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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-20 · 199 added, 209 removed, 284 unchanged (59% of the section changed)

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A detailed discussion comparing our results of operations for the years ended December 31, 2024 and 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024.

In 2025, we started to present revenue and cost of revenue in a single line on the accompanying consolidated statement of operations.

Accordingly, we recast our presentation of revenue and cost of revenue for the years ended December 31, 2024 and 2023 to conform with the current year presentation.

See Revenue Recognition section of Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to the disaggregation of revenue.

In addition, we included in this section a detailed discussion comparing our revenue and cost of revenue under the recast presentation for the years ended December 31, 2024 and 2023.

We are a leading precision oncology company focused on guarding wellness and giving every person more time free from cancer.

We are transforming patient care by providing critical insights into what drives disease through our advanced blood and tissue tests, and real-world data.

Our tests help improve outcomes across all stages of care, including screening to find cancer early, monitoring for recurrence in early-stage cancer, and helping doctors select the best treatment for patients with advanced cancer.

For patients with advanced-stage cancer, we have commercially launched Guardant360 laboratory developed test, or LDT, and Guardant360 CDx, the first comprehensive liquid biopsy test approved by the U.S.

Food and Drug Administration, or the FDA, to provide tumor mutation profiling with solid tumors and to be used as a companion diagnostic in connection with non-small cell lung cancer, or NSCLC, and breast cancer.

We have also launched the Guardant360 TissueNext tissue test for advanced-stage cancer, Guardant Reveal blood test to detect residual and recurring disease in early-stage colorectal, breast and lung cancer patients, and Guardant360 Response blood test to predict patient response to immunotherapy or targeted therapy eight weeks earlier than current standard-of-care imaging.

We also collaborate with biopharmaceutical companies in clinical studies by providing the above-mentioned tests, as well as the GuardantOMNI blood test for advanced-stage cancer, and the GuardantINFINITY blood test, a next-generation Smart Liquid Biopsy that provides new, multi-dimensional insights into the complexities of tumor molecular profiles and immune response to advance cancer research and therapy development.

Using data collected from our tests, we have also developed our GuardantINFORM platform to help biopharmaceutical companies accelerate precision oncology drug development through the use of this in-silico research platform to unlock further insights into tumor evolution and treatment resistance across various biomarker-driven cancers.

For early cancer detection, in May 2022, we launched the Shield LDT test to address the needs of individuals eligible for colorectal cancer screening.

From a simple blood draw, Shield uses a novel multimodal approach to detect colorectal cancer signals in the bloodstream, including DNA that is shed by tumors.

In December 2022, we announced that the ECLIPSE study, a registrational study evaluating the performance of our Shield blood test for detecting colorectal cancer in average-risk adults, met co-primary endpoints.

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

In July 2024, we received FDA approval of our 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, our 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.

We also expect to expand into lung cancer screening and multi-cancer detection with our Shield platform.

We are transforming patient care by providing critical insights into what drives disease through our advanced blood and tissue tests, real-world data and AI analytics.

Our tests help improve outcomes across all stages of care, including screening to find cancer early, monitoring for recurrence in early-stage cancer, and treatment selection for patients with advanced cancer.

For patients with advanced-stage cancer, we offer the Guardant360 Liquid test, formerly known as the Guardant360 LDT test, and the Guardant360 CDx test, the first comprehensive liquid biopsy test approved by the U.S.

We also offer the Guardant360 Tissue test for advanced-stage cancer and the Guardant Reveal test to detect residual and recurring disease in early-stage colorectal, breast and lung cancer patients.

We have also expanded the Guardant Reveal test to include late-stage therapy response monitoring for patients with solid tumors.

Our product portfolio is now powered by our Smart Platform, which utilizes methylation technology with genomic, epigenomic, and RNA-based data, to unlock multi-modal biology with proprietary chemistry, advanced algorithms and our InfinityAI learning engine.

We also collaborate with biopharmaceutical companies in clinical studies by providing the above-mentioned tests, as well as the GuardantINFINITY blood test, also powered by our Smart Platform, which provides new, multi-dimensional insights into the complexities of tumor molecular profiles and immune response to advance cancer research and therapy development, and the GuardantOMNI blood test for advanced-stage cancer.

Using data collected from our tests and through AI-enabled analytical tools, we have also developed our GuardantINFORM platform to help biopharmaceutical companies accelerate precision oncology drug development through the use of this in-silico research platform to unlock further insights into tumor evolution and treatment resistance across various biomarker-driven cancers.

For early cancer detection, we offer the Shield blood test for colorectal cancer screening in adults age 45 and older who are at average risk for the disease.

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

In addition, our Shield blood test is included in the National Comprehensive Cancer Network colorectal cancer screening guidelines.

We also expect to expand into lung cancer screening and multi-cancer detection, or MCD, with our Shield platform.

The FDA has granted Breakthrough Device designation to our Shield MCD test to provide patients and healthcare providers with timely access to medical devices by speeding up their development, assessment and review.

In addition, we have expanded our Shield blood test to include an MCD results report with a data collection effort to better understand the clinical impact of MCD results.

We currently perform clinical, research use only, and investigation use only tests in our laboratory located in Redwood City, California.

Our Redwood City laboratory is certified pursuant to the Clinical Laboratory Improvement Amendments of 1988, or CLIA, accredited by the College of American Pathologists, or CAP, permitted by the New York State Department of Health, or NYSDOH, and licensed in California and four other states.

We also perform research use only tests in our laboratory located in San Diego, California.

In addition, our Redwood City, San Diego and Palo Alto, California laboratories are currently operated as centers for our research and technology development.

Our Redwood City laboratory is licensed pursuant to the Clinical Laboratory Improvement Amendments of 1988, or CLIA, accredited by the College of American Pathologists, or CAP, permitted by the New York State Department of Health, or NYSDOH, and licensed in California and four other states.

We also perform clinical tests in our laboratory located in Long Island City, New York, for which we have received a clinical laboratory license from New York State, and research use only tests in our laboratory located in San Diego, California.

In addition, our Redwood City, San Diego and Palo Alto, California laboratories are currently operated as centers for our research and technology development, and our Palo Alto laboratory is also CLIA licensed.

We generated total revenue of $982.0 million, $739.0 million and $563.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

We also incurred net losses of $416.3 million, $436.4 million and $479.4 million in the years ended December 31, 2025, 2024 and 2023, respectively.

We have funded our operations to date

principally from the sale of our stock, convertible senior notes, and revenue from our precision oncology testing and development services and other.

In May 2023, we completed a follow-on underwritten public offering, in which we issued and sold 14,375,000 shares of our common stock at a price of $28.00 per share, and received net proceeds of $381.4 million after deducting underwriting discounts and commissions and other offering costs of $21.1 million.

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

As of December 31, 2024, we had cash, cash equivalents, restricted cash and marketable debt securities of approximately $944.2 million.

We have funded our operations to date principally from the sales of our common stock, issuances of convertible senior notes, and generation of our revenue.

See Note 7, Debt, and Note 10, Common Stock, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on our convertible senior notes and common stock.

As of December 31, 2025, we had cash, cash equivalents, restricted cash and marketable debt securities of approximately $1.3 billion.

Factors affecting our performance

We believe there are several important factors that have impacted and that we expect will impact our operating performance and results of operations, including:

• Testing volume, pricing and customer mix .

Our revenue and costs are affected by the volume of testing and mix of customers from period to period.

We evaluate both the volume of tests that we perform for patients on behalf of clinicians and the number of tests we perform for biopharmaceutical companies.

Our performance depends on our ability to retain and broaden adoption with existing customers, as well as attract new customers.

We believe that the test volume we receive from clinicians and biopharmaceutical companies are indicators of growth in each of these customer verticals.

Customer mix for our tests has the potential to significantly affect our results of operations, as the average selling price for biopharmaceutical sample testing is currently higher than our average reimbursement for clinical tests because we are not a contracted provider for, or our tests are not covered by clinical patients’ insurance for, the majority of the tests that we perform for patients on behalf of clinicians.

Precision oncology revenue from clinical tests for patients covered and administered by Medicare represented approximately 39%, 43% and 45% of our precision oncology revenue from clinical customers for the years ended December 31, 2024, 2023 and 2022, respectively.

• Testing volume, pricing, and product and customer mix .

Our revenue and cost of revenue are affected by the volume of tests, and average selling price per sample and cost per sample in relation to the mix of products and customers from period to period.

We evaluate the volume of tests performed both for patients on behalf of clinicians and for biopharmaceutical companies, including tests delivered by labs operated by our strategic partners.

Our performance depends on our ability to retain and broaden adoption of our existing and new products, with existing customers, as well as attract new customers.

• Payer coverage and reimbursement .

Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payers, including both commercial and government payers.

Precision oncology revenue from tests for clinical customers is calculated based on our expected cash collections, using the estimated variable consideration.

Our oncology and screening revenue is calculated based on our expected cash collections, using the estimated variable consideration.

The variable consideration is estimated based on historical collection patterns as well as the potential for changes in future reimbursement behavior by one or more payers.

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In March 2021, the Centers for Medicare and Medicaid Services, or CMS, approved advanced diagnostic laboratory test, or ADLT, status to our Guardant360 CDx test, based on which Medicare paid us at the lowest available commercial rate per test, from April 1, 2021 to December 31, 2021.

Effective January 1, 2022, Medicare started to reimburse Guardant360 CDx services at the median rate of claims paid by commercial payers.

In March 2022, Palmetto GBA, the Medicare administrative contractor for MolDX, conveyed coverage for our Guardant360 TissueNext test under the existing local coverage determination.

The policy covers our Guardant360 TissueNext test for Medicare fee-for-service patients with advanced solid tumor cancers.

2022, Palmetto GBA conveyed coverage for our Guardant Reveal test for fee-for-service Medicare patients in the United States with stage II or III colorectal cancer whose testing is initiated within three months following curative intent therapy, with an effective date of December 2021.

In April 2023, Palmetto GBA conveyed coverage for our Guardant360 Response test for fee-for-service Medicare patients in the U.S.

with metastatic or inoperable solid tumors who are on an immune checkpoint inhibitor therapy, tested four to ten weeks from therapy initiation.

Effective January 1, 2024, Medicare has increased the reimbursement rate for our Guardant360 LDT test to the same rate as our Guardant360 CDx test.

Effective January 1, 2022, Medicare started to reimburse Guardant360 CDx services at the median rate of claims paid by commercial

In March 2022, Palmetto GBA, the Medicare administrative contractor for MolDX, conveyed coverage for our Guardant360 Tissue test under the existing local coverage determination.

The policy covers our Guardant360 Tissue test for Medicare fee-for-service patients with advanced solid tumor cancers.

In July 2022, Palmetto GBA conveyed coverage for our Guardant Reveal test for fee-for-service Medicare patients in the United States with stage II or III colorectal cancer whose testing is initiated within three months following curative intent therapy, with an effective date of December 2021.

Effective January 1, 2024, Medicare has increased the reimbursement rate for our Guardant360 Liquid test to the same rate as our Guardant360 CDx test.

In January 2025, Palmetto GBA granted coverage for our Guardant Reveal test to monitor disease recurrence in patients with colorectal cancer in the surveillance setting following curative intent therapy.

This represents an expansion from the prior Medicare coverage of our Guardant Reveal test for colorectal cancer in the early post-surgical setting only.

In May 2025, the coverage for our upgraded Guardant360 Tissue test was expanded by Medicare to include both DNA and RNA testing.

In August 2024, following the FDA approval, our Shield blood test met the coverage requirements by Medicare based on the criteria established in its National Coverage Determination for blood-based colorectal cancer screening tests.

The test is covered once every three years for eligible Medicare beneficiaries.

Due to the inherent variability and unpredictability of the reimbursement landscape, including related to the amount that payers reimburse us for any of our tests, we estimate the amount of revenue to be recognized at the time a test is provided and record revenue adjustments if and when the cash subsequently received differs from the revenue recorded.

In March 2025, CMS approved ADLT status for our Shield blood test for colorectal cancer screening, which initiated a specific, market-based approach to pricing the test for Medicare patients.

In March 2025, our Shield blood test received coverage for patients receiving community care authorized by the U.S.

Department of Veterans Affairs, or VA, as an in-network benefit, with no copay for average-risk individuals who are age 45 or older.

Following Medicare coverage for our Shield blood test in August 2024, the VA network coverage is the first for individuals between the ages of 45 and 64.

In addition, in January 2026, our Shield blood test received coverage for active-duty service members and their families through TRICARE, the U.S.

military’s health insurance coverage, with no copay for average-risk individuals ages 45 and older.

Due to the inherent variability and unpredictability of the reimbursement landscape, including related to the amount that payers reimburse us for any of our tests, we estimate the amount of our oncology and screening revenue to be recognized at the time a test is provided and record revenue adjustments if and when the cash subsequently received differs from the revenue recorded.

Due to this variability and unpredictability, previously recorded revenue adjustments are not indicative of future revenue adjustments from actual cash collections, which may fluctuate significantly.

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Our revenue also depends on our ability to attract, maintain and expand relationships with biopharmaceutical customers.

As we continue to develop these relationships, we expect to support a growing number of clinical studies globally and continue to have opportunities to offer our platform to such customers for development services, including companion diagnostic development, novel target discovery and validation, as well as clinical study enrollment.

For example, our tests are being developed as companion diagnostics under collaborations with biopharmaceutical companies.

As we continue to develop these relationships, we expect to support a growing number of clinical studies globally and continue to have opportunities to offer our services to such customers, primarily including companion diagnostic development and regulatory approval, monitoring and maintenance, GuardantINFORM data services and GuardantConnect referral services.

• Research and development.

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

In addition, in June 2025, the National Comprehensive Cancer Network included our Shield blood test in its updated colorectal cancer screening guidelines.

In July 2025, we initiated patient enrollment for the required Shield post FDA-approval study with the goal of assessing our Shield blood test performance, which we refer to as the SOLAR study.

The SOLAR study will continue patient enrollment into 2026, and we aim to conclude the SOLAR study by 2031.

To clinically validate the performance of our next-generation Shield blood test in lung cancer screening in high-risk individuals ages 50-80, in January 2022, we initiated a nearly 10,000-patient prospective, registrational study, which we refer to as the SHIELD LUNG study.

In addition, in January 2025, our Shield multi-cancer detection, or MCD, test was selected for the Vanguard study funded by the National Cancer Institute, part of the National Institutes of Health.

The Vanguard study is a four-year pilot study which will enroll up to 24,000 people to inform the design of a randomized controlled trial evaluating the use of MCD tests for cancer screening.

The Vanguard study is a four-year pilot study which initiated patient enrollment in June 2025 and will enroll up to 24,000 people to inform the design of a randomized controlled trial evaluating the use of MCD tests for cancer screening.

In June 2025, the FDA also granted Breakthrough Device designation to our Shield MCD test to provide patients and healthcare providers with timely access to medical devices by speeding up their development, assessment and review.

We have expended considerable resources, and expect to increase such expenditures over the next few years, to support our research and development programs with the goal of fueling further innovation.

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A component of our long-term growth strategy is to expand our commercial footprint internationally, and we expect to increase our sales and marketing expense to execute on this strategy.

We currently offer our tests in countries outside the United States primarily through distributor relationships, direct contracts with hospitals, and partnerships with local research organizations and laboratory companies.

In May 2018, we formed and capitalized Guardant Health AMEA, Inc., with SoftBank, relating to the sale, marketing and distribution of our tests generally outside the Americas and Europe, and to accelerate commercialization of our products in Asia, the Middle East and Africa.

In June 2022, we purchased all of the shares held by SoftBank and its affiliates, and upon completion of the transaction, we obtained full control over operations of Guardant Health AMEA, Inc.

We currently offer our oncology and screening tests in countries outside the United States primarily through distributor relationships, direct contracts with hospitals, and partnerships with local research organizations and laboratory companies.

In July 2023, Japan's Ministry of Health, Labour and Welfare granted national reimbursement approval for our Guardant360 CDx test for patients with advanced or metastatic solid tumor cancers in Japan.

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In October 2021, we signed a partnership agreement with The Royal Marsden NHS Foundation Trust, or Royal Marsden, a premier cancer center within the United Kingdom, or the UK, for patient care, research and teaching of all types of cancer, and in April 2023, the blood-based cancer testing services based on our digital sequencing platform became available at Royal Marsden testing facility in the UK.

In September 2024, we signed a partnership agreement with the Agostino Gemelli University Polyclinic Foundation IRCCS, one of Italy’s largest and most renowned hospitals known for its advanced oncology services, including diagnostics, treatment, and research, to establish an in-house liquid biopsy testing service within its hospital system.

In September 2024, we signed a partnership agreement with Fondazione Policlinico Universitario Agostino Gemelli IRCCS, or Policlinico Gemelli, one of Italy’s largest and most renowned hospitals known for its advanced oncology services, including diagnostics, treatment, and research, to establish an in-house liquid biopsy testing service within its hospital system, and in December 2025, the liquid biopsy testing service based on our proprietary Guardant360® CDx technology became available at the Policlinico Gemelli facility in Italy.

In June 2022, we signed a strategic partnership agreement with Adicon Holdings Limited, or Adicon, a leading independent clinical laboratory company based in China, and in December 2023, the blood-based cancer testing services based on our digital sequencing platform became available at Adicon's testing facility, which offers our industry-leading comprehensive genomic profiling tests to biopharmaceutical companies to advance clinical research and the development of new cancer therapies in China.

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Our financial results have historically, and will likely continue to, fluctuate significantly based upon the impact of our general and administrative expense, and in particular, our stock-based compensation expense.

Our equity awards, including market-based and performance-based restricted stock units, are intended to retain and incentivize employees to lead us to sustained, long-term superior financial and operational performance.

Our equity awards, including performance-based restricted stock units, are intended to retain and incentivize employees to lead us to sustained, long-term superior financial and operational performance.

• Other operating expense .

Our financial results might fluctuate significantly based upon the impact of our other operating expense, and in particular, our legal settlement costs, which could potentially decrease or increase significantly.

Our financial results might fluctuate significantly based upon the impact of our other operating expense, and in particular, our legal reserves, which could potentially decrease or increase significantly.

While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address.

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Components of results of operations

We derive our revenue from two sources:

(i) precision oncology testing, and (ii) development services and other.

Precision oncology testing.

Precision oncology testing revenue is generated from sales of our tests to clinical and biopharmaceutical customers, including those tests delivered by labs operated by our strategic partners.

In the United States, through December 31, 2024, we generally performed tests as an out-of-network service provider without contracts with health insurance companies.

We submit claims for payment for tests performed for patients covered by U.S.

private payers.

We also submit claims to Medicare for reimbursement for our Guardant360 CDx, Guardant360 LDT, Guardant360 TissueNext, Guardant Reveal and Guardant360 Response clinical testing performed for qualifying patients.

Development services and other.

Development services revenue primarily represents services that we provide to biopharmaceutical companies, large medical institutions and international laboratory partners.

We collaborate with biopharmaceutical companies in the development and clinical studies of new drugs.

As part of these collaborations, we provide services related to regulatory filings to support companion diagnostic device submissions for our test panels.

Under these arrangements, we generate revenue from progression of our collaboration efforts, as well as from provision of on-going support.

In addition to companion diagnostic development and regulatory approval services, we also provide other development services, including clinical study setup, monitoring and maintenance, testing development and support, GuardantConnect and GuardantINFORM.

Other revenue includes amounts derived from licensing our technologies, kit fulfillment and delivery of our Shield screening tests.

We derive our revenue from four major sources, including oncology, biopharma and data, screening, and licensing and other.

Oncology revenue was previously presented as precision oncology revenue from tests for clinical customers.

Oncology revenue includes amounts derived from the delivery of our oncology tests for clinical customers, including hospitals, cancer centers, research institutions and patients, and oncology tests delivered by labs operated by our strategic partners.

In the United States, we submit claims to Medicare and private payers for reimbursement for our Guardant360 CDx, Guardant360 Liquid, Guardant360 Tissue, and Guardant Reveal tests performed for qualifying patients.

Biopharma and data.

Biopharma and data revenue includes amounts derived from the delivery of our tests for biopharmaceutical customers, previously presented as precision oncology revenue from tests for biopharmaceutical customers.

Biopharma and data revenue also includes amounts derived from the performance of our service agreements with biopharmaceutical customers, previously presented as a component of development services and other revenue, primarily comprised of companion diagnostic development and regulatory approval, monitoring and maintenance, GuardantINFORM data services and GuardantConnect referral services.

Screening revenue, previously included in other revenue, includes amounts derived from the delivery of our Shield screening tests.

In August 2024, following the FDA approval, our Shield screening test met the coverage requirements by Medicare, and we submit claims to Medicare for reimbursement for our Shield screening tests performed for qualifying patients.

We also submit claims to private payers for reimbursement for qualifying patients covered under Medicare Advantage program.

In addition, in March 2025, our Shield screening test received coverage for patients receiving community care authorized by the U.S.

Department of VA, as an in-network benefit, with no copay for average-risk individuals who are age 45 or older.

Following Medicare coverage for our Shield screening test in August 2024, the VA network coverage is the first for individuals between the ages of 45 and 64.

Licensing and other .

We also derive revenue from licensing our technologies, previously included in other revenue.

Costs and operating expenses

Cost of precision oncology testing.

Cost of precision oncology testing generally consists of cost of materials, including inventory write-downs;

Cost of revenue .

Costs associated with performing our tests generally consists of cost of materials, including inventory write-downs;

cost of labor, including employee benefits, bonus, and stock-based compensation;

equipment and infrastructure expenses associated with processing test samples, such as sample accessioning, library preparation, sequencing, and quality control analyses;

equipment and infrastructure expenses associated with processing test samples, such as sample preparation, library preparation, sequencing, and quality control analyses;

curation of test results for physicians;

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Costs associated with performing our tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to the tests.

While we do not believe the technologies underlying the third-party licenses are necessary to permit us to provide our tests, we do believe these technologies are potentially valuable and of possible strategic importance to us or our competitors.

We expect the cost of precision oncology testing to generally increase in line with the increase in the number of tests we perform, but we expect the cost per test to decrease modestly over time due to the efficiencies we may gain as test volume increases, and from automation and other cost reductions.

Cost of development services and other .

Cost of development services and other primarily includes costs incurred for the performance of development services requested by our biopharmaceutical customers, and costs associated with our partnership agreements and delivery of Shield screening tests, which comprise of labor and material costs including any inventory write-downs.

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 revenue.

Cost of development services and other will vary depending on the nature, timing and scope of customer projects.

We expect the costs associated with performing our tests to generally increase in line with the increase in the number of tests we perform, but we expect the cost per test to decrease modestly over time due to the efficiencies we may gain as test volume increases, and from automation and other cost reductions.

Cost of revenue also includes costs incurred for the performance of our service agreements and partnership agreements with biopharmaceutical customers and strategic partners, which comprise of labor and material costs.

Costs associated with our service agreements and partnership agreements will vary depending on the nature, timing and scope of customer projects.

Research and development expense .

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Research and development costs are expensed as incurred.

Payments made prior to the receipt of goods or services to be used in research and development are deferred and recognized as expense in the period in which the related goods are received or services are rendered.

Payments made prior to the receipt of goods or services to be used in research and development are deferred and recognized as an expense in the period in which the related goods are received or services are rendered.

Costs to develop our technology capabilities are recorded as research and development unless they meet the criteria to be capitalized as internal-use software costs.

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Interest expense

Interest expense consists primarily of charges relating to amortization of debt issuance costs.

Interest expense consists of coupon interest expense and amortization of debt issuance costs, net of amortization of debt premium.

Other income (expense), net

Other income (expense), net consists of foreign currency exchange gains and losses, unrealized and realized gains and losses of marketable equity securities, and impairment of non-marketable equity securities and other related assets.

Other income (expense), net consists of foreign currency exchange gains and losses, unrealized and realized gains and losses on marketable equity securities, gain on extinguishment of convertible notes, and impairment of non-marketable equity securities and other related assets.

We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

Provision for income tax

Provision for (benefit from) income tax

Income taxes are recorded using an asset and liability approach.

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The evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and effective settlement of audit issues.

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

The provision for (benefit from) income taxes includes the effects of any accruals that we believe are appropriate, as well as the related net interest and penalties.

Results of operations

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(in thousands)

Precision oncology testing

$ 982,021 $ 739,016

Development services and other

51,080 49,699

Total revenue

739,016 563,948

Costs and operating expenses:

Cost of precision oncology testing (1)

260,581 205,528

Cost of development services and other (1)

Cost of revenue (1)

349,007 289,799

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211,410 180,123

Other operating expense — 83,400

Total costs and operating expenses

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Other income (expense), net (10,490) (42,605)

Loss before provision for income taxes

Loss before (benefit from) provision for income taxes

(417,540) (435,089)

Provision for income taxes

(Benefit from) provision for income taxes

(1,263) 1,284

$ (416,277) $ (436,373)

(1) Amounts include stock-based compensation expense as follows:

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(in thousands)

Cost of precision oncology testing $ 5,315 $ 4,614

Cost of development services and other 4,050 1,851

Cost of revenue

$ 10,699 $ 9,365

Research and development expense 50,937 50,566

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

as such we 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, of which $2.4 million was recorded to cost of development services and other, and $11.8 million, $6.5 million and $4.1 million was recorded as components of research and development expense, sales and marketing expense, and general and administrative expense, respectively.

as such we 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, of which $2.4 million was recorded to cost of revenue, and $11.8 million, $6.5 million and $4.1 million was recorded as components of research and development expense, sales and marketing expense, and general and administrative expense, respectively.

In the first quarter of 2025, these PSUs were vested after the additional six months service requirements were fulfilled.

Comparison of the Years Ended December 31, 2025 and 2024

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(in thousands)

Precision oncology testing

$ 687,936 $ 514,249 $ 173,687 34 %

Development services and other

Oncology $ 683,595 $ 542,827 $ 140,768 26 %

Biopharma & data 210,132 177,579 32,553 18 %

Screening 79,732 5,124 74,608 *

Licensing and other

8,562 13,486 (4,924) (37) %

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$ 982,021 $ 739,016 $ 243,005 33 %

* Not meaningful

Total revenue was $982.0 million for the year ended December 31, 2025, compared to $739.0 million for the year ended December 31, 2024, an increase of $243.0 million, or 33%.

Precision oncology testing revenue increased to $687.9 million for the year ended December 31, 2024, from $514.2 million for the year ended December 31, 2023, an increase of $173.7 million, or 34%.

Precision oncology revenue from tests for clinical customers was $542.8 million for the year ended December 31, 2024, up 34% from $403.9 million for the year ended December 31, 2023.

This increase in clinical testing revenue was driven primarily by an increase in sample volume and an increase in reimbursement for our tests.

Total tests for clinical customers increased to approximately 206,700 for the year ended December 31, 2024, from approximately 172,900 for the year ended December 31, 2023.

The increase in reimbursement for our tests for the year ended December 31, 2024 was primarily attributable to an increase in Medicare reimbursement for our Guardant360 LDT test to $5,000, effective January 1, 2024;

and increases in Medicare Advantage and commercial payer reimbursement.

Precision oncology revenue from tests for biopharmaceutical customers was $145.1 million for the year ended December 31, 2024, up 31% from $110.4 million for the year ended December 31, 2023.

This increase in revenue was primarily due to an increase in sample volume.

Total tests for biopharmaceutical customers increased to approximately 40,500 for the year ended December 31, 2024, from approximately 29,900 for the year ended December 31, 2023.

Development services and other revenue increased to $51.1 million for the year ended December 31, 2024, from $49.7 million for the year ended December 31, 2023, an increase of $1.4 million, or 3%.

This increase in development services and other revenue was primarily due to an increase of $9.1 million associated with our companion diagnostics collaboration projects and other service agreements with biopharmaceutical customers, partially offset by a decrease of $7.2 million associated with our partnership agreements, and a reduction of $3.2 million in royalty revenue.

The increase in other revenue was also attributable to $4.1 million derived from the delivery of approximately 6,400 of our Shield screening tests for the three months ended December 31, 2024, following the FDA approval.

Oncology revenue was $683.6 million for the year ended December 31, 2025, compared to $542.8 million for the year ended December 31, 2024, an increase of $140.8 million, or 26%.

This increase was driven primarily by an increase in oncology test volume to approximately 276,000 for the year ended December 31, 2025, from approximately 206,700 for the year ended December 31, 2024.

Biopharma and data revenue was $210.1 million for the year ended December 31, 2025, compared to $177.6 million for the year ended December 31, 2024, an increase of $32.6 million, or 18%.

This increase was driven primarily by an increase in volume of our GuardantINFINITY test, as well as an increase in revenue derived from the achievement of certain milestones of our companion diagnostic development and regulatory approval service agreements and revenue derived from our data services.

Screening revenue was $79.7 million for the year ended December 31, 2025, generated from the delivery of approximately 87,000 of our Shield screening tests.

Licensing and other revenue was $8.6 million for the year ended December 31, 2025, compared to $13.5 million for the year ended December 31, 2024, a decrease of $4.9 million, primarily due to nonrecurring milestone revenue recorded related to one of our partnership agreements for the year ended December 31, 2024.

Cost of Revenue

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(in thousands)

Cost of precision oncology testing

$ 260,581 $ 205,528 $ 55,053 27 %

Cost of development services and other 29,218 21,524 7,694 36 %

Total cost of revenue

Cost of revenue

$ 349,007 $ 289,799 $ 59,208 20 %

Total cost of revenue was $289.8 million for the year ended December 31, 2024, compared to $227.1 million for the year ended December 31, 2023, an increase of $62.7 million, or 28%.

Cost of precision oncology testing was $260.6 million for the year ended December 31, 2024, compared to $205.5 million for the year ended December 31, 2023, an increase of $55.1 million, or 27%.

This increase in cost of precision oncology testing was primarily attributable to an increase in sample volumes and an increase in average cost per sample primarily due to changes in product mix, resulting in a $44.7 million increase in material costs, a $4.7 million increase in production labor and overhead costs, and a $4.6 million increase in other costs, including costs related to collection kits, freight and professional services.

Cost of development services and other was $29.2 million for the year ended December 31, 2024, compared to $21.5 million for the year ended December 31, 2023, an increase of $7.7 million, or 36%.

This increase in cost of development services and other was primarily due to an increase of $4.3 million associated with our companion diagnostics collaboration projects and other service agreements with biopharmaceutical customers, and an increase of $3.3 million associated with providing Shield screening tests during the year ended December 31, 2024.

Cost of revenue was $349.0 million for the year ended December 31, 2025, compared to $289.8 million for the year ended December 31, 2024, an increase of $59.2 million, or 20%.

This increase in cost of revenue was driven primarily by an increase in sample volume of our oncology, biopharma and screening tests, partially offset by reduced cost per sample of our tests, primarily Guardant Reveal, Guardant360 Liquid and Shield screening tests.

Operating Expenses

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$ 364,191 $ 347,753 $ 16,438 5 %

Research and development expenses were $347.8 million for the year ended December 31, 2024, compared to $367.2 million for the year ended December 31, 2023, a decrease of $19.4 million, or 5%.

This decrease was primarily due to a decrease of $31.8 million in outside services costs primarily driven by a reduction in the ECLIPSE clinical study costs as the study nears completion, a decrease of $9.7 million in material costs, and a decrease of $3.7 million in information technology infrastructure costs;

partially offset by an increase of $15.9 million in stock-based compensation, primarily related to the PSUs of $11.8 million discussed in the Results of operations section above;

and an increase of $10.0 million in other personnel costs.

Research and development expenses were $364.2 million for the year ended December 31, 2025, compared to $347.8 million for the year ended December 31, 2024, an increase of $16.4 million, or 5%.

This increase was related to continued investment in the development of our technologies and products, primarily including an increase of $9.6 million in personnel costs, an increase of $6.7 million in material costs, and an increase of $3.8 million in information technology infrastructure costs;

partially offset by a decrease of $6.5 million in outside services costs related to clinical studies.

Sales and marketing expense

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Sales and marketing expenses were $494.7 million for the year ended December 31, 2025, compared to $364.9 million for the year ended December 31, 2024, an increase of $129.7 million, or 36%.

This increase was related to commercial team expansion and marketing activities to support existing products and the Shield product launch, primarily resulting in an increase of $34.1 million in other personnel costs;

an increase of $14.9 million in marketing activity related costs;

an increase of $11.7 million in stock-based compensation, including $6.5 million related to the PSUs discussed in the Result of operations section above;

and an increase of $10.5 million in information technology infrastructure costs.

This increase was related to commercial team expansion and marketing activities to support both the Shield product launch and existing products growth, primarily resulting in an increase of $77.0 million in personnel costs, an increase of $35.1 million in marketing activity related costs, an increase of $8.2 million in stock-based compensation, an increase of $4.8 million in office and administrative costs, and an increase of $4.7 million in information technology infrastructure costs.

General and administrative expense

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General and administrative expenses were $211.4 million for the year ended December 31, 2025, compared to $180.1 million for the year ended December 31, 2024, an increase of $31.3 million, or 17%.

This increase was primarily due to an increase of $19.2 million in stock-based compensation, including $4.1 million related to the PSUs discussed in the Results of operation section above;

and an increase of $12.4 million in other personnel costs;

partially offset by a decrease of $7.5 million in severance costs related to a workforce reduction in the first quarter of 2023, and a decrease of $3.1 million in legal expenses.

Other operating expense

Year Ended December 31, Change

(in thousands)

Other operating expense

$ — $ 83,400 $ (83,400) (100) %

Other operating expense for the year ended December 31, 2023 was related to a legal accrual in connection with a jury verdict related to TwinStrand Biosciences, Inc.

and the University of Washington entered into in November 2023.

See "Commitments and Contingencies - Legal Proceedings" in Note 9 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

This increase was primarily due to an increase of $15.9 million in stock-based compensation, an increase of $13.9 million in information technology infrastructure costs, and an increase of $4.0 million in outside service costs;

partially offset by a decrease of $5.6 million in legal expenses.

Interest income

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$ 34,095 $ 53,691 $ (19,596) (36) %

Interest income was $53.7 million for the year ended December 31, 2024, compared to $35.4 million for the year ended December 31, 2023, an increase of $18.3 million, or 52%, primarily attributable to higher rates of return on our investments.

Interest income was $34.1 million for the year ended December 31, 2025, compared to $53.7 million for the year ended December 31, 2024, a decrease of $19.6 million, or 36%.

This decrease was primarily due to reduced average investment balances and lower available market rates of return on our investment portfolio.

Interest expense

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$ (3,897) $ (2,581) $ (1,316) 51 %

Interest expense was primarily attributable to the amortization of debt issuance costs related to our convertible senior notes issued in November 2020, for the years ended December 31, 2024, and 2023.

Interest expense was primarily related to the coupon interest, amortization of debt issuance costs, net of amortization of debt premium of our convertible senior notes for the years ended December 31, 2025, and 2024.

See Note 7, Debt to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on our convertible senior notes.

Other income (expense), net

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$ (10,490) $ (42,605) $ 32,115 (75) %

Other income (expense), net was a $42.6 million expense for the year ended December 31, 2024, primarily attributable to $44.4 million of net unrealized and realized losses recorded for our marketable equity security investment in Lunit, Inc.

Other income (expense), net was a $10.5 million expense for the year ended December 31, 2025, primarily attributable to an impairment of $18.6 million recorded for our non-marketable equity security investments, partially offset by a gain on extinguishment of convertible notes of $13.7 million related to the convertible notes exchange transaction completed in February 2025.

Other income (expense), net was a $42.6 million expense for the year ended December 31, 2024, primarily due to $44.4 million of net unrealized and realized losses recorded for our marketable equity security investment in Lunit, Inc.

during the period.

Other income (expense), net was a $53.2 million income for the year ended December 31, 2023, primarily due to $79.7 million of unrealized gains recorded for our marketable equity security investment in Lunit, Inc., partially offset by $29.1 million of impairment recorded for our non-marketable equity security investments and other related assets during the period.

Provision for income taxes

(Benefit from) provision for income taxes

Year Ended December 31, Change

(in thousands)

Provision for income taxes

(Benefit from) provision for income taxes

$ (1,263) $ 1,284 $ (2,547) (198) %

The change in the provision for income taxes between the years ended December 31, 2024 and 2023 was insignificant.

The (benefit from) provision for income taxes for the years ended December 31, 2025 and 2024 was insignificant.

Comparison of the Years Ended December 31, 2024 and 2023

Year Ended December 31, Change

(in thousands)

Oncology $ 542,827 $ 403,876 $ 138,951 34 %

Biopharma & data 177,579 136,351 41,228 30 %

Screening 5,124 — 5,124 *

Licensing and other

13,486 23,721 (10,235) (43) %

Total revenue

$ 739,016 $ 563,948 $ 175,068 31 %

* Not meaningful

Total revenue was $739.0 million for the year ended December 31, 2024, compared to $563.9 million for the year ended December 31, 2023, an increase of $175.1 million, or 31%.

Oncology revenue was $542.8 million for the year ended December 31, 2024, compared to $403.9 million for the year ended December 31, 2023, an increase of $139.0 million, or 34%.

This increase was driven primarily by an increase in oncology test volume and an increase in reimbursement for our oncology tests.

Total oncology test volume increased to approximately 206,700 for the year ended December 31, 2024, from approximately 172,900 for the year ended December 31, 2023.

The increase in reimbursement for our tests for the year ended December 31, 2024 was primarily attributable to an increase in Medicare reimbursement for our Guardant360 Liquid test to $5,000, effective January 1, 2024;

and increases in Medicare Advantage and commercial payer reimbursement.

Biopharma and data revenue was $177.6 million for the year ended December 31, 2024, compared to $136.4 million for the year ended December 31, 2023, an increase of $41.2 million, or 30%.

Screening revenue was $5.1 million for the year ended December 31, 2024, primarily generated from the delivery of approximately 6,400 of our Shield screening tests for the three months ended December 31, 2024, following the FDA approval.

Licensing and other revenue was $13.5 million for the year ended December 31, 2024, compared to $23.7 million for the year ended December 31, 2023, a decrease of $10.2 million, or 43%, primarily due to a decrease of $7.2 million associated with our partnership agreements and a reduction of $3.2 million in royalty revenue.

Cost of Revenue

Year Ended December 31, Change

(in thousands)

Cost of revenue

$ 289,799 $ 227,052 $ 62,747 28 %

Cost of revenue was $289.8 million for the year ended December 31, 2024, compared to $227.1 million for the year ended December 31, 2023, an increase of $62.7 million, or 28%.

This increase in cost of revenue was driven primarily by an increase in sample volume of our oncology, biopharma and screening tests.

Liquidity and capital resources

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As demand for our tests are expected to continue to increase from physicians and biopharmaceutical companies, we anticipate that our capital expenditure requirements could also increase if we require additional laboratory capacity.

We have funded our operations to date principally from the sale of stock, convertible debt and through revenue from precision oncology testing and development services and other.

As of December 31, 2024, we had cash, cash equivalents, restricted cash and marketable debt securities of $944.2 million.

We have funded our operations to date principally from the sales of our common stock, issuances of convertible notes and generation of our revenue.

As of December 31, 2025, we had cash, cash equivalents, restricted cash and marketable debt securities of $1.3 billion.

Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to provide liquidity while ensuring capital preservation.

Additionally, we have investments held in marketable debt securities consisting primarily of United States treasury securities that can be immediately liquid.

Additionally, we have investments held in marketable debt securities consisting primarily of commercial paper and U.S.

treasury securities that can be immediately liquid.

Based on our current business plan, we believe our current cash, cash equivalents, restricted cash and marketable debt securities and anticipated cash flows from operations, will be sufficient to meet our anticipated cash requirements for more than 12 months from the date of this Annual Report on Form 10-K.

We may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.

As revenue from precision oncology testing and development services and other is expected to grow long-term, we expect our accounts receivable and inventory balances to increase.

As our revenue is expected to grow long-term, we expect our accounts receivable and inventory balances to increase.

Any increase in accounts receivable and inventory may not be completely offset by increases in accounts payable and accrued liabilities, which could impact our working capital balances.

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Additional capital may not be available to us on reasonable terms, or at all.

At-The-Market Offering Program

In August 2024, we 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 we may offer and sell, from time to time at our sole discretion, shares of our 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 our common stock were sold under the Sales Agreement.

Convertible Notes Exchange

In February 2025, we entered into privately negotiated exchange agreements with certain holders of our convertible senior notes due 2027.

See Note 17, Subsequent Events , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to this transaction.

The transaction will be accounted for under FASB ASC Topic 470, Debt , and relevant accounting guidance, based on which and due to the nature of the transaction, a gain is currently expected to be recorded for the three months ended March 31, 2025.

The following table summarizes our cash flows for the periods presented:

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Net cash used in operating activities $ (184,760) $ (239,858)

Net cash (used in) provided by investing activities

Net cash used in investing activities

(627,202) (261,308)

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

$ 671,133 $ (996)

Operating activities

Cash used in operating activities during the year ended December 31, 2024 was $239.9 million, which resulted from a net loss of $436.4 million and changes in our operating assets and liabilities of $60.9 million, partially offset by non-cash charges of $257.4 million.

Non-cash charges primarily consisted of $140.4 million of stock-based compensation, $44.4 million of net unrealized and realized losses on marketable equity security investment in Lunit, inc., $42.4 million of depreciation and amortization, and $31.1 million of operating lease costs, partially offset by $6.8 million of amortization of discount on marketable debt securities.

Cash used in operating activities during the year ended December 31, 2025 was $184.8 million, which resulted from a net loss of $416.3 million and changes in our operating assets and liabilities of $14.4 million, partially offset by reconciliation adjustments of $245.9 million.

Reconciliation adjustments primarily consisted of $166.2 million of stock-based compensation, $39.7 million of depreciation and amortization, $33.6 million of operating lease costs, and $18.6 million of impairment on nonmarketable equity security investments;

partially offset by $13.7 million of gain on extinguishment of convertible notes.

The changes in our operating assets and liabilities was primarily the result of a $37.5 million payment of operating lease liabilities net of receipt of tenant improvement allowance, a $28.2 million increase in accounts receivable, net, a $14.8 million increase in inventory, net, and a $6.4 million increase in prepaid expenses and other current assets, net;

partially offset by a $52.7 million increase in accounts payable and accrued liabilities, and a $19.5 million increase in deferred revenue.

Reconciliation adjustments primarily consisted of $140.4 million of stock-based compensation, $44.4 million of net unrealized and realized losses on marketable equity security investment in Lunit, inc., $42.4 million of depreciation and amortization, and $31.1 million of operating lease costs;

partially offset by $6.8 million of amortization of discount on marketable debt securities.

The changes in our operating assets and liabilities was primarily the result of a $36.1 million payment of operating lease liabilities net of receipt of tenant improvement allowance, a $21.4 million increase in accounts receivable, net, a $9.1 million increase in inventory, net, a $7.7 million increase in prepaid expenses and other current assets, net, and a $2.8 million decrease in accounts payable and accrued liabilities;

partially offset by a $18.7 million increase in deferred revenue.

Cash used in operating activities during the year ended December 31, 2023 was $325.0 million, which resulted from a net loss of $479.4 million, partially offset by non-cash charges of $100.6 million and changes in our operating assets and liabilities of $53.8 million.

Non-cash charges primarily consisted of $90.8 million of stock-based compensation, $42.9 million of depreciation and amortization, $29.7 million of operating lease costs, and $29.1 million of impairment on non-marketable equity security investments and other related assets;

partially offset by $79.7 million of unrealized gains on marketable equity security investment in Lunit, inc., and $13.6 million of amortization of discount on marketable debt securities.

The changes in our operating assets and liabilities was primarily the result of a legal accrual of $83.4 million in connection with a jury verdict entered in favor of TwinStrand Biosciences, Inc.

and the University of Washington in November 2023, a $8.4 million decrease in accounts receivable, net, and a $5.2 million increase in accounts payable and accrued liabilities;

partially offset by a $31.5 million payment of operating lease liabilities net of receipt of tenant improvement allowance, a $10.4 million increase in inventory, net due to forecasted higher testing volumes, and a $4.3 million increase in prepaid expenses and other current assets, net.

Investing activities

Cash used in investing activities during the year ended December 31, 2025 was $627.2 million, which resulted primarily from purchases of marketable debt securities of $818.2 million, business acquisition net of cash acquired of $59.0 million, purchases of property and equipment of $48.3 million, and purchases of non-marketable equity security investments of $9.0 million;

partially offset by maturities of marketable debt securities of $307.3 million.

Cash used in investing activities during the year ended December 31, 2024 was $261.3 million, which resulted primarily from purchases of marketable debt securities of $307.3 million, purchases of property and equipment of $35.1 million, and purchases of non-marketable equity security investments of $7.5 million;

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of $53.6 million and maturities of marketable debt securities of $35.0 million.

Cash provided by investing activities during the year ended December 31, 2023 was $840.3 million, which resulted primarily from maturities of marketable debt securities of $1.5 billion;

partially offset by purchases of marketable debt securities of $629.9 million, purchases of property and equipment of $20.5 million, and purchases of non-marketable equity security investments and other related assets of $5.6 million.

Financing activities

Cash used in financing activities during the year ended December 31, 2024 was $1.0 million, which was primarily attributable to employee taxes paid related to settlement of restricted stock units of $15.7 million, partially offset by proceeds from issuances of common stock under our employee stock purchase plan of $11.7 million and proceeds from exercise of stock options of $3.1 million.

Cash provided by financing activities during the year ended December 31, 2023 was $477.4 million, which was primarily attributable to proceeds from equity offerings of $493.1 million, and proceeds from issuances of common stock under our employee stock purchase plan of $10.2 million;

partially offset by payment of equity offering costs of $21.1 million, and employee taxes paid related to settlement of restricted stock units of $11.2 million.

Cash provided by financing activities during the year ended December 31, 2025 was $671.1 million, which was primarily attributable to proceeds from issuance of convertible senior notes of $402.5 million, proceeds from equity offering of $257.1 million, proceeds from treasury stock reissuance upon equity offering of $87.9 million, proceeds from exercise of stock options of $19.2 million, and proceeds from issuances of common stock under our employee stock purchase plan of $13.6 million;

partially offset by repurchase of treasury stock of $45.0 million, employee taxes paid related to net share settlement of restricted stock units of $30.5 million, payment of debt issuance costs of $24.6 million, and payment of equity offering costs of $17.7 million.

Cash used in financing activities during the year ended December 31, 2024 was $1.0 million, which was primarily attributable to employee taxes paid related to net share settlement of restricted stock units of $15.7 million, partially offset by proceeds from issuances of common stock under our employee stock purchase plan of $11.7 million and proceeds from exercise of stock options of $3.1 million.

Critical accounting policies and estimates

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Revenue recognition

We derive revenue from the provision of precision oncology testing services, as well as from development services and other.

Precision oncology testing revenue includes amounts derived from the delivery of our 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 our technologies, kit fulfillment, and delivery of our Shield screening tests.

We derive revenue from four major sources, including oncology, biopharma and data, screening, and licensing and other.

We currently receive 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.

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FASB ASC Topic 606, Revenue from Contracts with Customers , provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

Precision oncology testing

We recognize revenue from the sale of our precision oncology tests for clinical customers, including certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians.

Most precision oncology tests requested by clinical customers are sold without a written agreement;

Oncology revenue was previously presented as precision oncology revenue from tests for clinical customers.

Oncology revenue is recognized at the time results of the test are reported to physicians.

Most oncology tests requested by clinical customers are sold without a written agreement;

however, we determine an implied contract exists with our clinical customers.

We identify each sale of our test to a clinical customer as a single performance obligation.

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 our clinical customers represents variable consideration.

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.

We estimate the variable consideration under the portfolio approach and consider 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.

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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.

We analyze actual cash collections over the expected reimbursement period and compare 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 cumulative future revenue reversal.

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.

We identify our promise to transfer a number of distinct tests to biopharmaceutical customers as a single performance obligation.

Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed.

We analyze the actual cash collections over the expected reimbursement period and compare it with the estimated variable consideration for each portfolio and any difference is recognized as an adjustment to estimated revenue, subject to assessment of the risk of cumulative future revenue reversal.

Biopharma and data

Biopharma and data revenue also includes amounts derived from the performance of our service agreements with

biopharmaceutical customers, previously presented as a component of development services and other revenue, primarily comprised of companion diagnostic development and regulatory approval, monitoring and maintenance, GuardantINFORM data services and GuardantConnect referral services.

Revenue from the delivery of our tests for 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.

We identify our promise to transfer a series of distinct tests to biopharmaceutical customers as a single performance obligation.

Tests for biopharmaceutical customers are generally billed at a fixed price for each test performed.

For agreements involving testing volume to be satisfied over a defined period, revenue is recognized over time based on the number of tests performed as the performance obligation is satisfied over time.

Results of our precision oncology services are delivered electronically, and as such there are no shipping or handling fees incurred by us or billed to customers.

Development services and other

We perform development services for our biopharmaceutical customers utilizing our precision oncology information platform.

Development services typically represent a single performance obligation as we perform a significant integration service, such as analytical validation and regulatory submissions.

The individual promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct.

However, under certain contracts, a biopharmaceutical customer may engage us for multiple distinct development services which are both capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct performance obligations.

We collaborate with biopharmaceutical companies in the development of new drugs.

Results of our tests are delivered electronically, and as such there are no shipping or handling fees incurred by us or billed to customers.

In addition, we collaborate with biopharmaceutical companies in the development of new drugs.

As part of these collaborations, we provide services related to regulatory filings to support companion diagnostic device submissions for our testing panels.

Under these collaborations, we generate revenue from achievement of milestones, as well as provision of on-going support.

For the companion diagnostic development and regulatory approval services performed, we are compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other developmental milestone payments.

Under these collaborations, we generate revenue from achievement of milestones.

The transaction price of these contracts typically represents variable consideration.

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We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone.

In making this assessment, we consider our 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 us.

The constraint for variable consideration is applied to the transaction 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.

We recognize companion diagnostic development and regulatory approval services revenue over the period in which biopharmaceutical research and development services are provided.

Specifically, we recognize revenue using an input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of progress.

We assess the changes to the total expected cost estimates as well as any incremental fees negotiated resulting from changes to the scope of the original contract in determining the revenue recognition at each reporting period.

For development of new products or services under these arrangements, costs incurred before technological feasibility is reached are included as research and development expenses in our consolidated statements of operations, while costs incurred thereafter are recorded as cost of development services and other.

We also recognize revenue from other development services, in addition to companion diagnostic development and regulatory approval services noted above, such as clinical study setup, monitoring and maintenance, testing development and support, GuardantConnect, and GuardantINFORM.

These revenues are generally recognized over time based on an input method to measure progress in the period when the associated services have been performed.

In addition, we license our digital sequencing technologies to our domestic customers and international laboratory partners.

For the licensed technology, we are compensated through royalty-based payments, non-refundable upfront payments, guaranteed minimum payments, and/or sample milestone payments.

Depending on the nature of the technology licensing arrangements, and considering factors including but not limited to enforceable right to payment and payment terms, and if an asset with alternative use is created, these technology licensing revenues are recognized in the period when royalty-bearing sales occur, when the technology transfer is complete, or over the technology transfer period.

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

In addition, other revenue includes amounts derived from delivery of our Shield screening tests.

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.

We also provide other services to our biopharmaceutical customers, such as monitoring and maintenance, GuardantINFORM data services and GuardantConnect referral services.

These revenues are generally recognized over time based on an input method to measure progress in the service period, utilizing costs incurred to-date relative to total expected costs as its measure of progress.

Screening revenue, previously included in other revenue, includes amounts derived from the delivery of our Shield screening tests.

As is the case with our Oncology revenue, we recognize our Screening revenue at the time the results of the tests are reported.

Due to consistencies with our Oncology revenue, we apply the concepts of variable consideration under the portfolio approach to our Screening revenue in a manner consistent with that of our Oncology revenue, described above.

Licensing and other

We also derive revenue from licensing our technologies, previously included in other revenue.

We recognize licensing and other revenue based on the nature and terms of the technology licensing arrangements.

Contracts with multiple performance obligations

Contracts with biopharmaceutical customers and international laboratory partners may include multiple distinct performance obligations, such as provision of precision oncology testing, the above-mentioned development services, and digital sequencing technology licensing, among others.

We evaluate the terms and conditions included within our contracts with biopharmaceutical customers and international laboratory partners to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations that should be accounted for separately versus together.

Our contracts with biopharmaceutical customers and international laboratory partners may include multiple distinct performance obligations, such as delivery of our tests, performance of the above-mentioned services, and licensing our technologies, among others.

We evaluate the terms and conditions included within our contracts with biopharmaceutical customers and international laboratory partners to ensure appropriate revenue recognition.

We first identify material promises, in contrast to immaterial promises or administrative tasks, under the contract, and then evaluate whether these promises are both capable of being distinct and distinct within the context of the contract.

In assessing whether a promised service is capable of being distinct, we consider whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party as well as the availability of the associated expertise in the general

In assessing whether a promised service is distinct within the context of the contract, we consider whether we provide a significant integration of the services, whether the services significantly modify or customize one another, or whether the services are highly interdependent or interrelated.

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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.

For awards granted with a market condition, we derive the grant date fair value using the Monte Carlo simulation model and the related compensation expense is recognized over the requisite service period using an accelerated attribution model commencing on the grant date.

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

Forfeitures are accounted for as they occur.

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Expected Volatility

Prior to the commencement of trading of our common stock on the Nasdaq Global Select Market on October 4, 2018 in connection with our initial public offering, there was no active trading market for our common stock.

Due to limited historical data for the trading of our common stock, expected volatility is estimated based on the average volatility for comparable publicly traded peer group companies in the same industry plus our expected volatility for the available periods.

Prior to the commencement of trading of our common stock on the Nasdaq Global Select Market on October 4, 2018 in connection with our IPO, there was no active trading market for our common stock.

Due to limited historical data for the trading of our common stock, for awards granted prior to fiscal year 2025, expected volatility was estimated based on the average volatility for comparable publicly traded peer group companies in the same industry plus our expected volatility for the available periods.

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

As sufficient trading data became available, for awards granted since fiscal year 2025, we estimate expected volatility based on its own historical stock price volatility.

Risk-Free Interest Rate

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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 7. Management’s Discussion and Analysis