years ended December 31, 2023, 2022 and 2021, respectively.

In addition, there has been no recognition of credit losses on marketable debt securities for the periods presented.

Intangible Assets, Net and Goodwill

54 unchanged sentences

Since the 2027 Notes were not convertible as of December 31, 2024, the net carrying amount of the 2027 Notes was classified as a long-term liability.

In February 2025, the Company entered into privately negotiated exchange agreements with certain holders of its 2027 Notes.

See Note 17, Subsequent Events, for additional information related to this transaction.

The following table sets forth the net carrying amounts of the 2027 Notes as of December 31, 2024 and 2023:

4 unchanged sentences

Net carrying amount $ 1,142,547 $ 1,139,966

The total estimated fair value of the 2027 Notes was $ 0.8 billion and $ 0.7 billion as of December 31, 2023 and 2022, respectively.

The total estimated fair value of the 2027 Notes was $ 964.9 million and $ 809.3 million as of December 31, 2024 and 2023, respectively.

The fair value was determined based on the closing trading price per $ 100 of the 2027 Notes as of the last day of trading for the period.

17 unchanged sentences

As leases approach maturity, the Company considers various factors such as market conditions and the terms of any renewal options that may exist to determine whether it will renew the lease, as such, the Company does not include renewal options in its lease terms for calculating its lease liability, as the renewal options allow it to maintain operational flexibility and the Company is not reasonably certain it will exercise these renewal options at the time of the lease commencement.

In July 2020, the Company entered into two lease agreements for additional office space in Palo Alto, California, or the Palo Alto Lease, and in San Diego, California, or the San Diego Lease, and took possession of these facilities in March 2021.

The San Diego Lease has a term of 8 years, and the Palo Alto Lease has a term of 12 years with an option to renew the lease term for an additional 10 years which has not been considered in the determination of ROU asset or lease liability as the Company does not consider it reasonably certain of exercising the renewal option.

Both leases consist of fixed and variable payments and are being accounted for as operating leases.

The Company estimated the incremental borrowing rate to determine the present value of lease payments for the San Diego and Palo Alto leases using trading data of the Company's convertible debt adjusted for credit rating and market yield curves.

Operating lease expense for the years ended December 31, 2024, 2023 and 2022, was $ 31.1 million, $ 29.7 million and $ 28.6 million, respectively, which includes both lease and non-lease components (primarily common area maintenance charges and property taxes).

43 unchanged sentences

10,287,631 and 10,760,127, and awarded TwinStrand Biosciences and the University of Washington $ 83.4 million in damages, representing a 6 % royalty on past sales.

As a result, the Company recorded a liability of $ 83.4 million in the fourth quarter of 2023, which is reflected as a charge to other operating expense on its consolidated statements of operations, and as a component of other long-term liabilities on its consolidated balance sheets.

Post-trial motions by both parties are due on March 4, 2024, where the Company will file motions to overturn the jury’s verdict, seek a new trial, and/or amend the judgment.

TwinStrand BioSciences has indicated to the District Court that it will seek treble damages based on the jury’s finding of willful infringement, pre- and post-judgment interest, and a go-forward running royalty.

As a result, the Company recorded a liability of $ 83.4 million in the fourth quarter of 2023, which was reflected as a charge to other operating expense on its consolidated statements of operations, and as a component of other long-term liabilities on its consolidated balance sheets.

Post-trial motions were filed on March 4, 2024, where the Company moved to overturn the jury’s verdict, seek a new trial, and/or amend the judgment, and TwinStrand Biosciences moved for enhanced damages based on the jury’s finding of willful infringement, pre- and post-judgment interest, and a go-forward running royalty.

A hearing date has not yet been set on the post-trial motions.

1 unchanged sentence

Court of Appeals for the Federal Circuit.

On August 1, 2023, the Company publicly announced that it entered into a Collaboration and Settlement Agreement, or the Collaboration Agreement, with Illumina, Inc., or Illumina.

Under the terms of the Collaboration Agreement, the parties have agreed to extend their long-standing commercial relationship by agreeing to collaborate on the sharing of specimen samples in order to advance cancer research, and by entering into a new long-term purchase and supply commitment.

Furthermore, the parties agreed to dismiss with prejudice the March 2022 lawsuit filed by Illumina in the U.S.

District Court for the District of Delaware, Illumina, Inc.

Guardant Health, Inc.

et al , Case No.

1:22-cv-00334-GBW-CJB, including any allegations related to the subject intellectual property.

False Advertising Dispute

On June 11, 2024, the Company filed a patent infringement suit against Tempus AI, Inc.

or Tempus, in the United States District Court for the District of Delaware alleging that Tempus infringes U.S.

and 11,643,693.

The Company is seeking an injunction to stop Tempus’ infringement and compensatory damages.

The case Guardant Health, Inc.

Tempus AI, Inc.

1:24-cv-00687, has been assigned to Judge Richard Andrews and does not yet have a scheduling order.

On October 21, 2024, Tempus moved to dismiss the Company’s suit alleging that some of the asserted patents were invalid.

The Company disagrees and will be responding accordingly.

False Advertising Disputes

In May 2021, the Company also filed a lawsuit against Natera, Inc., or Natera, in the United States District Court for the Northern District of California, wherein the Company alleged that Natera is misleading healthcare providers about the performance of the Company’s new oncology test, Guardant Reveal, by suggesting the test is inaccurate and/or insensitive, and inferior to Natera’s Signatera assay.

The Company is seeking an injunction to prevent Natera from continuing to make false and misleading statements and to require Natera to take corrective actions.

Natera has asserted counterclaims of false and misleading statements, false advertising, unlawful trade practices and unfair competition.

Natera asserted counterclaims of false and misleading statements, false advertising, unlawful trade practices and unfair competition.

The Company moved to dismiss Natera’s counterclaims, and in January 2022, the court granted in part and denied in part the Company's motion to dismiss.

The Company and Natera have both moved for summary judgment on various claims, with the court granting in part non-dispositive motions brought by each party.

Trial is scheduled to commence in March 2024.

Civil Investigative Demand

In January 2022, the Company received a Civil Investigative Demand, or CID, from the United States Attorney for the Northern District of California in connection with an investigation under the False Claims Act.

The CID requests information and documents regarding billing of government-funded programs for the Company’s panel of genetic tests known as Guardant360.

The Company is fully cooperating with the investigation.

At this time, the Company is unable to predict the outcome of this investigation.

On November 25, 2024, after a three-week trial before Judge Edward M.

Chen, the jury unanimously found in favor of the Company on all of its claims against Natera for false advertising and unfair competition.

The jury awarded the Company $ 292.5 million, including $ 175.5 million in punitive damages.

The jury also unanimously rejected all of Natera’s counterclaims against the Company.

Both parties have filed post-trial briefing, which will be considered by Judge Chen at a hearing scheduled for March 2025.

On January 13, 2025, Tempus sent the Company a letter alleging that the Company made certain false or misleading statements in its advertising related to Guardant360 and Tempus’ xF+ assay.

The Company strongly disagrees with Tempus’ allegations and responded to each allegation.

On January 17, 2025, the Company filed a declaratory judgment action against Tempus in the United States District Court for the District of Delaware, seeking to show that Tempus’ allegations are without merit.

The Company’s common stockholders are entitled to dividends if and when declared by the Company’s Board of Directors, or the Board of Directors.

15 unchanged sentences

In December 2023, the Company completed a registered direct offering with an investment management firm, in which it issued and sold 3,387,446 shares of its common stock at a price of $ 26.77 per share, and received net proceeds of $ 90.6 million.

At-The-Market Offering Program

In August 2024, the Company entered into an Open Market Sales Agreement, or the Sales Agreement, with Jefferies LLC, or the Agent, with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having aggregate gross proceeds of up to $ 400.0 million through the Agent, subject to the terms and conditions of the Sales Agreement.

During the year ended December 31, 2024, no shares of the Company's common stock were sold under the Sales Agreement.

Stock-Based Compensation

17 unchanged sentences

Granted ( 1,051,466 ) 1,051,466 44.86

Granted in connection with the Joint Venture Acquisition ( 15,128 ) 15,128 4.90

Exercised — ( 228,311 ) 6.29

2 unchanged sentences

Restricted stock units canceled

Market-based restricted stock units canceled 558,254 —

Performance-based restricted stock units granted ( 26,935 ) —

3 unchanged sentences

2018 Plan annual increase (1)

Shares authorized under the 2023 Plan 5,000,000 —

Granted ( 1,000,760 ) 1,000,760 30.80

Granted in connection with the Joint Venture Acquisition ( 15,128 ) 15,128 4.90

Exercised — ( 51,124 ) 7.93

7 unchanged sentences

2018 Plan annual increase (1)

Shares authorized under the 2023 Plan 5,000,000 —

Granted ( 1,440,273 ) 1,440,273 27.07

3 unchanged sentences

Restricted stock units canceled

Market-based restricted stock units canceled 2,260,764 —

Performance-based restricted stock units granted ( 913,829 ) —

Performance-based restricted stock units adjusted for performance achievement

Performance-based restricted stock units canceled 74,161 —

14 unchanged sentences

Granted 2,902,217 45.04

Granted in connection with the Joint Venture Acquisition 93,316 38.24

Vested and released ( 315,673 ) 96.36

3 unchanged sentences

Granted 2,436,947 26.62

Granted in connection with the Joint Venture Acquisition 93,316 38.24

Vested and released ( 728,603 ) 60.07

10 unchanged sentences

Since November 2020, the Compensation Committee of the Board of Directors started to approve, and the Company started to grant performance-based restricted stock units, or PSUs, to its employees and non-employees.

The PSUs granted to employees consist of financial and/or operational metrics to be met over a performance period of approximately 0.3 to 4 years and an additional service period requirement of up to 2 years after the performance metrics are met.

The PSUs granted to a consultant consistent of operational metrics to be met over a performance period of 4 years.

The PSUs granted consist of financial and/or operational metrics to be met over a performance period of approximately 0.6 to 4 years and an additional service period requirement of up to 2 years after the performance metrics are met.

In addition, granted units might be adjusted when certain performance metrics are met.

The PSUs are expected to be expensed over a period of approximately 0.6 to 4.5 years subject to meeting the respective performance metrics and service requirements.

In November 2020, and as part of these PSU programs, the Company granted PSUs consisting of a performance period of 4 years combined with an additional service period requirement of six months should the vesting criteria be met.

As of December 31, 2023, these PSUs had a grant-date fair value of approximately $ 25.7 million, net of forfeitures, however no compensation expense for these PSUs has been recorded to-date since the achievement of the performance metrics did not meet the criteria for accrual as of December 31, 2023.

A summary of the Company’s performance-based restricted stock unit activity under the 2018 Plan and related information is as follows:

In November 2020 and May 2021, and as part of these PSU programs, the Company granted PSUs consisting of a performance period of 4 years combined with an additional service period requirement of six months should the vesting criteria be met with a grant date fair value of $ 113.40 per share and $ 148.19 per share, respectively.

Before 2024, no compensation expense for these PSUs had been recorded since the achievement of the performance metrics did not meet the criteria for accrual.

In 2024, the performance metrics of these PSUs were considered to be achieved;

as such the Company recorded $ 24.8 million in stock-based compensation expense related to these PSUs, based on 219,161 shares granted with fair values of $ 113.40 per share and $ 148.19 per share.

A summary of the Company’s PSU activity under the 2018 Plan and related information is as follows:

Performance-based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

6 unchanged sentences

Granted 126,041 32.84

Vested and released ( 3,435 ) 32.86

Canceled ( 51,829 ) 80.91

3 unchanged sentences

Vested and released ( 9,708 ) 94.73

Adjusted for performance achievement

Canceled ( 74,161 ) 102.14

6 unchanged sentences

The MSUs consist of three separate tranches and the vesting of each tranche is subject to the Company's common stock closing price being maintained at or above a predetermined share price goal for a period of 30 consecutive calendar days.

The share price goal can be met any time during the seven-year performance period from the date of grant.

Upon vesting, the MSUs must be held for a period of six to twelve months depending on the time of vesting within the seven-year performance period.

The vesting of the MSUs can also be triggered upon a change in control event and achievement of a certain change in control price goal, or when there is a qualifying termination or in the event of death or disability.

Any MSUs that remain unvested at the end of the seven-year performance period will automatically be forfeited and terminated without further consideration.

The following table presents additional information relating to each MSU award:

Tranche Price Goal Number of RSUs

Tranche 1 $ 120 per share

Tranche 2 $ 150 per share

Tranche 3 $ 200 per share

The grant date fair values of the MSUs were determined using a Monte Carlo valuation model for each tranche.

The related stock-based compensation expense for each tranche was recognized based on an accelerated attribution method over the estimated derived service period.

The derived service period was the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model.

The Monte Carlo valuation model used assumptions such as volatility, risk-free interest rate, cost of equity and dividend estimated for the performance period of the MSU.

The related stock-based compensation expense for each tranche was recognized based on an accelerated attribution method over the estimated derived service period, which was the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model.

The weighted-average grant date fair value of the MSUs was $ 67.00 per share and the weighted-average derived service period was estimated to be in the range of 0.83 – 2.07 years.

On January 1, 2021, Tranche 1 of the MSUs became vested because it had met both service requirement and market-based performance metrics as the predetermined share price goal of $ 120 per share was achieved for a period of 30 consecutive calendar days.

All three tranches of the MSUs were fully expensed as of June 30, 2022.

Stock-based compensation for the MSUs for the year ended December 31, 2022 was $ 16.1 million, which was recorded in general and administrative expenses on the accompanying consolidated statement of operations.

On January 1, 2021, Tranche 1 of the MSUs became vested because it had met both service requirement and market-based performance metrics.

No MSUs were granted, vested or canceled during the years ended December 31, 2023, and 2022.

A summary of the Company’s market-based restricted stock unit activity under the 2018 Plan and related information is as follows:

Market-based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

Balance as of January 1, 2021

3,391,148 $ 67.00

Vested and released ( 572,130 ) 70.58

( 558,254 ) 70.58

Balance as of December 31, 2021

2,260,764 65.20

Balance as of December 31, 2022

2,260,764 65.20

Balance as of December 31, 2023

2,260,764 $ 65.20

(1) Represented shares withheld by the Company for the holders' tax obligation upon release of vested MSUs.

The MSUs were fully expensed as of June 30, 2022.

Stock-based compensation for the MSUs for the years ended December 31, 2022 and 2021 was $ 16.1 million and $ 99.2 million, respectively, which was recorded in general and administrative expenses on the accompanying consolidated statement of operations.

As of December 31, 2023, 2,260,764 shares of the MSUs, with a weighted-average grant date fair value of $ 65.20 per share, were outstanding under the 2018 Plan.

In March 2024, the Board of Directors approved to cancel the unvested MSUs and concurrently approved to grant new awards to the Co-Chief Executive Officers, which was accounted for as a modification, however no stock-based compensation expense was reversed as the Company's Co-Chief Executive Officers had fulfilled the service requirement.

AMEA 2020 Equity Incentive Plan

12 unchanged sentences

340,928 3,652,219 $ 0.58 8.8 $ —

Granted ( 826,667 ) 826,667 0.58

Exercised — ( 2,051,645 ) 0.58

Canceled 82,407 ( 82,407 ) 0.58

Balance as of December 31, 2021

340,928 3,652,219 0.58 8.8 —

Exercised — ( 2,051,645 ) 0.58

Canceled 82,407 ( 82,407 ) 0.58

Canceled in connection with the Joint Venture Acquisition ( 423,335 ) ( 1,518,167 ) 0.58

1 unchanged sentence

— — $ — 0.0 $ —

No stock options were granted under the AMEA 2020 Plan for the year ended December 31, 2022.

The weighted-average grant date fair value of options granted under the AMEA 2020 Plan was $ 0.33 per share for the year ended December 31, 2021.

Stock‑Based Compensation Expense

15 unchanged sentences

Valuation of Stock Options

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions including the Joint Venture:

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions:

Year Ended December 31,

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Expected dividend yield

The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of common stock of the Company and the Joint Venture, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine.

The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of common stock of the Company, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine.

The valuation assumptions were determined as follows:

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The fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the Nasdaq Global Select Market.

The grant date fair value of the Joint Venture's common stock was determined by the board of directors of the Joint Venture, using valuation methodologies which utilize certain assumptions including probability weighting of events, volatility, time to liquidation, a risk-free interest rate and an assumption for a discount for lack of marketability.

The methodologies used to estimate the enterprise value of the Joint Venture were performed using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

Expected Term

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The comparable companies are chosen based on their similar size, stage in the life cycle or area of specialty.

The Joint Venture derived the expected volatility from the average historical volatility over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends as the Joint Venture did not have any trading history for its common stock.

Risk-Free Interest Rate

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The Company does not anticipate paying any dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero .

The Joint Venture did not anticipate paying any dividends, therefore used an expected dividend yield of zero.

2018 Employee Stock Purchase Plan

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On the first day of each calendar year beginning on January 1, 2019 and ending on and including January 1, 2028, the number of shares of common stock available for issuance under the ESPP may be increased by the least of (i) 1,106,700 shares, (ii) 1 % of the shares outstanding (on an as-converted basis) on the last day of the immediately preceding calendar year, assuming the conversion of any shares of preferred stock, but excluding shares issuable upon the exercise or payment of stock options, warrants or other equity securities with respect to which shares have not actually been issued, and (iii) such smaller number of shares as determined by the Company’s Board of Directors.

Effective as of January 1, 2020 and March 2, 2023, an additional 942,614 and 1,026,194 shares of common stock became available for issuance under the ESPP.

Effective as of January 1, 2020, March 2, 2023 and February 23, 2024, an additional 942,614 , 1,026,194 and 1,106,700 shares of common stock became available for issuance under the ESPP.

Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 10 % of their earnings for the purchase of the Company’s common stock at a discounted price per share.

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5.2 % – 5.4 %

1.5 % – 4.5 %

Expected dividend yield — %

As of December 31, 2024, the unrecognized stock-based compensation expense related to the ESPP was $ 2.5 million , which is expected to be recognized over the remaining term of the offering period of 0.4 years.

Net Loss Per Share Attributable to Guardant Health, Inc.

Common Stockholders

The following table sets forth the computation of the basic and diluted net loss per share attributable to Guardant Health, Inc.

common stockholders:

Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share:

Year Ended December 31,

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(in thousands, except per share data)

Net loss $ ( 479,449 ) $ ( 654,588 ) $ ( 384,770 )

Adjustment of redeemable noncontrolling interest

— — ( 20,900 )

Net loss attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Net loss, basic and diluted

$ ( 436,373 ) $ ( 479,449 ) $ ( 654,588 )

Net loss per share attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Net loss per share, basic and diluted

$ ( 3.56 ) $ ( 4.28 ) $ ( 6.41 )

Weighted-average shares used in computing net loss per share attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Weighted-average shares used in computing net loss per share, basic and diluted

122,745 111,988 102,178

Since the Company was in a loss position for all periods presented, basic net loss per share attributable to Guardant Health, Inc.

common stockholders is the same as diluted net loss per share attributable to Guardant Health, Inc.

common stockholders, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share attributable to Guardant Health, Inc.

common stockholders for the periods presented as they had an anti-dilutive effect:

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

The following weighted-average common stock equivalents were excluded from the calculation of diluted net loss per share for the periods presented as they had an anti-dilutive effect:

Year Ended December 31,

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(in thousands)

Stock options issued and outstanding 3,566 2,799 2,715

Stock options

3,990 3,566 2,799

Restricted stock units 5,199 3,474 2,342

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ESPP obligation 209 176 105

Common stock subject to repurchase — — 7

Convertible senior notes 8,225 8,225 8,225

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Taxes at the statutory federal rate $ ( 91,369 ) $ ( 100,553 ) $ ( 137,276 )

Capitalized research and expenditures true-up 8,212 — —

Change in valuation allowance 92,726 114,707 175,916

Stock-based compensation 12,012 8,077 7,905

Research and development credits ( 11,000 ) ( 14,549 ) ( 15,738 )

Change in valuation allowance 114,707 175,916 106,227

State taxes, net of federal benefits

( 15,918 ) ( 19,117 ) ( 28,522 )

Prior period true-up 7,962 8,212 —

6,871 3,908 ( 1,146 )

1 unchanged sentence

$ 1,284 $ 685 $ 1,139

The Company’s actual tax expense differed from the statutory federal income tax expense using a tax rate of 21% for the years ended December 31, 2023, 2022 and 2021, primarily due to the change in valuation allowance, state income taxes net of federal benefits, withholding taxes, research and development tax credits, stock-based compensation expenses, and capitalized research and expenditures true-up.

The Company’s actual tax expense differed from the statutory federal income tax expense using a tax rate of 21% for the years ended December 31, 2024, 2023 and 2022, primarily due to the change in valuation allowance, state income taxes net of federal benefits, withholding taxes, research and development tax credits, and stock-based compensation expenses.

As of December 31, 2024 and 2023, the Company had net operating loss carryforwards of $ 1.6 billion and $ 1.4 billion for federal purposes, and $ 1.4 billion and $ 1.0 billion for state and local purposes, respectively, which may be subject to limitations as described below.

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As of December 31, 2024, the Company had federal and state research and development tax credit carryforwards of $ 47.9 million, net of reserve of $ 25.8 million, and $ 29.7 million, net of reserve of $ 16.0 million, respectively.

As of December 31, 2022, the Company had federal and state research and development tax credit carryforwards of $ 32.7 million and $ 21.8 million, respectively.

As of December 31, 2023, the Company had federal and state research and development tax credit carryforwards of $ 41.9 million, net of reserve of $ 22.6 million, and $ 26.1 million, net of reserve of $ 14.0 million, respectively.

The federal research and development tax credit carryforwards will expire at various dates beginning in the year 2032.

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Segment and Geographic Information

The Company operates as one operating segment.

The Company operates as one operating segment, and the Company's chief operating decision makers, or the CODMs, are its Co-Chief Executive Officers.

The CODMs review segment financial information presented on a consolidated basis, including revenue, gross profit, operating expenses, net loss and adjusted EBITDA, and considers budget-to-actual variances for the purposes of making operating decisions, assessing financial performance and allocating resources.

The CODMs do not evaluate operating segment performance using asset information.

The following table presents a summary of the Company's segment information:

Year Ended December 31,

2024 2023 2022

(in thousands)

Revenue $ 739,016 $ 563,948 $ 449,538

Cost of precision oncology testing (1)

254,551 200,202 141,691

Cost of development services and other (1)

24,886 18,863 8,126

Research and development expense (1)

295,866 329,826 341,650

Sales and marketing expense (1)

328,064 270,132 273,961

General and administrative expense (1)

133,352 129,247 121,023

Other segment items (2)

138,670 95,127 217,675

Net loss $ ( 436,373 ) $ ( 479,449 ) $ ( 654,588 )

(1) Excludes stock-based compensation and related employer payroll tax payments, contingent consideration, and amortization of intangible assets.

(2) Includes stock-based compensation and related employer payroll tax payments, contingent consideration, amortization of intangible assets, interest income and expense, provision for income taxes, and other income and expense.

The following table sets forth the Company’s revenue by geographic areas based on the customers’ locations:

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Prior to the completion of the Joint Venture Acquisition in June 2022, the Company had consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances had been eliminated in consolidation.

Subsequent Events

In February 2025, the Company entered into privately negotiated exchange agreements with certain holders of its 2027 Notes, pursuant to which the Company issued $ 600.0 million aggregate principal amount of 1.25 % Convertible Senior Notes due 2031, or the New Notes, in exchange for the retirement of $ 659.3 million aggregate principal amount of the 2027 Notes, or the Transaction.

The Company will settle conversions of the New Notes by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The initial conversion rate of the New Notes is 16.0716 shares of common stock per $1,000 principal amount of the New Notes, which represents an initial conversion price of approximately $ 62.22 per share of common stock, which reflects a conversion premium of approximately 35 % to the last reported sale price of the Company’s common stock on February 6, 2025.

The conversion rate and conversion price is subject to customary adjustments upon the occurrence of certain events.

Following the closing of the Transaction, $ 490.7 million in aggregate principal amount of the 2027 Notes remain outstanding with terms unchanged.

In connection with the Transaction, in February 2025, the Company repurchased $ 45.0 million of shares of its common stock from certain participants in the Transaction through a financial intermediary at a price of $ 46.09 per share, which was the last reported sale price of its common stock on February 6, 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data