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What changed in Guardant Health, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Guardant Health, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+434 added−424 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in Guardant Health, Inc.'s 2024 10-K

434 paragraphs added · 424 removed · 363 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

97 edited+25 added−20 removed231 unchanged
Biggest changeOver the last year, that has included new and accelerated development programs by a number of potential competitors, and increasing levels of merger and acquisition activity by both existing and new competitors. 11 We believe key competitive factors affecting our success are the price and performance of our products, evidence of clinical differentiation, support by KOLs, commercial competitiveness, turnaround time and scope and quality of payer contracts.
Biggest changeWe believe key competitive factors affecting our success are the price and performance of our products, evidence of clinical differentiation, support by KOLs, commercial competitiveness, turnaround time and scope and quality of payer contracts. Our competitive landscape may change over the next few years as a result of new competitors entering through investment and acquisition activity.
These include: • establishment registration and device listing with the FDA; • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • advertising and promotion requirements; • restrictions on sale, distribution or use of a device; • PMA annual reporting requirements; • PMA approval of product modifications, or the potential for new 510(k) clearances for certain modifications to 510(k)-cleared devices; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; • an order of repair, replacement or refund; 18 • device tracking requirements; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • advertising and promotion requirements; • restrictions on sale, distribution or use of a device; • PMA annual reporting requirements; • PMA approval of product modifications, or the potential for new 510(k) clearances for certain modifications to 510(k)-cleared devices; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; • an order of repair, replacement or refund; • device tracking requirements; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The program is available to medical devices that meet certain eligibility criteria, including that the device provides more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, and that the device meets one of the following criteria: (i) the device represents a breakthrough technology, (ii) no approved or cleared alternatives exist, (iii) the device offers significant advantages over existing approved or cleared alternatives, or (iv) the availability of the device is in the best interest of patients.
The program is available to medical devices that 16 meet certain eligibility criteria, including that the device provides more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, and that the device meets one of the following criteria: (i) the device represents a breakthrough technology, (ii) no approved or cleared alternatives exist, (iii) the device offers significant advantages over existing approved or cleared alternatives, or (iv) the availability of the device is in the best interest of patients.
The initial term of the supply agreement, as amended, continues until January 2033, and automatically renews for additional one-year terms thereafter unless either we or Illumina terminate the supply agreement for the other’s uncured material breach, bankruptcy or insolvency-related events, or in the event a regulatory authority notifies such party that continued performance under the supply agreement would violate applicable laws or regulations.
The initial term of the supply agreement, as amended, continues until January 2033, and automatically renews for additional one-year terms thereafter unless either we or Illumina terminate the supply agreement for the other’s uncured material breach, bankruptcy or insolvency-related events, or 10 in the event a regulatory authority notifies such party that continued performance under the supply agreement would violate applicable laws or regulations.
Alternatively, if a UK notified body conducts such assessment, a ‘UKNI’ mark is applied and the device may only be placed on the market in Northern Ireland and not the EU. Other foreign regulations In February 2021, Guardant Health Japan, an affiliate of Guardant AMEA, submitted an application to the MHLW, for regulatory approval of Guardant360 CDx.
Alternatively, if a UK notified body conducts such assessment, a ‘UKNI’ mark is applied and the device may only be placed on the market in Northern Ireland and not the EU. 21 Other foreign regulations In February 2021, Guardant Health Japan, an affiliate of Guardant AMEA, submitted an application to the MHLW, for regulatory approval of Guardant360 CDx.
We also track voluntary and involuntary turnover rates, conduct frequent employee engagement surveys, and consider relations with our employees to be good. 24 As part of our mission to conquer cancer, we continue to advance our environmental, social and governance efforts, including enhancing the diversity and inclusiveness of our workplace.
We also track voluntary and involuntary turnover rates, conduct frequent employee engagement surveys, and consider relations with our employees to be good. As part of our mission to conquer cancer, we continue to advance our environmental, social and governance efforts, including enhancing the diversity and inclusiveness of our workplace.
PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel.
PMA supplements often require submission of the same type of 15 information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel.
For other substances, the notified body can seek the opinion from a national competent authorities or the EMA. 21 The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.
For other substances, the notified body can seek the opinion from a national competent authorities or the EMA. The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland.
Certain countries also mandate implementation of commercial compliance programs. 20 In the EU, regulatory authorities have the power to carry out announced and, if necessary, unannounced inspections of companies, as well as suppliers and/or sub-contractors and, where necessary, the facilities of professional users.
Certain countries also mandate implementation of commercial compliance programs. In the EU, regulatory authorities have the power to carry out announced and, if necessary, unannounced inspections of companies, as well as suppliers and/or sub-contractors and, where necessary, the facilities of professional users.
The MHLW and PMDA also assess the quality management systems of the manufacturer and product conformity to the requirements of the PAL. We are subject to compliance inspections by these agencies. 22 We will seek approvals in other countries as may be required in the future.
The MHLW and PMDA also assess the quality management systems of the manufacturer and product conformity to the requirements of the PAL. We are subject to compliance inspections by these agencies. We will seek approvals in other countries as may be required in the future.
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 AMEA throughout the Asia, Middle East and Africa region.
In June 2022, we 7 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 AMEA throughout the Asia, Middle East and Africa region.
In addition to our existing covered and contracted payers, various laboratory benefit managers and evidence review organizations working with commercial payers have endorsed coverage of our Guardant360 CDx test, Guardant360 LDT test, Guardant360 TissueNext test and Guardant Reveal test.
In addition to our existing covered and contracted payers, various laboratory benefit managers and evidence review organizations working with commercial payers have endorsed coverage of Guardant360 CDx, Guardant360 LDT, Guardant360 TissueNext and Guardant Reveal.
Moreover, legislative measures could likewise result in a change to the approach to FDA’s regulation over LDTs, including a requirement for premarket review of LDTs, among other things. 17 Research use only or investigational use only devices Some of our products are currently available for research use only, or RUO, or for investigational use only, or IUO, depending on the proposed application.
Moreover, legislative measures could result in a change to the approach to FDA’s regulation over LDTs, including a requirement for premarket review of LDTs, among other things. Research use only or investigational use only devices Some of our products are currently available for research use only, or RUO, or for investigational use only, or IUO, depending on the proposed application.
Such a strategy is predicated on the tests’ ability to offer accurate, reliable and fast guideline-directed comprehensive genotyping for all adult solid tumors without exposing patients to invasive biopsy procedures’ risks, delays or chance of failure.
Such a strategy is predicated on the tests’ abilities to offer accurate, reliable and fast guideline-directed comprehensive genotyping for all adult solid tumors without exposing patients to invasive biopsy procedures’ risks, delays or chance of failure.
Regulatory framework for medical devices in the United States Pursuant to its authority under the Federal Food, Drug and Cosmetic Act, or the FDCA, the FDA has jurisdiction over medical devices, which are defined to include, among other things, IVDs.
Regulatory framework for medical devices in the United States Pursuant to its authority under the Federal Food, Drug and Cosmetic Act, or the FDCA, the FDA has jurisdiction over medical devices, which are defined to include, among other things, in vitro diagnostics, or IVDs.
Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., as well as Myriad Genetics, Inc., and most if not all of the competitors within the liquid biopsy space for therapy selection, that sell molecular diagnostic tests for cancer to physicians and have or may develop tests that compete with our tests.
Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., and most if not all of the competitors within the liquid biopsy space for therapy selection, that sell molecular diagnostic tests for cancer to physicians and have or may develop tests that compete with our tests.
Our Guardant360 CDx test is a 55-gene test to provide tumor mutation profiling to be used by qualified health professionals in accordance with professional guidelines in oncology for cancer patients with any solid malignant neoplasm.
Our Guardant360 CDx test is a 74-gene test to provide tumor mutation profiling to be used by qualified health professionals in accordance with professional guidelines in oncology for cancer patients with any solid malignant neoplasm.
We believe that additional state and federal health care reform measures may be adopted in the future, any of which could have a material adverse effect on the clinical laboratory industry and our ability to successfully commercialize our tests. Any of these or other changes could substantially impact our revenues and increase costs.
We believe that additional state and federal healthcare reform measures may be adopted in the future, any of which could have a material adverse effect on the clinical laboratory industry and our ability to successfully commercialize our tests. Any of these or other changes could substantially impact our revenues and increase costs.
We expect to migrate our products to the platform and we believe our smart liquid biopsy platform has the potential to unlock the power of the epigenome, broaden the view of what drives cancer biology, and provide industry leading high-sensitivity genomic and epigenomic detection at ultra-high specificity and low cost.
We believe our Smart Liquid Biopsy platform has the potential to unlock the power of the epigenome, broaden the view of what drives cancer biology, and provide industry leading high-sensitivity genomic and epigenomic detection at ultra-high specificity and low cost.
The goal of the program is to provide patients and health care providers with more timely access to qualifying devices by expediting their development, assessment and review, while preserving the statutory standards for PMA approval, 510(k) clearance and de novo classification.
The goal of the program is to provide patients and healthcare providers with more timely access to qualifying devices by expediting their development, assessment and review, while preserving the statutory standards for PMA approval, 510(k) clearance and de novo classification.
Our Guardant360 CDx test has also been approved by the FDA for use as a companion diagnostic to identify NSCLC patients who may benefit from treatment with TAGRISSO® (osimertinib), RYBREVANT® (amivantamab-vjmw), LUMAKRASTM (sotorasib) and ENHERTU® (fam-trastuzumab deruxtecan-nxki), and breast cancer patients who may benefit from treatment with ORSERDUTM (elacestrant), marketed by biopharmaceutical companies.
Our Guardant360 CDx test has also been approved by the FDA for use as a companion diagnostic to identify NSCLC patients who may benefit from treatment with TAGRISSO® (osimertinib), RYBREVANT® (amivantamab-vjmw), LUMAKRAS™ (sotorasib) and ENHERTU® (fam-trastuzumab deruxtecan-nxki), and breast cancer patients who may benefit from treatment with ORSERDU™ (elacestrant), marketed by biopharmaceutical companies.
As of December 31, 2023, women held 43% of the independent director seats on our Board. Culture, Compensation and Benefits We strive to recruit, hire and retain a talented and diverse team of people who align with our values. Our employees are supported with training and development opportunities to pursue their career paths and ensure compliance with our policies.
As of December 31, 2024, women held 30% of the independent director seats on our Board. Culture, Compensation and Benefits We strive to recruit, hire and retain a talented and diverse team of people who align with our values. Our employees are supported with training and development opportunities to pursue their career paths and ensure compliance with our policies.
Other Considerations As of January 2024, 15 states, including California, have enacted laws that require biomarker testing to be covered for the purposes of diagnosis, treatment, appropriate management, or ongoing monitoring of disease or condition if the test is supported by medical and scientific evidence, and these enacted laws will mandate coverage for our Guardant360 CDx test, Guardant360 LDT test, Guardant360 TissueNext test, Guardant Response test and Guardant Reveal test when certain criteria are met.
Other Considerations As of January 2025, 21 states, including California, have enacted laws that require biomarker testing to be covered for the purposes of diagnosis, treatment, appropriate management, or ongoing monitoring of disease or condition if the test is supported by medical and scientific evidence, and these enacted laws will mandate coverage for Guardant360 CDx, Guardant360 LDT, Guardant360 TissueNext, Guardant Response and Guardant Reveal when certain criteria are met.
Our Guardant360 LDT test measures 80+ cancer-related genes and supports new guideline-recommended biomarkers, to help inform which therapy may be effective for advanced stage cancer patients with solid tumors, without the need to obtain archival tissue or subject the patient to another invasive biopsy.
Our Guardant360 LDT test measures 730+ genes and supports all guideline-recommended biomarkers, to help inform which therapy may be effective for advanced stage cancer patients with solid tumors, without the need to obtain archival tissue or subject the patient to another invasive biopsy.
Recurring Monitoring / Minimum Residual Disease Guardant Reveal Test In the management of early-stage cancer, current tools do not identify all high-risk patients who will benefit from adjuvant therapy or detect recurrence early enough when it is most curable.
Minimal Residual Disease Detection and Recurrence Monitoring Guardant Reveal Test In the management of early-stage cancer, current tools do not identify all high-risk patients who will benefit from adjuvant therapy or detect recurrence early enough when it is most curable.
To clinically validate the performance of our next-generation Shield blood test in detecting lung cancer in high-risk individuals ages 50-80, in January 2022, we enrolled the first patient in a nearly 10,000-patient prospective, registrational study, which we refer to as the SHIELD LUNG study.
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.
To achieve this, we intend to: • Increase awareness of our products by: ▪ building awareness of liquid biopsy and pioneering a blood-first paradigm for genotyping cancer patients; ▪ educating biopharmaceutical companies, key opinion leaders, or KOLs, and advocacy groups; ▪ advocating for inclusion of our tests in treatment guidelines; and ▪ expanding access to our products globally through direct investment and by leveraging our global network of partners. • Expand clinical utility and increase reimbursement for our products by: ▪ working with private and public payers to establish coverage and reimbursement for our tests; ▪ investing in clinical evidence directly and through relationships with academia and biopharmaceutical companies to establish expanded indications for use; ▪ demonstrating improved clinical utility and health economics from use of our tests to patients, physicians and payers; and ▪ pursuing FDA and other regulatory approval internationally of our tests to facilitate reimbursement and global market access. • Strengthen our relationships with customers by: ▪ demonstrating the utility of our products in connection with standard of care treatments thereby encouraging clinical adoption; ▪ developing and seeking approval of our products as companion diagnostics for targeted therapies and immuno-oncology therapies; and ▪ providing earlier insights into emerging clinically relevant biomarkers. • Expand our product portfolio by: ▪ using our commercial engine as a force multiplier of returns on research and development investment to generate data and analytical insights to enable development of new products; ▪ taking a disciplined and systematic approach to product and market development, by starting with therapy selection and then expanding sequentially towards early cancer detection; ▪ utilizing our data, sample biobank and insights into biology of circulating tumor-related biomarkers in blood to develop our new products; ▪ building on our regulatory and commercial infrastructure to accelerate new product launches and drive commercial efficiencies; and ▪ using our strategic relationships, including our partnerships with cancer centers, research organizations and laboratory companies in Europe and Asia, to drive global commercialization of our products.
To achieve this, we intend to: • Increase awareness of our products by: ▪ building awareness of liquid biopsy and pioneering a blood-first paradigm for genotyping cancer patients; ▪ educating biopharmaceutical companies, key opinion leaders, or KOLs, and advocacy groups; ▪ advocating for inclusion of our tests in treatment guidelines; and ▪ expanding access to our products globally through direct investment and by leveraging our global network of partners. • Expand clinical utility and increase reimbursement for our products by: ▪ working with private and public payers to establish coverage and reimbursement for our tests; ▪ investing in clinical evidence directly and through relationships with academia and biopharmaceutical companies to establish expanded indications for use; ▪ demonstrating improved clinical utility and health economics from use of our tests to patients, physicians and payers; and ▪ pursuing FDA and other regulatory approval internationally of our tests to facilitate reimbursement and global market access. • Strengthen our relationships with customers by: ▪ demonstrating the utility of our products in connection with standard of care treatments thereby encouraging clinical adoption; ▪ developing and seeking approval of our products as companion diagnostics for targeted therapies and immuno-oncology therapies; ▪ providing earlier insights into emerging clinically relevant biomarkers; ▪ providing seamless customer experiences through collaborations with electronic medical record partners; and ▪ expanding lab capabilities and services through partnerships. • Expand our product portfolio by: ▪ using our commercial engine as a force multiplier of returns on research and development investment to generate data and analytical insights to enable development of new products; ▪ taking a disciplined and systematic approach to product and market development for cancer management across all stages of the disease; ▪ utilizing our data, sample biobank and insights into biology of circulating tumor-related biomarkers in blood to develop our new products; ▪ building on our regulatory and commercial infrastructure to accelerate new product launches and drive commercial efficiencies; and ▪ using our strategic relationships, including our partnerships with cancer centers, research organizations and laboratory companies in Europe and Asia, to drive global commercialization of our products.
Guardant360 TissueNext Test To complement our liquid biopsy-based products, Guardant360 TissueNext, our first tissue-based test, is designed to identify patients with advanced cancer who may benefit from biomarker-informed treatment. Tissue genotyping is currently widely available to physicians and patients.
Guardant360 TissueNext Test To complement our liquid biopsy-based products, Guardant360 TissueNext, our first tissue-based test with AI-powered PD-L1 detection, is designed to identify patients with advanced cancer who may benefit from biomarker-informed treatment. Tissue genotyping is currently widely available to physicians and patients.
We may also terminate the supply agreement for convenience upon 90 days’ prior written notice. Competition Growing understanding of the importance of biomarkers linked with therapy selection, response and early screening is leading to more companies offering services in genomic profiling.
We may also terminate the supply agreement for convenience upon 90 days’ prior written notice. Competition Growing understanding of the importance of biomarkers linked with therapy selection, minimal residual disease detection, and early cancer screening is leading to more companies offering services in genomic profiling.
Once applicable, the IVDR will among other things: • strengthen the rules on placing devices on the market and reinforce surveillance once they are available; • establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • establish explicit provisions on importers’ and distributors’ obligations and responsibilities; • impose an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; • improve the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; • set up a central database (Eudamed) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthen rules for the assessment of certain high-risk devices that may have to undergo an additional check by experts before they are placed on the market.
Once applicable, the IVDR will among other things: • strengthen the rules on placing devices on the market and reinforce surveillance once they are available; • establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • establish explicit provisions on importers’ and distributors’ obligations and responsibilities; • impose an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; • improve the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; • set up a central database (Eudamed) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthen rules for the assessment of certain high-risk devices that may have to undergo an additional check by experts before they are placed on the market. 20 Regulation of Companion Diagnostics In the EU, in vitro diagnostic medical devices are regulated by the IVDD which regulates the placing on the market, the CE marking, the essential requirements, the conformity assessment procedures, the registration obligations for manufactures and devices as well as the vigilance procedure.
Despite these needs, clinical study enrollment in oncology has severely lagged, with only approximately 6.3% of cancer patients enrolling in clinical studies. GuardantConnect is our integrated software-based solution designed for our clinical and biopharmaceutical customers, seeking to connect patients tested with our assays with actionable alterations with potentially relevant clinical studies.
Despite these needs, clinical study enrollment in oncology has severely lagged. GuardantConnect is our integrated software-based solution designed for our clinical and biopharmaceutical customers, seeking to connect patients tested with our assays with actionable alterations with potentially relevant clinical studies.
We plan to address this need, first in early-stage colorectal, breast and lung cancers, with our Guardant Reveal test for residual disease and recurrence monitoring.
We expect to address this need, first in early-stage colorectal, breast and lung cancers, with our Guardant Reveal tissue-free blood test for residual disease and recurrence monitoring.
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. Our San Diego laboratory is CAP-accredited, CLIA-certified and licensed in 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.
To that end, we offer a comprehensive total rewards package that includes market-competitive fixed and/or variable pay, broad-based equity grants and bonuses, access to medical, dental, vision and life insurance benefits, disability coverage, fertility subsidies, retirement savings plans, paid time off and family leave, caregiving support, fitness, cellphone and internet reimbursements, and mental health and other wellness benefits.
To that end, we offer a comprehensive total rewards package that includes market-competitive fixed and/or variable pay, broad-based equity grants and bonuses, access to medical, dental, vision and life insurance benefits, disability coverage, fertility subsidies, retirement savings plans, paid time off and family leave, caregiving support, fitness, cellphone and internet reimbursements, and mental health and other wellness benefits. 24 Available information Our website is located at https://guardanthealth.com .
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions such as: warning letters, fines, injunctions, consent decrees and civil penalties; unanticipated expenditures, repair, replacement, refunds, recall or seizure of our products; operating restrictions, partial suspension or total shutdown of production; the FDA’s refusal of our requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products; the FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries; and withdrawing 510(k) clearance or premarket approvals that have already been granted and criminal prosecution.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions such as: warning letters, fines, injunctions, consent decrees and civil penalties; unanticipated expenditures, repair, replacement, refunds, recall or seizure of our products; operating restrictions, partial suspension or total shutdown of production; the FDA’s refusal of our requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products; the FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries; and withdrawing 510(k) clearance or premarket approvals that have already been granted and criminal prosecution. 18 Foreign regulation of medical devices Medical devices (including in vitro diagnostic medical devices) are subject to extensive regulation, such as premarket review, marketing authorization or certification, by similar agencies or notified bodies in other countries.
We are proud to employ a diverse workforce that, as of December 31, 2023, was 61% racially/ethnically diverse and 55% female. For leadership positions across the company, which is defined as director level and above, 36% self-identified as racially/ethnically diverse and 42% self-identified as women.
We are proud to employ a diverse workforce that, as of December 31, 2024, was 55% racially/ethnically diverse and 54% female. For leadership positions across the company, which is defined as director level and above, 32% self-identified as racially/ethnically diverse and 40% self-identified as women.
This variability and unpredictability could increase the risk of future revenue reversal and result in our failing to meet any previously publicly stated guidance we may provide. Operations We currently perform our tests in our laboratories located in Redwood City, California, and San Diego, California.
This variability and unpredictability could increase the risk of future revenue reversal and result in our failing to meet any previously publicly stated guidance we may provide. Operations We currently perform clinical, research use only, and investigation use only tests in our laboratory located in Redwood City, California.
Employees and Human Capital Our Employees and Commitment to Diversity, Equity and Inclusion As of December 31, 2023, we had 1,779 employees, 1,768 of which are full-time employees and approximately 1,655 of which are in the U.S., with the remainder in Asia, Europe and Canada.
Employees and Human Capital Our Employees and Commitment to Diversity, Equity and Inclusion As of December 31, 2024, we had 2,021 employees, 1,999 of which are full-time employees and approximately 1,849 of which are in the U.S., with the remainder in Asia, Europe and Canada.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. 23 In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
The FDA has developed and maintain a list device types appropriate for the “safety and performance based” pathway and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as recommended testing methods, where feasible. The PMA process We currently market our Guardant360 CDx test pursuant to an approved PMA.
The FDA has developed and maintain a list device types appropriate for the “safety and performance based” pathway and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as recommended testing methods, where feasible.
The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical studies.
In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical studies.
In addition, over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products.
In addition, in these circumstances, the FDA can impose significant regulatory fines or penalties for failure to submit the requisite application(s). 14 In addition, over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products.
The PMA process can be expensive, uncertain and lengthy and a number of devices for which the FDA approval has been sought by other companies have never been approved for marketing. 15 In approving a PMA, as a condition of approval, the FDA may require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer term safety and effectiveness data for the device.
In approving a PMA, as a condition of approval, the FDA may require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer term safety and effectiveness data for the device.
On December 29, 2022, Congress passed the Consolidated Appropriations Act, 2023, which prevented any reduction in payment amounts from commercial payor rate implementation for 2023; delayed by one year data reporting requirements for tests other than ADLTs; and extended the three-year period in which payment may not be reduced by more than 15%, to CYs 2024 through 2026. 9 Current Procedural Terminology, or CPT, coding plays a significant role in how our tests are reimbursed both from commercial and governmental payers.
On December 29, 2022, Congress passed the Consolidated Appropriations Act, 2023, which prevented any reduction in payment amounts from commercial payor rate implementation for 2023; delayed by one year data reporting requirements for tests other than ADLTs; and extended the three-year period in which payment may not be reduced by more than 15%, to CYs 2024 through 2026.
Future planned applications include deep learning-driven genomic, epigenomic and spatial biomarker discovery via collaboration with biopharmaceutical partners and integration with GuardantINFORM real-world clinical data platform. 6 Clinical Studies and Publications We are proactively pursuing studies to support the use of our tests as a preferred alternative or complementary to tissue testing to inform first line treatment right after diagnosis and at time of disease progression, with the goal to provide evidence that our tests detect genomic alterations at a similar rate compared to standard of care tissue testing and detects mutations that may not be detected by tissue based testing in the United States, Europe and Asia.
Clinical Studies and Publications We are proactively pursuing studies to support the use of our tests as a preferred alternative or complementary to tissue testing to inform first line treatment right after diagnosis and at time of disease progression, with the goal to provide evidence that our tests detect genomic alterations at a similar rate compared to standard of care tissue testing and detects mutations that may not be detected by tissue based testing in the United States, Europe and Asia.
Given the trend for oncologists to use liquid biopsy to monitor changes over time, our GuardantINFORM database uniquely provides longitudinal biological insight to go alongside longitudinal clinical outcomes, which is particularly valuable for a disease characterized by resistance, and for which testing will move earlier and earlier in the cancer journey.
Given the trend for oncologists to use liquid biopsy to monitor changes over time, our GuardantINFORM database uniquely provides longitudinal biological insight into tumor evolution alongside longitudinal clinical outcomes, which is particularly valuable for both resistance characterization of disease and as testing moves earlier in the cancer journey.
We also expect to expand into lung and multi-cancer screening with our investigational, next-generation Shield assay. 2 Our strategy Our objective is to be the leading provider of precision oncology and screening products for cancer management across all stages of the disease and drive commercial adoption of our products.
We also expect to expand into lung cancer screening and multi-cancer detection with our Shield platform. 2 Our strategy Our objective is to be the leading provider of therapy selection, minimal residual disease detection, and early cancer screening products for cancer management across all stages of the disease and drive commercial adoption of our products.
Our patent portfolio includes owned and licensed patents and patent applications, generally falling into three broad categories: • issued patents and patent applications relating to our digital sequencing platform, including claims directed to methods for sequencing cell-free DNA, identifying CNVs, SNVs, indels and fusions in cell-free DNA and techniques for enriching nucleic acid samples; • issued patents and patent applications relating to detecting and monitoring cancer and other diseases by determining genetic variations in biological samples; and • issued patents and patent applications relating to early-stage cancer detection.
In addition, we file for patent protection in connection with our on-going research and development activities, particularly those related to early-stage cancer detection. 11 Our patent portfolio includes owned and licensed patents and patent applications, generally falling into three broad categories: • issued patents and patent applications relating to our digital sequencing platform, including claims directed to methods for preparing and sequencing cell-free DNA, techniques for enriching nucleic acid samples, identifying CNVs, SNVs, indels and fusions in cell-free DNA, and detecting epigenomic variations (such DNA methylation) in biological samples; • issued patents and patent applications relating to detecting residual disease and monitoring cancer and other diseases by determining genetic and epigenomic variations in biological samples; and • issued patents and patent applications relating to early-stage cancer detection.
By statute, the FDA is required to complete its review of a 510(k) notification within 90 days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, and clearance is never assured.
By statute, the FDA is required to complete its review of a 510(k) notification within 90 days of receiving the 510(k) notification. As a practical matter, clearance often takes longer, and clearance is never assured. FDA may issue a hold letter requesting additional information, which would stop the review clock for FDA.
This includes addressing variable coverage requirements and evidence required, and the need for enhanced guideline support. 8 As we broaden our coverage amongst commercial payers to include additional tests of ours, we may begin to experience increases in average revenue per test performed; however, we cannot make any assurances that we will be successful in broadening our coverage on a timely basis or at all.
As we broaden our coverage amongst commercial payers to include additional tests, we may begin to experience increases in average revenue per test performed; however, we cannot make any assurances that we will be successful in broadening our coverage on a timely basis or at all.
De novo classification may also be available after receipt of a “not substantially equivalent” letter following submission of a 510(k) to FDA. 14 After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA or de novo request.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA or de novo request.
We are actively engaged to expand coverage among existing commercial payers and to achieve coverage with the remaining key commercial payers, laboratory benefit managers and evidence review organizations.
We are actively engaged to expand coverage among existing commercial payers and to achieve coverage with the remaining key commercial payers, laboratory benefit managers and evidence review organizations. This includes addressing variable coverage requirements and evidence required, and the need for enhanced guideline support.
FDA Regulation of Companion Diagnostics If safe and effective use of drug or biologic depends on an in vitro diagnostic, then the FDA may require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the therapeutic product.
The FDA may consider the totality of the circumstances surrounding distribution and use of an RUO or IUO device, including how the device is marketed, when determining its intended use. 17 FDA Regulation of Companion Diagnostics If safe and effective use of drug or biologic depends on an in vitro diagnostic, then the FDA may require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the therapeutic product.
Both the 510(k) clearance and PMA processes can be resource intensive, expensive, and lengthy, and require payment of significant user fees. 13 Device classification Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III-depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.
Device classification Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III-depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.
In addition, NeoGenomics Laboratories, Inc., Natera, Inc., Exact Sciences Corp., and Tempus Labs, Inc., among others, are our competitors in minimal residual disease testing. Additionally, our competitors in the early screening testing space include GRAIL, Inc., Exact Sciences Corp., Freenome Holdings, Inc., Delfi Diagnostics and InterVenn Biosciences.
In addition, Natera, Inc., Tempus AI, Inc., Exact Sciences Corp., Myriad Genetics, Inc., Caris Life Science, Foundation Medicine, Inc. and Quest Diagnostics, Inc., among others, are our competitors in minimal residual disease detection. Additionally, our competitors in the early screening testing space include GRAIL, Inc., Exact Sciences Corp., Freenome Holdings, Inc., and Delfi Diagnostics.
An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects. 16 During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, study monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, study monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.
A manufacturer can submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk.
A manufacturer can submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk. De novo classification may also be available after receipt of a “not substantially equivalent” letter following submission of a 510(k) to FDA.
In addition, the Physician Payments Sunshine Act imposes, among other things, reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care providers such as physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by physicians (as defined by the statute) and their immediate family members.
We must also operate within the bounds of the fraud and abuse laws of the states in which we do business which may apply to items or services reimbursed by non-governmental third-party payers, including private insurers. 22 In addition, the Physician Payments Sunshine Act imposes, among other things, reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers such as physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by physicians (as defined by the statute) and their immediate family members.
Most Class II devices are subject to premarket review and clearance by the FDA. Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.
Most Class II devices are subject to premarket review and clearance by the FDA.
In return, these relationships could help us establish clinical utility for our tests and create new testing opportunities related to emerging therapies. 4 Screening Shield Test According to American Cancer Society: Colorectal Cancer Facts & Figures 2023-2025, it is estimated that only 59% of adults at 45 years and older are screened despite compelling evidence that routine cancer screening can reduce colorectal cancer mortality.
Screening Shield Test According to American Cancer Society: Colorectal Cancer Facts & Figures 2023-2025, it is estimated that only 59% of adults at 45 years and older are screened despite compelling evidence that routine cancer screening can reduce colorectal cancer mortality.
Therefore, these devices are subject to the PMA process, which is generally more costly and time-consuming than the 510(k) process. As part of the PMA process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction.
As part of the PMA process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction.
In addition, the broad genomic footprint of our GuardantOMNI test enables accurate measurement of tumor mutational burden. 5 GuardantINFINITY Test In September 2022, we launched GuardantINFINITY, a next-generation smart liquid biopsy test that provides new, multi-dimensional insights into the complexities of tumor molecular profiles and immune response to advance cancer research and therapy development.
Biopharmaceutical Offerings GuardantINFINITY Test Our GuardantINFINITY test is a next-generation Smart Liquid Biopsy test that provides new, multi-dimensional insights into the complexities of tumor molecular profiles and immune response to advance cancer research and therapy development.
International regulators and notified bodies are independent and not bound by the findings of the FDA. Regulation of Medical Devices in the EU The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigations, conformity assessment, labeling and adverse event reporting for medical devices (including in vitro diagnostic medical devices).
Regulation of Medical Devices in the EU The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigations, conformity assessment, labeling and adverse event reporting for medical devices (including in vitro diagnostic medical devices). In the EU, there is currently no premarket government review of medical devices (including in vitro diagnostic medical devices).
The CID requests information and documents regarding billing government-funded programs for our panel of genetic tests known as Guardant360. We are fully cooperating with the investigation. At this time, we are unable to predict the outcome of this investigation. See “Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for more information.
At this time, we are unable to predict the outcome of this investigation. See “Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for more information.
We also enter into invention disclosure and assignment agreements with our employees and consultants that obligate them to assign to us any inventions they have developed while working for us. 12 Government regulations Federal and state laboratory licensing requirements Under CLIA, a laboratory is any facility that performs laboratory testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of or assessment of health.
Government regulations Federal and state laboratory licensing requirements Under CLIA, a laboratory is any facility that performs laboratory testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of or assessment of health.
The advertising and promotion of in vitro diagnostic medical devices is subject to some general principles set forth by EU directives. According to the IVDD, only devices that are CE marked may be marketed and advertised in the EU in accordance with their intended purpose.
According to the IVDD, only devices that are CE marked may be marketed and advertised in the EU in accordance with their intended purpose.
If any physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs. 23 In January 2022, we 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.
If any physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.
In addition, Z-Code Identifiers are used by certain payers, including under Medicare's Molecular Diagnostic Services Program, or MolDx, to supplement CPT codes for our molecular diagnostics tests. Changes to the codes used to report to payers may result in significant changes in reimbursement.
Current Procedural Terminology, or CPT, coding plays a significant role in how our tests are reimbursed both from commercial and governmental payers. In addition, Z-Code Identifiers are used by certain payers, including under Medicare's Molecular Diagnostic Services Program, or MolDx, to supplement CPT codes for our molecular diagnostics tests.
Our clinical commercial efforts are focused on driving adoption with academic research institutions and with community oncology practices, including through leading physician networks.
We have supplemented the team with clinical oncology specialists with extensive medical affairs experience for molecular information support in the field. Our clinical commercial efforts are focused on driving adoption with academic research institutions and with community oncology practices, including through leading physician networks.
Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process. The safety and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and special controls described above.
Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process. 13 Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
The applicant has 180 days to respond to such additional information request, after which the FDA review clock will resume. Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.
We publish peer-reviewed studies in order to influence treatment guidelines, to educate clinicians and other oncology stakeholders about the value proposition of our test and to set the stage for reimbursement with private and public payers. We have over 140 targeted therapy outcomes studies, more than 450 peer-reviewed publications and more than 900 scientific abstracts.
We publish peer-reviewed studies in order to influence treatment guidelines, to educate clinicians and other oncology stakeholders about the value proposition of our test and to set the stage for reimbursement with private and public payers. Commercialization Successful commercial adoption of our tests by clinicians and biopharmaceutical companies is critical to our business.
Our clinician-focused sales organization in the United States is engaged in sales efforts and promotional activities primarily targeting oncologists and cancer centers. Our sales representatives typically have extensive sales-related backgrounds in laboratory testing, therapeutics and oncology. We have supplemented the team with clinical oncology specialists with extensive medical affairs experience for molecular information support in the field.
U.S. clinical commercial efforts We sell our tests to clinical customers in the United States through our targeted sales organization. Our clinician-focused sales organization in the United States is engaged in sales efforts and promotional activities primarily targeting oncologists, cancer centers and primary care physicians. Our sales representatives typically have extensive sales-related backgrounds in laboratory testing, therapeutics and oncology.
The core module offers genotyping coverage of more than 800 genes with sample-level methylation detection and tumor fraction score for biomarker discovery, clinical research, therapy selection and response monitoring.
The core module offers genotyping coverage 5 of more than 800 genes with sample-level methylation detection and tumor fraction score for biomarker discovery, clinical research, therapy selection and response monitoring. GuardantOMNI Test Our GuardantOMNI test covers 500 genes, including genes associated with homologous recombination repair deficiency and biomarkers for immuno-oncology applications, such as tumor mutational burden and microsatellite instability.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that essential requirement. 19 Compliance with the essential requirements of the IVDD is a prerequisite for European conformity marking, or CE mark, without which in vitro diagnostic medical devices cannot be marketed or sold in the EU.
Compliance with the essential requirements of the IVDD is a prerequisite for European conformity marking, or CE mark, without which in vitro diagnostic medical devices cannot be marketed or sold in the EU.
CLIA provides that a state may adopt laboratory regulations that are more stringent than those under federal law, and a number of states have implemented their own more stringent laboratory regulatory requirements.
The regulatory and compliance standards applicable to any testing we perform may change over time and any such changes could have a material effect on our business. 12 CLIA provides that a state may adopt laboratory regulations that are more stringent than those under federal law, and a number of states have implemented their own more stringent laboratory regulatory requirements.
Our competitors within the liquid biopsy space for therapy selection include Foundation Medicine, Inc., which was acquired by Roche Holdings, Inc. in 2018; Roche Molecular Systems, Inc., Thermo Fisher Scientific, Inc., Illumina, Inc., Qiagen N.V., Invitae Corporation, Caris Life Science, and Tempus Labs, Inc.
Our competitors within the liquid biopsy space for therapy selection include Foundation Medicine, Inc., which was acquired by Roche Holdings, Inc. in 2018; Caris Life Science; Tempus AI, Inc.; NeoGenomics Laboratories, Inc.; Exact Sciences Corp.; Myriad Genetics, Inc.; and Laboratory Corporation of America.
We are conducting studies in various jurisdictions, and have secured and will continue our efforts to secure reimbursement in several countries.
We are conducting studies in various jurisdictions, and have secured and will continue our efforts to secure reimbursement in several countries. In addition, we have established, and as these studies progress and we near commercial opportunities in these jurisdictions, will continue to seek to establish in-country laboratories and direct sales organizations.
GuardantINFORM GuardantINFORM complements our core diagnostic business with aggregated data obtained through real world genomic testing matched with clinically relevant information, which enables important insights into disease progression and treatment impact that can be fed back into drug discovery and development as well as clinical research and practice.
This genomic and epigenetic data is first matched with clinically relevant information, and through AI-enabled analytical tools and expertise, unlocks important insights into disease progression and treatment impact that can be fed back into drug discovery and development, as well as clinical research and practice.
Commercialization Successful commercial adoption of our tests by clinicians and biopharmaceutical companies is critical to our business. For clinicians, endorsement by KOLs, utilization by academic centers and inclusion in national treatment guidelines are important, especially for adoption in the local community setting.
For clinicians, endorsement by KOLs, utilization by academic centers and inclusion in national treatment guidelines are important, especially for adoption in the local community setting. We believe that our relationships 6 with key stakeholders across the oncology space have helped facilitate the use of our tests by clinicians and biopharmaceutical companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong others, these provisions include that: • our board of directors has the exclusive right to expand its size and to elect directors to fill a vacancy created by the expansion of the board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by our board of directors, its chairman, or our co-chief executive officers, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect their director candidates; • our board of directors may alter our bylaws without obtaining stockholder approval; • approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate candidates for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror. 67 Table of Contents Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Biggest changeAmong others, these provisions include that: • our board of directors has the exclusive right to expand its size and to elect directors to fill a vacancy created by the expansion of the board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; 65 Table of Contents • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by our board of directors, its chairman, or our co-chief executive officers, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect their director candidates; • our board of directors may alter our bylaws without obtaining stockholder approval; • approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate candidates for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror.
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 for a test differs from the revenue recorded for the test.
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 for a test differs from the revenue recorded for the test.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us, our distributors, or our local partners to obtain regulatory approvals or certifications for the use of our products in various countries; • presence of additional third-party patents or other intellectual property rights that may be relevant to our business and may potentially block our expansion; • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property rights; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payer reimbursement regimes, government payers, or patient self-pay systems; • logistics and regulations associated with shipping blood samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to perform our tests locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations, currency controls and cash repatriation restrictions; • natural disasters, political and economic instability, including wars, terrorism, and political unrest, boycotts, curtailment of trade and other business restrictions; • public health or similar issues, such as epidemics or pandemics, that could cause business disruption for our offices in Japan and Singapore, and make it more difficult to sell our tests in the affected countries or regions, and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us, our distributors, or our local partners to obtain regulatory approvals or certifications for the use of our products in various countries; • presence of additional third-party patents or other intellectual property rights that may be relevant to our business and may potentially block our expansion; • complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property rights; • difficulties in staffing and managing foreign operations; 34 • complexities associated with managing multiple payer reimbursement regimes, government payers, or patient self-pay systems; • logistics and regulations associated with shipping blood samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to perform our tests locally; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations, currency controls and cash repatriation restrictions; • natural disasters, political and economic instability, including wars, terrorism, and political unrest, boycotts, curtailment of trade and other business restrictions; • public health or similar issues, such as epidemics or pandemics, that could cause business disruption for our offices in Japan and Singapore, and make it more difficult to sell our tests in the affected countries or regions, and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
We believe that patients, clinicians and biopharmaceutical companies are likely to be particularly sensitive to product defects and errors in the use of our products, including if our products fail to detect genomic alterations with high accuracy from samples or if we fail to list or inaccurately include certain treatment options and available clinical studies in our test reports, and there can be no guarantee that our products will meet their expectations.
We believe that patients, clinicians and biopharmaceutical companies are likely to be particularly 28 sensitive to product defects and errors in the use of our products, including if our products fail to detect genomic alterations with high accuracy from samples or if we fail to list or inaccurately include certain treatment options and available clinical studies in our test reports, and there can be no guarantee that our products will meet their expectations.
The FDA and foreign authorities or notified bodies can delay, limit or deny clearance or approval or certification of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA, similar foreign authorities or notified bodies that our products are safe or effective for their intended uses; • the disagreement of the FDA, similar foreign authorities or notified bodies with the design, conduct or implementation of our clinical studies or the analysis or interpretation of data from our pre-clinical or clinical studies; • serious and unexpected adverse effects experienced by participants in our clinical studies; • the data from our pre-clinical and clinical studies may be insufficient to support clearance or approval, or certification where required; • our inability to demonstrate that the clinical and other benefits of any of our tests outweigh the risks; • an advisory committee, if convened by the FDA, may recommend against approval of our PMA or other application for any of our tests or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical studies, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the FDA may still not approve the test; Similar requirements may apply in foreign jurisdictions; • the FDA, similar foreign authorities or notified bodies may identify deficiencies in our marketing application, or certification application and in our manufacturing processes, facilities or analytical methods or those of our third-party contract manufacturers; • the potential for approval or certification policies or regulations of the FDA or similar foreign authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for the clearance or approval or certification; and • the FDA, similar foreign authorities or notified bodies may audit our clinical study data and conclude that the data is not sufficiently reliable to support a PMA or other applications.
The FDA and foreign authorities or notified bodies can delay, limit or deny clearance or approval or certification of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA, similar foreign authorities or notified bodies that our products are safe or effective for their intended uses; 37 Table of Contents • the disagreement of the FDA, similar foreign authorities or notified bodies with the design, conduct or implementation of our clinical studies or the analysis or interpretation of data from our pre-clinical or clinical studies; • serious and unexpected adverse effects experienced by participants in our clinical studies; • the data from our pre-clinical and clinical studies may be insufficient to support clearance or approval, or certification where required; • our inability to demonstrate that the clinical and other benefits of any of our tests outweigh the risks; • an advisory committee, if convened by the FDA, may recommend against approval of our PMA or other application for any of our tests or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical studies, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the FDA may still not approve the test; Similar requirements may apply in foreign jurisdictions; • the FDA, similar foreign authorities or notified bodies may identify deficiencies in our marketing application, or certification application and in our manufacturing processes, facilities or analytical methods or those of our third-party contract manufacturers; • the potential for approval or certification policies or regulations of the FDA or similar foreign authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for the clearance or approval or certification; and • the FDA, similar foreign authorities or notified bodies may audit our clinical study data and conclude that the data is not sufficiently reliable to support a PMA or other applications.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that indebtedness becoming immediately payable in full. The conditional conversion features of the 2027 Notes, if triggered, may adversely affect our financial condition.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that indebtedness becoming immediately payable in full. The conditional conversion features of the Notes, if triggered, may adversely affect our financial condition.
If one or more holders of the 2027 Notes elect to convert their 2027 Notes, unless we satisfy our conversion obligation by delivering only shares of our common stock, we would be required to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our financial condition.
If one or more holders of the Notes elect to convert their Notes, unless we satisfy our conversion obligation by delivering only shares of our common stock, we would be required to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our financial condition.
The EKRA applies to all payers including commercial payers and government payers; • the Stark Law, which prohibits a physician from making a referral for certain designated health services covered by the Medicare or Medicaid program, including laboratory and pathology services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services and prohibits that entity from billing, presenting or causing to be presented a claim for the designated health services furnished pursuant to the prohibited referral, unless an exception applies; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • federal and state “Anti-Markup” rules, which, among other things, typically prohibit a physician or supplier billing for clinical or diagnostic tests (with certain exceptions) from marking up the price of a purchased test performed by another physician or supplier that does not “share a practice” with the billing physician or supplier; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and kits, medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to CMS, information related to (i) payments and other transfers of value to physicians (as defined by statute), certain other health care professionals such as physician assistants and nurse practitioners, and teaching hospitals, and (ii) ownership and investment interests in such manufacturers held by physicians and their immediate family members.
The EKRA applies to all payers including commercial payers and government payers; 47 Table of Contents • the Stark Law, which prohibits a physician from making a referral for certain designated health services covered by the Medicare or Medicaid program, including laboratory and pathology services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services and prohibits that entity from billing, presenting or causing to be presented a claim for the designated health services furnished pursuant to the prohibited referral, unless an exception applies; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; • federal and state “Anti-Markup” rules, which, among other things, typically prohibit a physician or supplier billing for clinical or diagnostic tests (with certain exceptions) from marking up the price of a purchased test performed by another physician or supplier that does not “share a practice” with the billing physician or supplier; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and kits, medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually to CMS, information related to (i) payments and other transfers of value to physicians (as defined by statute), certain other healthcare professionals such as physician assistants and nurse practitioners, and teaching hospitals, and (ii) ownership and investment interests in such manufacturers held by physicians and their immediate family members.
We currently have limited international operations, but our business strategy incorporates potentially significant international expansion. 34 We plan to maintain distributor and partner relationships, to conduct physician and patient association outreach activities, to extend laboratory capabilities and to expand payer relationships, outside of the United States.
We currently have limited international operations, but our business strategy incorporates potentially significant international expansion. We plan to maintain distributor and partner relationships, to conduct physician and patient association outreach activities, to extend laboratory capabilities and to expand payer relationships, outside of the United States.
CMS adopted an exception to its laboratory date of service regulation, and if certain conditions are met, molecular testing laboratories such as us can rely on that exception to bill Medicare directly, instead of seeking payment from the hospital.
CMS adopted an exception to its laboratory date of service regulation, and if certain conditions are met, molecular pathology testing laboratories such as us can rely on that exception to bill Medicare directly, instead of seeking payment from the hospital.
When we contract with a payer as a participating provider, reimbursements by the payer are generally made pursuant to a negotiated fee schedule and are limited to only covered indications or where prior approval has been obtained.
When we contract with a payer as a participating provider, reimbursements by the payer are generally made pursuant to a negotiated fee schedule and are limited to only specifically covered indications or where prior approval has been obtained.
Historic success and payments are not indicative of future success of and payments from such appeals. 30 If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or to achieve and then sustain profitability.
Historic success and payments are not indicative of future success of and payments from such appeals. If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or to achieve and then sustain profitability.
In the event the conditional conversion feature of the 2027 Notes is triggered, the conversion of some or all of the 2027 Notes will dilute the ownership interests of our existing stockholders to the extent we deliver shares of our common stock upon such conversion.
In the event the conditional conversion feature of the Notes is triggered, the conversion of some or all of the Notes will dilute the ownership interests of our existing stockholders to the extent we deliver shares of our common stock upon such conversion.
Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under the 2027 Notes or any additional indebtedness that we may incur.
Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under the Notes or any additional indebtedness that we may incur.
Conversion of the 2027 Notes, to the extent the 2027 Notes are not redeemed or repurchased, will dilute the ownership interest of existing stockholders, and even if anticipated, may otherwise depress the price of our common stock.
Conversion of the Notes, to the extent the Notes are not redeemed or repurchased, will dilute the ownership interest of existing stockholders, and even if anticipated, may otherwise depress the price of our common stock.
See “Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for more information; 48 Table of Contents • the HIPAA fraud and abuse provisions, which created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private insurers, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
See “Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for more information; • the HIPAA fraud and abuse provisions, which created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private insurers, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The effectiveness of our controls and procedures may be limited by a variety of factors, including: • faulty human judgment and simple errors, omissions or mistakes; • fraudulent action of an individual or collusion of two or more people; 71 Table of Contents • inappropriate management override of procedures; and • the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control.
The effectiveness of our controls and procedures may be limited by a variety of factors, including: • faulty human judgment and simple errors, omissions or mistakes; • fraudulent action of an individual or collusion of two or more people; 69 Table of Contents • inappropriate management override of procedures; and • the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control.
Furthermore, biopharmaceutical companies may decline to do business with us or decrease or discontinue their use of our tests due to their broad strategic collaboration with any of our competitors.
Furthermore, biopharmaceutical companies may decline to do business with us or decrease or discontinue their use of our tests 29 due to their broad strategic collaboration with any of our competitors.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payer coverage and reimbursement arrangements with domestic and international commercial payers and government payers; • the cost of expanding our laboratory operations and product offerings, including our sales and marketing efforts; • our rate of progress in, and costs of our sales and marketing activities associated with, establishing adoption of and reimbursement for our current products, including our tests; • our rate of progress in, and costs of our research and development activities associated with, products in research and early development; • the effect of competing technological and market developments; • costs related to our international expansion; and • the potential costs of and delays in product development as a result of any existing or new regulatory oversight applicable to our products.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payer coverage and reimbursement arrangements with domestic and international commercial payers and government payers; • the cost of expanding our laboratory operations and product offerings, including our sales and marketing efforts; • our rate of progress in, and costs of our sales and marketing activities associated with, establishing adoption of and reimbursement for our current products, including our tests; • our rate of progress in, and costs of our research and development activities associated with, products in research and early development; 67 Table of Contents • the effect of competing technological and market developments; • costs related to our international expansion; and • the potential costs of and delays in product development as a result of any existing or new regulatory oversight applicable to our products.
Several factors make the billing process complex, including: • differences between the list prices for our tests and the reimbursement rates of payers; 50 Table of Contents • compliance with complex federal and state regulations related to billing government healthcare programs, including Medicare and Medicaid, to the extent our tests are covered by such programs; • differences in coverage among payers and the effect of patient co-payments or co-insurance; • differences in information, pre-authorization and other billing requirements among payers; • changes to codes and coding instructions governing our tests; • incorrect or missing billing information; and • the resources required to manage the billing and claim appeals process.
Several factors make the billing process complex, including: • differences between the list prices for our tests and the reimbursement rates of payers; • compliance with complex federal and state regulations related to billing government healthcare programs, including Medicare and Medicaid, to the extent our tests are covered by such programs; • differences in coverage among payers and the effect of patient co-payments or co-insurance; • differences in information, pre-authorization and other billing requirements among payers; • changes to codes and coding instructions governing our tests; • incorrect or missing billing information; and • the resources required to manage the billing and claim appeals process.
We have not yet registered trademarks in all of our potential markets, although we have registered Guardant Health, Guardant360 and GuardantOMNI in the United States.
We have not yet registered trademarks in all of our potential markets, although we have registered Guardant Health and Guardant360 in the United States.
Moreover, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; 47 Table of Contents • the EKRA, which prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in exchange for an individual using the services of that laboratory.
Moreover, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • the EKRA, which prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in exchange for an individual using the services of that laboratory.
In addition, breaches of our and/or our vendors’ security measures and the unauthorized dissemination of sensitive personal information or proprietary information or confidential information about us, our customers or other third-parties, could expose our customers' private information and our customers to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions which could have a material adverse effect on our business, prospects, reputation, results of operations and financial condition.
In addition, cybersecurity incidents of our and/or our vendors’ security measures and the unauthorized dissemination of sensitive personal information or proprietary information or confidential information about us, our customers or other third-parties, could expose our customers' private information and our customers to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions which could have a material adverse effect on our business, prospects, reputation, results of operations and financial condition.
Numerous significant intellectual property issues have been litigated, are being litigated and will likely continue to be litigated, between existing and new participants in our existing and targeted markets, and our competitors have asserted and may in the future assert that our products or services infringe their intellectual property rights as part of a business strategy to impede our successful entry into or growth in those markets, and we may enforce our owned or licensed intellectual property rights against our competitors and other parties.
Numerous significant intellectual property issues have 61 Table of Contents been litigated, are being litigated and will likely continue to be litigated, between existing and new participants in our existing and targeted markets, and our competitors have asserted and may in the future assert that our products or services infringe their intellectual property rights as part of a business strategy to impede our successful entry into or growth in those markets, and we may enforce our owned or licensed intellectual property rights against our competitors and other parties.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. 75 Table of Contents Item 1B. Unresolved Staff Comments None.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. 72 Table of Contents Item 1B. Unresolved Staff Comments None.
Areas of the regulatory environment that may affect our ability to conduct business include, without limitation: • federal, state and foreign laws applicable to test ordering, documentation of tests ordered, billing practices and claims payment and/or regulatory agencies enforcing those laws and regulations; • federal, state and foreign health care fraud and abuse laws; • federal, state and foreign laboratory anti-mark-up laws; • coverage and reimbursement levels by Medicare, Medicaid, other governmental payers and private insurers; • restrictions on coverage of and reimbursement for tests; • federal, state and foreign laws governing laboratory testing, including CLIA, and state licensing laws; • federal, state and foreign laws and enforcement policies governing the development, use and distribution of diagnostic medical devices, including laboratory developed tests, or LDTs; • federal, state, local and foreign laws governing the handling and disposal of medical and hazardous waste; • federal and state Occupational Safety and Health Administration rules and regulations; • HIPAA, GDPR, APPI, CCPA, CPRA and similar state or foreign data privacy and security laws; and • consumer protection laws.
Areas of the regulatory environment that may affect our ability to conduct business include, without limitation: • federal, state and foreign laws applicable to test ordering, documentation of tests ordered, billing practices and claims payment and/or regulatory agencies enforcing those laws and regulations; • federal, state and foreign healthcare fraud and abuse laws; • federal, state and foreign laboratory anti-mark-up laws; • coverage and reimbursement levels by Medicare, Medicaid, other governmental payers and private insurers; • restrictions on coverage of and reimbursement for tests; 35 Table of Contents • federal, state and foreign laws governing laboratory testing, including CLIA, and state licensing laws; • federal, state and foreign laws and enforcement policies governing the development, use and distribution of diagnostic medical devices, including laboratory developed tests, or LDTs; • federal, state, local and foreign laws governing the handling and disposal of medical and hazardous waste; • federal and state Occupational Safety and Health Administration rules and regulations; • HIPAA, GDPR, APPI, CCPA, CPRA and similar state or foreign data privacy and security laws; and • consumer protection laws.
We have provided testing services to patients with many cancer types and indications, some of the time as a non-participating provider through 2023. When we have received payment as a non-participating provider, the amounts, on average, were significantly lower than for participating providers.
We have provided testing services to patients with many cancer types and indications, some of the time as a non-participating provider through 2024. When we have received payment as a non-participating provider, the amounts, on average, were significantly lower than for participating providers.
Revenue attributable to Medicare accounted for more than 10% of our total revenue in each of the years ended December 31, 2023, 2022 and 2021. In addition, pursuant to CMS regulations, we cannot bill Medicare directly for tests provided for Medicare beneficiaries in some situations.
Revenue attributable to Medicare accounted for more than 10% of our total revenue in each of the years ended December 31, 2024, 2023 and 2022. In addition, pursuant to CMS regulations, we cannot bill Medicare directly for tests provided for Medicare beneficiaries in some situations.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
Even if identified, we may be unable to adequately investigate or remediate cybersecurity incidents due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
In the years ended December 31, 2023, 2022 and 2021, revenue from our top five biopharmaceutical customers, including their affiliated entities, accounted for 14%, 18% and 18% of our total revenue, respectively. The revenue attributable to our biopharmaceutical customers may also fluctuate in the future, which could have an adverse effect on our financial condition and results of operations.
In the years ended December 31, 2024, 2023 and 2022, revenue from our top five biopharmaceutical customers, including their affiliated entities, accounted for 13%, 14% and 18% of our total revenue, respectively. The revenue attributable to our biopharmaceutical customers may also fluctuate in the future, which could have an adverse effect on our financial condition and results of operations.
Any intellectual property rights licensed by us may lose value or utility, including as a result of a change of in the industry, in our business objectives, others' technology, our dispute with the licensor, and other circumstances outside our control. 60 Table of Contents We may not be able to protect or enforce our intellectual property rights adequately throughout the world.
Any intellectual property rights licensed by us may lose value or utility, including as a result of a change of in the industry, in our business objectives, others' technology, our dispute with the licensor, and other circumstances outside our control. We may not be able to protect or enforce our intellectual property rights adequately throughout the world.
We have systems in place to remind us to pay these fees, and we rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar requirements during the patent application process.
We have systems in place to remind us to 62 Table of Contents pay these fees, and we rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar requirements during the patent application process.
If this exception is repealed or curtailed by CMS, or its laboratory date of service regulation is otherwise changed to adversely impact our ability to bill Medicare directly, our revenue could be materially reduced.
If this exception is repealed or curtailed by CMS, or the laboratory date of service regulation is otherwise changed to adversely impact our ability to bill Medicare directly, our revenue could be materially reduced.
We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures. 35 Table of Contents Risks related to our highly regulated industry We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition, and harm our business.
We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures. Risks related to our highly regulated industry We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may, directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition, and harm our business.
We have implemented measures to ensure that data and biological samples that we receive have been collected from subjects who have provided appropriate informed consent. We also act as a sponsor of clinical studies in connection with the development of our tests, which are frequently conducted in collaboration with different parties.
We have implemented measures to ensure that data and biological samples that we receive have been collected from subjects who have provided appropriate informed consent. We also act as a sponsor of clinical studies in connection with the 49 Table of Contents development of our tests, which are frequently conducted in collaboration with different parties.
Whether or not we are successful in defending against such actions, we could incur substantial costs and expenses, including legal fees, and divert the attention of management from the operation of our business. If we were to be sued for product liability or professional liability, we could face substantial liabilities that exceed our resources.
Whether or not we are successful in 70 Table of Contents defending against such actions, we could incur substantial costs and expenses, including legal fees, and divert the attention of management from the operation of our business. If we were to be sued for product liability or professional liability, we could face substantial liabilities that exceed our resources.
The Protecting Access to Medicare Act, or PAMA authorized the adoption of new, temporary billing codes and unique test identifiers for FDA-cleared or approved tests as well as advanced diagnostic laboratory tests. The AMA has created a new section of CPT codes, Proprietary Laboratory Analyses codes or PLA, to facilitate implementation of this section of PAMA.
The Protecting Access to Medicare Act, or PAMA 50 Table of Contents authorized the adoption of new, temporary billing codes and unique test identifiers for FDA-cleared or approved tests as well as advanced diagnostic laboratory tests. The AMA has created a new section of CPT codes, Proprietary Laboratory Analyses codes or PLA, to facilitate implementation of this section of PAMA.
The ACA contains a number of provisions expected to impact existing state and federal health care programs or result in the development of new programs, including those governing enrollments in state and federal health care programs, reimbursement changes and fraud and abuse. Our business and operations could be affected by the ACA, including in ways we cannot currently predict.
The ACA contains a number of provisions expected to impact existing state and federal healthcare programs or result in the development of new programs, including those governing enrollments in state and federal healthcare programs, reimbursement changes and fraud and abuse. Our business and operations could be affected by the ACA, including in ways we cannot currently predict.
Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of our products.
Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other 54 Table of Contents obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of our products.
If the price of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our stock as consideration. 68 Table of Contents We may need to raise additional capital to fund our existing operations, develop our platform, commercialize new products or expand our operations.
If the price of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our stock as consideration. We may need to raise additional capital to fund our existing operations, develop our platform, commercialize new products or expand our operations.
This could significantly increase the costs and expenses of conducting, or otherwise harm, our business. 36 Table of Contents Legislative and administrative proposals proposing to amend the FDA’s oversight of LDTs have been introduced in recent years and we expect that new legislative and administrative proposals will continue to be introduced from time to time.
This could significantly increase the costs and expenses of conducting, or otherwise harm, our business. Legislative and administrative proposals proposing to amend the FDA’s oversight of LDTs have been introduced in recent years and we expect that new legislative and administrative proposals will continue to be introduced from time to time.
In addition, CMS maintains the Healthcare Common Procedure Coding System, or HCPCS, and may assign unique level II HCPCS code to tests that are not already described by a unique CPT code. New CPT codes are issued annually and new HCPCS codes are issued as frequently as quarterly.
In addition, CMS maintains the Healthcare Common Procedure Coding System, or HCPCS, and may assign unique level II HCPCS code to tests that are not already described by a unique CPT code. New CPT "Category I" codes are issued annually and new PLA and level II HCPCS codes are issued as frequently as quarterly.
If third parties bring actions against our owned or licensed patent rights, we could experience significant costs and management distraction. 58 Table of Contents In patent litigation in the United States or abroad, defendant counterclaims alleging invalidity or unenforceability of plaintiff’s patents are common.
If third parties bring actions against our owned or licensed patent rights, we could experience significant costs and management distraction. In patent litigation in the United States or abroad, defendant counterclaims alleging invalidity or unenforceability of plaintiff’s patents are common.
In cases where there is not a specific CPT code to describe a test, such as Guardant360 test, the test may be billed under an unlisted molecular pathology procedure code or through the use of a combination of single gene CPT codes, depending on the payer.
In cases where there is not a specific CPT code to describe a test, the test may be billed under an unlisted molecular pathology procedure code or through the use of a combination of single gene CPT codes, depending on the payer.
In January 2021, a proprietary laboratory analyses, or PLA code was issued for our Guardant360 CDx test with an effective date in April 2021. Additionally, based on this new PLA code, we applied to the CMS for our Guardant360 CDx test to become an advanced diagnostic laboratory test, or ADLT.
In January 2021, a CPT PLA code was issued for our Guardant360 CDx test with an effective date in April 2021. Additionally, based on this new PLA code, we applied to the CMS for our Guardant360 CDx test to become an advanced diagnostic laboratory test, or ADLT.
For example, the Biden administration and members of Congress have proposed, and future U.S. presidential administrations may propose, various U.S. federal tax law changes, which if enacted could have a material impact on our business operations and financial performance.
For example, the Trump administration, members of Congress, and future U.S. presidential administrations may propose, various U.S. federal tax law changes, which if enacted could have a material impact on our business operations and financial performance.
This risk extends to the third-party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. Cyberattacks, security breaches, computer viruses, malware and other incidents could cause misappropriation, loss or other unauthorized disclosure of confidential data, materials or information, including those concerning our customers and employees.
This risk extends to the third-party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. Cybersecurity incidents such as security breaches, computer viruses, malware and other incidents could cause misappropriation, loss or other unauthorized disclosure of confidential data, materials or information, including those concerning our customers and employees.
Our indebtedness could have significant negative consequences for our security holders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • in the event interest accrues on the 2027 Notes or additional indebtedness, requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; 65 Table of Contents • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the Notes or additional indebtedness; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our indebtedness could have significant negative consequences for our security holders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • the accrual and payment of interest on the Notes or additional indebtedness, requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the Notes or additional indebtedness; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may experience security breaches that may remain undetected for an extended period.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may experience cybersecurity incidents that may remain undetected for an extended period.
We may not develop additional proprietary products, services, methods and technologies that are patentable. 57 Table of Contents Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
We may not develop additional proprietary products, services, methods and technologies that are patentable. Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
We have experienced challenges attracting and retaining qualified personnel due to competitive labor markets and may continue to do so, and may be unable to manage our future growth effectively, all of which could make it difficult to execute our business strategy. Since our inception, we have experienced rapid growth and anticipate further growth in our business operations.
If we continue to experience challenges attracting and retaining qualified personnel due to competitive labor markets, we may be unable to manage our future growth effectively, all of which could make it difficult to execute our business strategy. Since our inception, we have experienced rapid growth and anticipate further growth in our business operations.
In September 2018, we began to receive reimbursement from Medicare for claims submitted with respect to our precision oncology tests. Revenue from clinical tests for patients covered by Medicare represented approximately 43%, 45% and 45% of our precision oncology revenue from clinical customers for the years ended December 31, 2023, 2022 and 2021, respectively.
In September 2018, we began to receive reimbursement from Medicare for claims submitted with respect to our precision oncology tests. 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.
In addition, some countries have stricter consumer notice and/or consent requirements relating to personal data collection, use or sharing, more stringent requirements relating to organizations’ privacy programs and provide stronger individual rights. Moreover, international privacy and data security regulations may become more complex and have greater consequences.
In addition, some countries have stricter consumer notice and/or consent requirements relating to personal data collection, use or sharing, more stringent 53 Table of Contents requirements relating to organizations’ privacy programs and provide stronger individual rights. Moreover, international privacy and data security regulations may become more complex and have greater consequences.
Our ability to execute our growth strategy and become profitable is highly dependent on the continued adoption and use of our tests, which accounted for 91%, 87% and 81% of our revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
Our ability to execute our growth strategy and become profitable is highly dependent on the continued adoption and use of our tests, which accounted for 93%, 91% and 87% of our revenue in the years ended December 31, 2024, 2023 and 2022, respectively.
In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. 66 Table of Contents We are subject to counterparty risk with respect to the 2027 Note Hedge transactions.
In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. We are subject to counterparty risk with respect to the 2027 Note Hedge transactions.
We are subject to reporting requirements under PAMA and the Medicare rate for our tests will be calculated in the future based on our private payer rates. For clinical diagnostic laboratory tests furnished on or after January 1, 2018, their Medicare CLFS reimbursement rates are established upon these reported private payer rates.
We are subject to reporting requirements under PAMA and the Medicare rate for our tests will be calculated in the future based on our private payer rates. For clinical diagnostic laboratory tests furnished on or after January 1, 2018, PAMA and its implementing regulations contemplate that their Medicare CLFS reimbursement rates are established upon these reported private payer rates.
Following a cyberattack, our and/or our vendors’ remediation efforts may not be successful, and a cyberattack could result in interruptions, delays or cessation of service, and loss of existing or potential customers.
Following a cybersecurity incident, our and/or our vendors’ remediation efforts may not be successful, and a cybersecurity incident could result in interruptions, delays or cessation of service, and loss of existing or potential customers.
In addition, the 2027 Notes contain, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our indebtedness.
In addition, future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our indebtedness.
We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security risks or threats in the future. The costs of attempting to protect against the foregoing risks and the costs of responding to a cyberattack are significant.
We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security risks or threats in the future. 71 Table of Contents The costs of attempting to protect against the foregoing risks and the costs of responding to a cybersecurity incident are significant.
This law substantially changed the way health care is financed by both commercial payers and government payers, and significantly impacted our industry.
This law substantially changed the way healthcare is financed by both commercial payers and government payers, and significantly impacted our industry.
We may be subject to claims challenging the inventorship or ownership of our owned or licensed intellectual property. We or our licensors may be subject to claims that former employees, independent contractors, collaborators or other third parties have an interest in or right to our owned or licensed patents, trade secrets or other intellectual property.
We or our licensors may be subject to claims that former employees, independent contractors, collaborators or other third parties have an interest in or right to our owned or licensed patents, trade secrets or other intellectual property.
Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS are generally required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”, or ADLT), commercial payer payment rates and volumes for each test they perform.
Under PAMA and its implementing regulations, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS or the Physician Fee Schedule are generally required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”, or ADLTs), commercial payer payment rates and volumes for each test they perform.
Large scale data breaches at other entities increase the challenge we and our vendors face in maintaining the security of our information technology systems and of our customers’ sensitive information.
Large scale cybersecurity incidents at other entities increase the challenge we and our vendors face in maintaining the security of our information technology systems and of our customers’ sensitive information.
Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., as well as companies such as Caris Biosciences, Tempus Labs, Inc., Foundation Medicine, Inc., Myriad Genetics, Inc., and most if not all of the competitors within the liquid biopsy space for therapy selection, that sell molecular diagnostic tests for cancer to physicians and have or may develop tests that compete with our tests.
Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., and most if not all of the competitors within the liquid biopsy space for therapy selection, that sell molecular diagnostic tests for cancer to physicians and have or may develop tests that compete with our tests.
In the event the conditional conversion feature of the 2027 Notes is triggered, holders of the 2027 Notes will be entitled to convert their 2027 Notes into shares of our common stock upon the occurrence of certain events.
In the event the conditional conversion features of the Notes are triggered, holders of the Notes will be entitled to convert their Notes into shares of our common stock upon the occurrence of certain events.
Complying with licensure requirements in new jurisdictions may be expensive, time-consuming and subject us to significant and unanticipated delays.
Complying with 46 Table of Contents licensure requirements in new jurisdictions may be expensive, time-consuming and subject us to significant and unanticipated delays.
Growing understanding of the importance of biomarkers linked with therapy selection, response and early screening is leading to more companies offering services in genomic profiling. The promise of biopsy testing is also leading to more companies attempting to enter the space and compete with us.
Growing understanding of the importance of biomarkers linked with therapy selection, minimal residual disease detection, and early cancer screening is leading to more companies offering services in genomic profiling. The promise of liquid biopsy testing is also leading to more companies attempting to enter the space and compete with us.
For example, on February 23, 2022, the FDA issued a proposed rule to amend the Quality System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards. This proposal has not yet been finalized or adopted.
For example, on February 23, 2022, the FDA issued a proposed rule to amend the Quality System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards. This proposal was finalized on January 31, 2024.
Effective January 1, 2022, Medicare started to reimburse Guardant360 CDx services at the median rate of claims paid by commercial payers and this rate will update annually each year based on the previous year’s private payor data submission. In July of 2022 a CPT code was issued for Guardant360.
Effective January 1, 2022, Medicare started to reimburse Guardant360 CDx services at the median rate of claims paid by commercial payers and this rate will update annually based on the previous year’s private payer data submission. In April 2022, a CPT PLA code was issued for Guardant360 with an effective date in July 2022.
For the years ended December 31, 2023, 2022 and 2021, we incurred net losses of $479.4 million, $654.6 million and $384.8 million, respectively. As of December 31, 2023, we had an accumulated deficit of $2.1 billion.
For the years ended December 31, 2024, 2023 and 2022, we incurred net losses of $436.4 million, $479.4 million and $654.6 million, respectively. As of December 31, 2024, we had an accumulated deficit of $2.6 billion.
Any such access, breach, or other loss of information could result in legal claims or proceedings, and liability under federal, state or foreign laws that protect the privacy of personal information, such as HIPAA, and regulatory penalties.
Any cybersecurity incident could result in legal claims or proceedings, and liability under federal, state or foreign laws that protect the privacy of personal information, such as HIPAA, and regulatory penalties.
We carry insurance for damage to our property and disruption of our business, but this insurance may not cover all of the risks associated with damage or disruption to our facility and business, may not provide coverage in amounts sufficient to cover our potential losses and may not continue to be available to us on acceptable terms, if at all.
We carry insurance for damage to our property and disruption of our business, but this insurance may not cover all of the risks associated with damage or disruption to our facility and business, may not provide coverage in amounts sufficient to cover our potential losses and may not continue to be available to us on acceptable terms, if at all. 33 We are dependent on third parties for the collection of blood samples for our tests.
Notice of breaches is required to be made to affected individuals, the Secretary of the HHS or other state, federal or foreign regulators, and for extensive breaches, notice may need to be made to the media or State Attorneys General. Such a notice could harm our reputation and our ability to compete.
Notice of cybersecurity incidents may be required to be made to affected individuals, the Secretary of the HHS or other state, federal or foreign regulators, to the media or State Attorneys General. Such a notice could harm our reputation and our ability to compete.
These laws and regulations relating to the provision of items or services for free are complex and are subject to interpretation by the courts and by government agencies; • other federal and state fraud and abuse laws, such as state anti-kickback, self-referrals, false claims and anti-markup laws, any of which may extend to services reimbursable by any payer, including private insurers; • state laws that prohibit other specified practices, such as billing physicians for tests that they order; providing tests at no or discounted cost to induce adoption; waiving co-insurance, co-payments, deductibles or other amounts owed by patients; billing a state healthcare program at a price that is higher than what is charged to other payers; or employing, exercising control over or splitting fees with licensed medical professionals; and • similar foreign laws and regulations in the countries in which we operate or may operate in the future.
These laws and regulations relating to the provision of items or services for free are complex and are subject to interpretation by the courts and by government agencies; 48 Table of Contents • other federal and state fraud and abuse laws, such as state anti-kickback, self-referrals, false claims and anti-markup laws, any of which may extend to services reimbursable by any payer, including private insurers; • the federal No Surprises Act, which prohibits an out-of-network provider from billing a patient at an amount in excess of the in-network cost sharing for services furnished with respect to a visit at certain in-network healthcare facilities, as well as state laws restricting balance billing of patients; • state laws that prohibit other specified practices, such as billing physicians for tests that they order; providing tests at no or discounted cost to induce adoption; waiving co-insurance, co-payments, deductibles or other amounts owed by patients; billing a state healthcare program at a price that is higher than what is charged to other payers; or employing, exercising control over or splitting fees with licensed medical professionals; and • similar foreign laws and regulations in the countries in which we operate or may operate in the future.
It is possible that governmental authorities may conclude that our business practices, including our consulting and advisory board arrangements with physicians and other healthcare providers, some of whom receive stock or stock options as compensation for services provided, do not comply with current or future corporate practice of medicine or healthcare fraud and abuse statutes, regulations, agency guidance or case law. 49 Table of Contents The growth and international expansion of our business may increase the potential of violating applicable laws and regulations.
It is possible that governmental authorities may conclude that our business practices, including our consulting and advisory board arrangements with physicians and other healthcare providers, some of whom receive stock or stock options as compensation for services provided, do not comply with current or future corporate practice of medicine or healthcare fraud and abuse statutes, regulations, agency guidance or case law.
If we do not timely register and enforce marks used in connection with our products, services or technology, we may encounter difficulty in enforcing them against third parties, and if these marks are registered by others, we could infringe such trademarks and may have to defend ourselves to continue the use of our trademarks, which may be time consuming and costly, and we may be unsuccessful.
If we do not timely register and enforce marks used in connection with our products, services or technology, we may encounter difficulty in enforcing them against third parties, and if these marks are registered by others, we could infringe such trademarks and may have to defend ourselves to continue the use of our trademarks, which may be time consuming and costly, and we may be unsuccessful. 60 Table of Contents We may be subject to claims challenging the inventorship or ownership of our owned or licensed intellectual property.
In addition, the existence of the 2027 Notes may encourage short selling by market participants because the conversion of the 2027 Notes could be used to satisfy short positions, and even anticipated conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, and even anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock. 64 Table of Contents The convertible note hedge may affect the value of the 2027 Notes and our common stock.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence. 37 Table of Contents The conformity assessment procedure requires the intervention of a notified body.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market.
The conformity assessment procedure requires the intervention of a notified body. Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market.
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.
In July 2022, Palmetto GBA established coverage under an existing LCD 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. This coverage, which also applies to Noridian, has an effective date of December 2021.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo protect this information, we have implemented a cybersecurity program, and have established oversight mechanisms designed to provide effective cybersecurity governance, risk management, and timely incident response. Our cybersecurity risk management is based on recognized cybersecurity industry frameworks and standards including NIST-CSF, ISO 27001/27002 as well as HIPAA.
Biggest changeWe utilize external security and infrastructure vendors to manage parts of our data centers. To protect this information, we have implemented a cybersecurity program, and have established oversight mechanisms designed to provide effective cybersecurity governance, risk management, and timely incident response.
Risk management is performed by the senior leadership of the cybersecurity team as well as members of our legal and privacy teams where relevant.
Cybersecurity risk management is performed by the senior leadership of the cybersecurity team as well as members of our legal and privacy teams where relevant.
In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our data security practices and compliance with applicable practices and standards. In addition, we maintain a third-party risk register to identify, prioritize and track risks, including those associated with our use of third-party service providers.
In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess the effectiveness of our data security practices and compliance with applicable practices and standards. In addition, we maintain a third-party risk register to identify, prioritize and track risks, including those associated with our use of third-party service providers.
We maintain various protections designed to safeguard against cyberattacks, including but not limited to attack surface management, anti-phishing secure email gateways, centralized log monitoring and analysis, cloud security posture management, endpoint detection and response, and network intrusion detection and prevention systems.
We maintain various protections designed to safeguard against cyberattacks, including but not limited to attack surface management, anti-phishing secure email gateways, log monitoring and analysis, cloud security posture management, endpoint detection and response, and network intrusion detection and prevention systems.
Senior members of our management, including our Head of Information Security and Chief Information Officer, each of whom has over 10 years of experience in various roles involving information technology, including security, auditing, compliance, systems and programming, are responsible for assessing cybersecurity risk.
Senior members of our management, including our Chief Information Security Officer and Chief Information Officer, each of whom has over 10 years of experience in various roles involving information technology, including security, auditing, compliance, systems and programming, are responsible for assessing cybersecurity risk.
These individuals are informed about, and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management processes described above, including the operation of our incident response plan.
These individuals are informed about, and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management processes described above, including the operation and testing of our incident response plan.
We also have processes in place to prevent unauthorized access to data processing systems and facilities, including two-factor authentication, tiered approval processes and password complexity, and our employees undergo mandatory privacy and security trainings annually. We have established and periodically test our disaster recovery plan and we protect against business interruption by backing up our major systems.
We also have processes in place to prevent unauthorized access to data processing systems and facilities, including two-factor authentication, tiered approval processes and password complexity, and our employees and applicable contractors undergo mandatory privacy and security trainings annually. We have established and periodically test our disaster recovery plan and we protect against business interruption by backing up our major systems.
However, we and our customers routinely face risks of cybersecurity incidents, wholly or partially beyond our control, as we rely heavily on our information technology systems. While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. See Part I, Item 1A.
However, we and our customers have 73 Table of Contents experienced cybersecurity incidents and routinely face risks of cybersecurity incidents, wholly or partially beyond our control, as we rely heavily on our information technology systems. While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. See Part I, Item 1A.
Additionally, our threat intelligence software issues a quarterly report briefing to inform the security team about relevant cybersecurity events, significant vulnerabilities and vendor-related incidents. Our Head of Information Security reports to the full Board of Directors and the Nominating and Corporate Governance Committee on two occasions per year on information security and cybersecurity matters, or more frequently as needed.
Additionally, our threat intelligence program issues a semi-annual report briefing to inform the security team about relevant cybersecurity events, significant vulnerabilities and vendor-related incidents. Our Chief Information Security Officer reports to the full Board of Directors and the Nominating and Corporate Governance Committee on two occasions per year on information security and cybersecurity matters, or more frequently as needed.
We also maintain cybersecurity insurance coverage. Governance Our cybersecurity program is led by a team of cybersecurity professionals. The program incorporates industry-standard frameworks, policies and practices designed to protect the privacy and security of our sensitive information.
We also maintain cybersecurity insurance coverage though it may not be sufficient to cover all costs of a cybersecurity incident. Governance Our cybersecurity program is led by a team of cybersecurity professionals. The program incorporates aspects of industry-standard frameworks, policies and practices designed to protect the privacy and security of our sensitive information.
“Risk Factors” of this Annual Report on Form 76 Table of Contents 10-K for additional information about the risks to our business associated with a breach or compromise to our information technology systems.
“Risk Factors” of this Annual Report on Form 10-K for additional information about the risks to our business associated with a cybersecurity incident affecting our information technology systems.
In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, information regarding study participants in connection with clinical studies, sensitive third-party information and employee information.
In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, information regarding study participants in connection with clinical studies, sensitive third-party information and employee information. We manage and maintain our applications and data utilizing a combination of on-site systems and cloud-based data centers.
Our cybersecurity policies require that we implement and maintain monitoring and detection programs, network security precautions, encryption of critical data, and management of third-party risk.
Our cybersecurity program takes into account recognized cybersecurity industry frameworks and standards including NIST-CSF, ISO 27001/27002 as well as HIPAA. Our cybersecurity policies require that we implement and maintain monitoring and detection programs, network security precautions, encryption of critical data, and management of third-party risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have approximately 200,000 square feet of additional office and lab space in Redwood City and San Diego, California, with current lease expiration dates ranging from 2025 to 2029. Our domestic CAP-accredited and CLIA-certified laboratories are located in these two facilities, where testing for clinical and biopharmaceutical customers are performed.
Biggest changeIn addition, we have approximately 200,000 square feet of additional office and lab space in Redwood City and San Diego, California, with current lease expiration dates ranging from 2025 to 2029. We also maintain domestic leased office spaces in Dallas and Spring, Texas; Seattle, Washington; Long Island City, New York; and Washington, D.C.; and warehouse space in Union City, California.
While we believe our existing facilities are adequate to meet our current requirements, we expect to expand our facilities as our operations grow over time. We believe we will be able to obtain such additional space on acceptable and commercially reasonable terms.
In addition, for international locations, we maintain leased office space in Japan, Singapore and India. While we believe our existing facilities are adequate to meet our current requirements, we expect to expand our facilities as our operations grow over time. We believe we will be able to obtain such additional space on acceptable and commercially reasonable terms.
Removed
We also maintain domestic leased office spaces in Dallas and Spring, Texas; Seattle, Washington; Washington, D.C.; and warehouse space in Union City, California. In addition, for international locations, we maintain leased office and lab space in Japan and leased office space in Singapore.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe resolution of any such legal proceeding is subject to inherent uncertainty and could have a material adverse effect on our financial condition, cash flows or results of operations. Item 4. Mine Safety Disclosures. Not applicable. PART II
Biggest changeThe resolution of any such legal proceeding is subject to inherent uncertainty and could have a material adverse effect on our financial condition, cash flows or results of operations.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+18 added−13 removed113 unchanged
Biggest changeThe cash effect of changes in our operating assets and liabilities was primarily the result of a $60.3 million increase in accounts payable and accrued liabilities, primarily due to increase in purchases of goods and services, increased personnel and increase in accrued and other liabilities, a $20.4 million decrease in prepaid expenses and other current assets, net primarily driven by a $25.0 million one-time payment pursuant to a settlement and license agreement entered into in December 2021, a $11.7 million decrease in other assets, net and a $9.9 million increase in deferred revenue primarily due to upfront payments from international laboratory partners, partially offset by a $20.9 million increase in inventory, net due to forecasted higher testing volumes, and increased inventory level to offset potential disruption in supply chain, and a $20.2 million payment of operating lease liabilities net of receipt of tenant improvement allowance.
Biggest changeThe 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.
Investing activities 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.
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.
If our available cash, cash equivalents and marketable debt securities and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements because of lower demand for our products as a result of lower than currently expected rates of reimbursement from our customers or other risks described in this Annual Report on Form 10-K, we may seek to sell additional common or preferred equity or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing.
If our available cash, cash equivalents, restricted cash and marketable debt securities and anticipated cash flows from operations are insufficient to satisfy our liquidity requirements because of lower demand for our products as a result of lower than currently expected rates of reimbursement from our customers or other risks described in this Annual Report on Form 10-K, we may seek to sell additional common or preferred equity or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing.
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. Application of the constraint for variable consideration is assessed and updated at each reporting period as a revision to the estimated transaction price.
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.
Based on our current business plan, we believe our current cash, cash equivalents 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.
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 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 future revenue reversal.
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.
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 screening tests, which comprise of labor and material costs including any inventory write-downs.
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.
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, 2023, we generally performed tests as an out-of-network service provider without contracts with health insurance companies.
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.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K. The following generally compares our results of operations for the years ended December 31, 2023 and 2022.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K. The following generally compares our results of operations for the years ended December 31, 2024 and 2023.
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 series of distinct tests to biopharmaceutical customers as a single performance obligation.
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.
A detailed discussion comparing our results of operations for the years ended December 31, 2022 and 2021 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, 2022.
A detailed discussion comparing our results of operations for the years ended December 31, 2023 and 2022 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, 2023.
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. 85 Table of Contents Results of operations The following tables set forth the significant components of our results of operations for the periods presented.
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. 81 Table of Contents Results of operations The following tables set forth the significant components of our results of operations for the periods presented.
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. 92 Table of Contents Development services and other We perform development services for our biopharmaceutical customers utilizing our precision oncology information platform.
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. 88 Table of Contents Development services and other We perform development services for our biopharmaceutical customers utilizing our precision oncology information platform.
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 marketplace.
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 89 Table of Contents marketplace.
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 amount derived from the delivery of our precision oncology tests, including those tests delivered by labs operated by our strategic partners.
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.
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.
In July 77 Table of Contents 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.
The cash effect of changes in our operating assets and liabilities was primarily the result of a $88.6 million increase in accounts payable and accrued liabilities, primarily due to 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, and a $8.4 million decrease in accounts receivable, net, 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.
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.
See Part I, Item 1A, “Risk Factors ” of this Annual Report on Form 10-K for more information. Components of results of operations Revenue We derive our revenue from two sources: (i) precision oncology testing, and (ii) development services and other. Precision oncology testing.
See Part I, Item 1A, “Risk Factors ” of this Annual Report on Form 10-K for more information. 79 Table of Contents Components of results of operations Revenue We derive our revenue from two sources: (i) precision oncology testing, and (ii) development services and other. Precision oncology testing.
Risk-Free Interest Rate The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock options. Expected Dividend Yield We do not anticipate paying any dividends in the foreseeable future and, therefore, use an expected dividend yield of zero.
Risk-Free Interest Rate The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock options. 90 Table of Contents Expected Dividend Yield We do not anticipate paying any dividends in the foreseeable future and, therefore, use an expected dividend yield of zero.
For example, our tests are being developed as companion diagnostics under collaborations with biopharmaceutical companies. 81 Table of Contents • Research and development. A significant aspect of our business is our investment in research and development, including the development of new products.
For example, our tests are being developed as companion diagnostics under collaborations with biopharmaceutical companies. • Research and development. A significant aspect of our business is our investment in research and development, including the development of new products.
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. • International expansion.
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. 78 Table of Contents • International expansion.
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, 2023, we had cash, cash equivalents and marketable debt securities of approximately $1.2 billion.
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.
The assumptions used to calculate the fair value of our stock options, including the Joint Venture, were: Fair Value of Common Stock The fair value of our common stock is determined by the closing price, on the date of grant, of our common stock, which is traded on the Nasdaq Global Select Market.
The assumptions used to calculate the fair value of our stock options, were: Fair Value of Common Stock The fair value of our common stock is determined by the closing price, on the date of grant, of our common stock, which is traded on the Nasdaq Global Select Market.
We expect that our research and development expenses will continue to increase in absolute dollars as we continue to innovate and develop additional products, expand our genomic and medical data management resources and conduct our ongoing and new clinical studies. Sales and marketing expense.
We expect that our research and development expenses will continue to increase in absolute dollars as we continue to innovate and develop additional products, expand our genomic and medical data management resources and conduct our ongoing and new clinical studies. 80 Table of Contents Sales and marketing expense.
Black-Scholes Assumptions The weighted-average assumptions used in our Black-Scholes option-pricing model, including the Joint Venture, were as follows for stock option granted to our employees, directors and non-employees for the periods presented: Year Ended December 31, 2023 2022 2021 Expected term (in years) 5.50 – 6.10 5.50 – 6.10 5.49 – 6.06 Expected volatility 69.3% – 70.5% 63.3% – 67.6% 63.6% – 66.7% Risk-free interest rate 3.4% – 4.5% 1.9% – 4.4% 0.3% – 1.3% Expected dividend yield —% —% —% We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis, including probabilities of meeting performance metrics for our PSUs.
Black-Scholes Assumptions The weighted-average assumptions used in our Black-Scholes option-pricing model were as follows for stock option granted to our employees, directors and non-employees for the periods presented: Year Ended December 31, 2024 2023 2022 Expected term (in years) 5.50 – 6.09 5.50 – 6.10 5.50 – 6.10 Expected volatility 67.4% – 69.4% 69.3% – 70.5% 63.3% – 67.6% Risk-free interest rate 3.8% – 4.5% 3.4% – 4.5% 1.9% – 4.4% Expected dividend yield —% —% —% We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis, including probabilities of meeting performance metrics for our PSUs.
Other income (expense), net Other income (expense), net consists of foreign currency exchange gains and losses, fair value adjustments of marketable equity securities, 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.
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. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.
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, and kit fulfillment.
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.
Interest expense Year Ended December 31, Change 2023 2022 $ % (in thousands) Interest expense $ (2,578) $ (2,577) $ (1) — % 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, 2023, and 2022.
Interest expense Year Ended December 31, Change 2024 2023 $ % (in thousands) Interest expense $ (2,581) $ (2,578) $ (3) — % 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 income Interest income consists of interest earned on our cash, cash equivalents and marketable debt securities. 84 Table of Contents Interest expense Interest expense consists primarily of charges relating to amortization of debt issuance costs.
Interest income Interest income consists of interest earned on our cash, cash equivalents, restricted cash and marketable debt securities. Interest expense Interest expense consists primarily of charges relating to amortization of debt issuance costs.
We also incurred net losses of $479.4 million, $654.6 million and $384.8 million in the years ended December 31, 2023, 2022 and 2021, 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.
We also incurred net losses of $436.4 million, $479.4 million and $654.6 million in the years ended December 31, 2024, 2023 and 2022, respectively. We have funded our operations to date 76 Table of Contents principally from the sale of our stock, convertible senior notes, and revenue from our precision oncology testing and development services and other.
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. Our San Diego laboratory is CAP-accredited, CLIA-certified, and licensed in 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.
Effective January 1, 2022, Medicare started to reimburse Guardant360 CDx services at the median rate of claims paid by commercial payers and this rate will apply until December 2023. In March 2022, Palmetto GBA, the Medicare administrative contractor for MolDX, has conveyed coverage for our Guardant360 TissueNext test under the existing local coverage determination.
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.
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. throughout the Asia, Middle East and Africa region.
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 measure stock-based compensation expense for stock options granted to our employees, directors, and non-employee consultants on the date of grant based on the fair value of the awards and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective awards.
Forfeitures are accounted for as they occur. We measure stock-based compensation expense for stock options granted to our employees, directors, and non-employees on the date of grant based on the fair value of the awards and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective awards.
Revenue from clinical tests for patients covered by Medicare represented approximately 43%, 45% and 45% of our precision oncology revenue from clinical customers for the years ended December 31, 2023, 2022 and 2021, respectively. 80 Table of Contents • Payer coverage and reimbursement .
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. • Payer coverage and reimbursement .
As of December 31, 2023, we had cash and cash equivalents of $1.1 billion and marketable debt securities of $35.1 million. 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.
As of December 31, 2024, we had cash, cash equivalents, restricted cash and marketable debt securities of $944.2 million. 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.
Other income (expense), net Year Ended December 31, Change 2023 2022 $ % (in thousands) Other income (expense), net $ 53,174 $ (12,778) $ 65,952 * * Not meaningful Other income (expense), net was a $53.2 million income for the year ended December 31, 2023, primarily attributable 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.
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.
In March 2021, CMS approved ADLT status to the 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.
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.
This decrease in development services and other revenue was primarily due to revenue decrease of $6.9 million associated with our companion diagnostics collaboration projects and other service agreements with biopharmaceutical customers, and a reduction in royalty revenue of $3.8 million, partially offset by revenue increase from our data services of $2.4 million and partnership agreements of $1.4 million during the year ended December 31, 2023.
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.
Precision oncology revenue from tests for clinical customers was $403.9 million for the year ended December 31, 2023, up 35% from $298.1 million for the year ended December 31, 2022. This increase in clinical testing revenue was driven primarily by an increase in sample volume.
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.
Operating Expenses Research and development expense Year Ended December 31, Change 2023 2022 $ % (in thousands) Research and development expense $ 367,194 $ 373,807 $ (6,613) (2) % Research and development expenses were $367.2 million for the year ended December 31, 2023, compared to $373.8 million for the year ended December 31, 2022, a decrease of $6.6 million, or 2%.
Operating Expenses Research and development expense Year Ended December 31, Change 2024 2023 $ % (in thousands) Research and development expense $ 347,753 $ 367,194 $ (19,441) (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%.
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. 82 Table of Contents The success of our international expansion strategy depends on a number of factors, including the internal and external constraints placed on our international laboratory partners and biopharmaceutical companies in the context of broader global, regional and U.S. economic and geopolitical conditions.
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.
Precision oncology testing revenue increased to $514.2 million for the year ended December 31, 2023, from $392.0 million for the year ended December 31, 2022, an increase of $122.2 million, or 31%.
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%.
Cash used in operating activities during the year ended December 31, 2022 was $309.5 million, which resulted from a net loss of $654.6 million, partially offset by non-cash charges of $283.6 million and cash effect of changes in our operating assets and liabilities of $61.6 million.
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.
Other revenue also includes kit fulfillment which is recognized when such products are delivered. 93 Table of Contents 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.
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.
No stock-based compensation expense is recorded for PSUs, unless it is determined to be probable that the related performance metrics will be met. Any PSUs that remain unvested at the end of the performance period will be forfeited. Forfeitures are accounted for as they occur.
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.
Cash used in financing activities during the year ended December 31, 2022 was $189.1 million, which was primarily attributable to consideration payment for the Joint Venture Acquisition of $177.8 million, payment for the tender offer in connection with the Joint Venture Acquisition and acquisition related costs of $14.2 million, and taxes paid related to net share settlement of restricted stock units of $7.9 million, partially offset by proceeds of $9.3 million from issuances of common stock under our employee stock purchase plan. 91 Table of Contents Critical accounting policies and estimates We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP.
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. 87 Table of Contents Critical accounting policies and estimates We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP.
Cost of precision oncology testing was $205.5 million for the year ended December 31, 2023, compared to $148.2 million for the year ended December 31, 2022, an increase of $57.3 million, or 39%.
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%.
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.
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.
Revenue from clinical tests for patients covered by Medicare represented approximately 43%, 45% and 45% of our precision oncology revenue from clinical customers for the years ended December 31, 2023, 2022 and 2021, respectively. Development services and other. Development services revenue primarily represents services that we provide to biopharmaceutical companies, large medical institutions and international laboratory partners.
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. Development services and other.
This increase in cost of precision oncology testing was primarily attributable to an increase in sample volumes, resulting in a $33.0 million increase in material costs, a $19.9 million increase in production labor and overhead costs, and a $4.0 million increase in other costs, including costs related to collection kits, freight, professional services and reporting of test results for physicians. 87 Table of Contents Cost of development services and other was $21.5 million for the year ended December 31, 2023, compared to $8.1 million for the year ended December 31, 2022, an increase of $13.4 million.
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. 83 Table of Contents 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%.
Financing activities Cash provided by financing activities during the year ended December 31, 2023 was $477.4 million, which was primarily attributable to proceeds of $493.1 million from equity offerings, and proceeds of $10.2 million from issuances of common stock under our employee stock purchase plan, partially offset by payment of equity offering costs of $21.1 million, and taxes paid related to net share settlement of restricted stock units of $11.2 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.
Based on these study results, in March 2023, we submitted a PMA to the FDA for our Shield blood test. The FDA’s Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee intends to review the PMA.
Based on these study results, in March 2023, we submitted a PMA to the FDA for our Shield blood test.
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 . 94 Table of Contents Expected Term The expected term represents the period that the stock options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as we have concluded that our stock option exercise history does not provide a reasonable basis upon which to estimate expected term.
Expected Term The expected term represents the period that the stock options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as we have concluded that our stock option exercise history does not provide a reasonable basis upon which to estimate expected term.
In addition, to evaluate the performance of our investigational, next-generation Shield assay in detecting lung cancer in high-risk individuals ages 50-80, in January 2022, we enrolled the first patient in a nearly 10,000-patient prospective, registrational study, which we refer to as the SHIELD LUNG study.
Shield is also the first blood test for colorectal cancer screening that meets coverage requirements by Medicare. 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.
Year Ended December 31, 2023 2022 (in thousands) Revenue: Precision oncology testing $ 514,249 $ 392,049 Development services and other 49,699 57,489 Total revenue 563,948 449,538 Costs and operating expenses: Cost of precision oncology testing (1) 205,528 148,199 Cost of development services and other (1) 21,524 8,126 Research and development expense (1) 367,194 373,807 Sales and marketing expense (1) 295,227 299,828 General and administrative expense (1) 155,800 163,956 Other operating expense 83,400 — Total costs and operating expenses 1,128,673 993,916 Loss from operations (564,725) (544,378) Interest income 35,365 6,069 Interest expense (2,578) (2,577) Other income (expense), net 53,174 (12,778) Fair value adjustments of noncontrolling interest liability — (99,785) Loss before provision for income taxes (478,764) (653,449) Provision for income taxes 685 1,139 Net loss $ (479,449) $ (654,588) (1) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2023 2022 (in thousands) Cost of precision oncology testing $ 4,614 $ 5,498 Cost of development services and other 1,851 — Research and development expense 34,682 26,630 Sales and marketing expense 24,764 25,442 General and administrative expense 24,848 37,115 Total stock-based compensation expense $ 90,759 $ 94,685 In November 2020, we granted restricted stock units with certain performance metrics, or 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.
Year Ended December 31, 2024 2023 (in thousands) Revenue: Precision oncology testing $ 687,936 $ 514,249 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) 29,218 21,524 Research and development expense (1) 347,753 367,194 Sales and marketing expense (1) 364,935 295,227 General and administrative expense (1) 180,123 155,800 Other operating expense — 83,400 Total costs and operating expenses 1,182,610 1,128,673 Loss from operations (443,594) (564,725) Interest income 53,691 35,365 Interest expense (2,581) (2,578) Other income (expense), net (42,605) 53,174 Loss before provision for income taxes (435,089) (478,764) Provision for income taxes 1,284 685 Net loss $ (436,373) $ (479,449) (1) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2024 2023 (in thousands) Cost of precision oncology testing $ 5,315 $ 4,614 Cost of development services and other 4,050 1,851 Research and development expense 50,566 34,682 Sales and marketing expense 36,479 24,764 General and administrative expense 44,001 24,848 Total stock-based compensation expense $ 140,411 $ 90,759 In November 2020 and May 2021, we granted restricted stock units with certain performance metrics, or 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.
This increase in revenue was primarily due to an increase in sample volume. Total tests for biopharmaceutical customers increased to approximately 29,900 for the year ended December 31, 2023, from approximately 26,000 for the year ended December 31, 2022.
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.
Cash provided by investing activities during the year ended December 31, 2022 was $149.8 million, which resulted primarily from maturities of marketable debt securities of $555.0 million, partially offset by purchases of marketable debt securities of $303.8 million, purchases of property and equipment of $77.5 million, and purchases of non-marketable equity security investments and other related assets of $24.0 million.
Investing activities 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; partially offset by sales of marketable equity security investment in Lunit, Inc. of $53.6 million and maturities of marketable debt securities of $35.0 million.
Liquidity and capital resources We have incurred losses and negative cash flows from operations since our inception, and as of December 31, 2023, we had an accumulated deficit of $2.1 billion.
Provision for income taxes Year Ended December 31, Change 2024 2023 $ % (in thousands) Provision for income taxes $ 1,284 $ 685 $ 599 87 % The change in the provision for income taxes between the years ended December 31, 2024 and 2023 was insignificant. 85 Table of Contents Liquidity and capital resources We have incurred losses and negative cash flows from operations since our inception, and as of December 31, 2024, we had an accumulated deficit of $2.6 billion.
Sales and marketing expense Year Ended December 31, Change 2023 2022 $ % (in thousands) Sales and marketing expense $ 295,227 $ 299,828 $ (4,601) (2) % Selling and marketing expenses were $295.2 million for the year ended December 31, 2023, compared to $299.8 million for the year ended December 31, 2022, a decrease of $4.6 million, or 2%.
Sales and marketing expense Year Ended December 31, Change 2024 2023 $ % (in thousands) Sales and marketing expense $ 364,935 $ 295,227 $ 69,708 24 % Sales and marketing expenses were $364.9 million for the year ended December 31, 2024, compared to $295.2 million for the year ended December 31, 2023, an increase of $69.7 million, or 24%.
General and administrative expense Year Ended December 31, Change 2023 2022 $ % (in thousands) General and administrative expense $ 155,800 $ 163,956 $ (8,156) (5) % General and administrative expenses were $155.8 million for the year ended December 31, 2023, compared to $164.0 million for the year ended December 31, 2022, a decrease of $8.2 million, or 5%.
General and administrative expense Year Ended December 31, Change 2024 2023 $ % (in thousands) General and administrative expense $ 180,123 $ 155,800 $ 24,323 16 % General and administrative expenses were $180.1 million for the year ended December 31, 2024, compared to $155.8 million for the year ended December 31, 2023, an increase of $24.3 million, or 16%.
Cost of Revenue Year Ended December 31, Change 2023 2022 $ % (in thousands) Cost of precision oncology testing $ 205,528 $ 148,199 $ 57,329 39 % Cost of development services and other 21,524 8,126 13,398 165 % Total cost of revenue $ 227,052 $ 156,325 $ 70,727 45 % Total cost of revenue was $227.1 million for the year ended December 31, 2023, compared to $156.3 million for the year ended December 31, 2022, an increase of $70.7 million, or 45%.
Cost of Revenue Year Ended December 31, Change 2024 2023 $ % (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 $ 289,799 $ 227,052 $ 62,747 28 % 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%.
If their policies were to change in the future to cover additional cancer indications, we anticipate that our total reimbursement would increase. In January 2021, a proprietary laboratory analyses, or PLA code was issued for our Guardant360 CDx with an effective date in April 2021.
If their policies were to change in the future to cover additional cancer indications, we anticipate that our total reimbursement would increase.
Other income (expense), net was a $12.8 million expense for the year ended December 31, 2022, primarily due to $7.8 million of unrealized losses recorded for our marketable equity security investment in Lunit, Inc., and $5.3 million of impairment recorded for our non-marketable equity security investments and other related assets during the period.
Other income (expense), net Year Ended December 31, Change 2024 2023 $ % (in thousands) Other income (expense), net $ (42,605) $ 53,174 $ (95,779) (180) % 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. during the period.
In February 2022, we received CAP accreditation, and in October 2022, we received IVD sample processing approval from the MHLW for our laboratory in Japan. In addition, in July 2023, the MHLW granted national reimbursement approval for our Guardant360 CDx test for patients with advanced or metastatic solid tumor cancers in Japan.
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.
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 and kit fulfillment. 83 Table of Contents Costs and operating expenses Cost of precision oncology testing.
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.
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.
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.
Interest income Year Ended December 31, Change 2023 2022 $ % (in thousands) Interest income $ 35,365 $ 6,069 $ 29,296 483 % Interest income was $35.4 million for the year ended December 31, 2023, compared to $6.1 million for the year ended December 31, 2022, an increase of $29.3 million, or 483%, primarily due to higher interest rates, and increase in cash and cash equivalents and marketable debt securities balances.
Interest income Year Ended December 31, Change 2024 2023 $ % (in thousands) Interest income $ 53,691 $ 35,365 $ 18,326 52 % 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.
Total tests for clinical customers increased to approximately 172,900 for the year ended December 31, 2023, from approximately 124,800 for the year ended December 31, 2022. Precision oncology revenue from tests for biopharmaceutical customers was $110.4 million for the year ended December 31, 2023, up 17% from $94.0 million for the year ended December 31, 2022.
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.
Cash flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2023 2022 (in thousands) Net cash used in operating activities $ (324,975) $ (309,463) Net cash provided by investing activities 840,250 149,816 Net cash provided by (used in) financing activities 477,375 (189,093) 90 Table of Contents Operating activities 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 cash effect of changes in our operating assets and liabilities of $53.8 million.
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. 86 Table of Contents Cash flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (239,858) $ (324,975) Net cash (used in) provided by investing activities (261,308) 840,250 Net cash (used in) provided by financing activities (996) 477,375 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.
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, 2024, Medicare has increased the reimbursement rate for our Guardant360 LDT 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.
Other operating expense Year Ended December 31, Change 2023 2022 $ % (in thousands) Other operating expense $ 83,400 $ — $ 83,400 * * Not applicable 88 Table of Contents 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.
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. 84 Table of Contents Other operating expense Year Ended December 31, Change 2024 2023 $ % (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.
This increase in cost of development services and other was primarily due to costs associated with providing screening testing services which increased to $13.5 million for the year ended December 31, 2023, from $2.0 million for the year ended December 31, 2022, an increase of $11.5 million.
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.
This decrease was primarily due to a decrease of $11.2 million in material costs, a decrease of $5.6 million in information technology infrastructure costs, and a decrease of $3.1 million in post-acquisition contingent consideration, partially offset by an increase of $8.1 million in stock-based compensation, an increase of $3.3 million in personnel costs, and an increase of $2.7 million in depreciation and amortization.
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.
Non-cash charges primarily consisted of $99.8 million of fair value adjustments of noncontrolling interest liability in connection with the Joint Venture Acquisition, $94.7 million of stock-based compensation, $36.0 million of depreciation and amortization, $28.6 million of operating lease costs, $7.8 million of unrealized losses on marketable equity security investment in Lunit, inc., $5.3 million of impairment on non-marketable equity security investments and other related assets, $4.6 million of amortization of premium on marketable debt securities, and $4.3 million of acquisition-related contingent consideration.
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.
Development services and other revenue decreased to $49.7 million for the year ended December 31, 2023, from $57.5 million for the year ended December 31, 2022, a decrease of $7.8 million, or 14%.
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%.
The FDA’s Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee intends to review the PMA. We also expect to expand into lung and multi-cancer screening with our investigational, next-generation Shield assay. We currently perform our tests in our laboratories located in Redwood City, California, and San Diego, California.
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 currently perform clinical, research use only, and investigation use only tests in our laboratory located in Redwood City, California.
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In addition, our Palo Alto, California laboratory is currently operated as a center for our research and technology development.
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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.
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We have also received CAP accreditation and In Vitro Diagnostic, or IVD, sample processing approval from Japan's Ministry of Health, Labour and Welfare, or the MHLW, for our laboratory in Japan. 79 Table of Contents We generated total revenue of $563.9 million, $449.5 million and $373.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. As of December 31, 2023, a hypothetical 100 basis point increase or decrease in interest rates would have resulted in immaterial decline or increase of the fair value of our available-for-sale securities.
Biggest changeAs of December 31, 2024, a hypothetical 100 basis point increase or decrease in interest rates would have resulted in immaterial decline or increase of the fair value of our investments. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
As of December 31, 2023, the effect of a hypothetical 10% change in foreign currency exchange rates would not be material to our financial condition or results of operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.
As of December 31, 2024, the effect of a hypothetical 10% change in foreign currency exchange rates would not be material to our financial condition or results of operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.
As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 96
As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates. 91
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk in the ordinary course of our business.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. 95 Interest rate risk We are exposed to market risk for changes in interest rates related primarily to our cash and cash equivalents, marketable debt securities and our indebtedness.
Interest rate risk We are exposed to market risk for changes in interest rates related primarily to our cash, cash equivalents, restricted cash, marketable debt securities and our indebtedness.
This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Foreign currency risk The majority of our revenue is generated in the United States. Through December 31, 2023, we have generated an insignificant amount of revenues denominated in foreign currencies.
Foreign currency risk The majority of our revenue is generated in the United States. Through December 31, 2024, we have generated an insignificant amount of revenues denominated in foreign currencies.
As of December 31, 2023, we had cash and cash equivalents of $1.1 billion held primarily in cash deposits and money market funds. Our marketable debt securities are held in U.S. government debt securities. As of December 31, 2023, we had short-term marketable debt securities of $35.1 million.
As of December 31, 2024, we had cash, cash equivalents, restricted cash and marketable debt securities of $944.2 million held primarily in cash deposits, money market funds and U.S. government debt securities. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States.

Other GH 10-K year-over-year comparisons