
~~12.~~15.	Related Party Transactions

As discussed in Note 3, Investment in ~~connection with Softbank’s purchase of its Series E convertible preferred stock in 2017, the Company entered into a joint venture agreement with an entity affiliated with SoftBank. In May 2018,~~Joint Venture, the Company and SoftBank formed and capitalized the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and ~~Africa.~~Africa, with an initial focus on Japan. The Company has consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany balances have been eliminated in consolidation.


~~13.~~	~~Subsequent Events~~

~~Acquisition of Bellwether Bio~~

In April 2019, the Company completed its purchase of all of the outstanding shares of Bellwether Bio, Inc. ("Bellwether Bio"), a privately-held company developing a method for early blood-based cancer detection. The upfront consideration, after customary adjustments at closing, was approximately $10.1 million in cash. Subject to the achievement of certain commercialization milestones and, for certain milestones, the continued provision of services to the Company by certain former employees and consultants of Bellwether Bio, the Company will pay additional contingent consideration of up to a total of $20.0 million, which may be paid, at the Company’s election, in cash or in the Company’s common stock. At the time of the issuance of the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2019, the initial accounting for the acquisition of Bellwether Bio, including purchase price allocation, had not been completed.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this ~~his~~ Quarterly Report on Form 10-Q contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, beliefs, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A,~~“Risk~~ “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019and in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

Overview

We are a leading precision oncology company focused on helping conquer cancer globally through use of our proprietary blood tests, vast data sets and advanced analytics. We believe that the key to conquering cancer is unprecedented access to its molecular information throughout all stages of the disease, which we intend to enable by a routine blood draw, or liquid biopsy. Our Guardant Health Oncology Platform is designed to leverage our capabilities in technology, clinical development, regulatory and reimbursement to drive commercial adoption, accelerate drug development, improve patient clinical outcomes and lower healthcare costs. In pursuit of our goal to manage cancer across all stages of the disease, we launched our Guardant360 and GuardantOMNI liquid biopsy-based tests for advanced stage cancer. Our Guardant360 test, launched in 2014, has been used by more than ~~6,000~~7,000 oncologists, over 50 biopharmaceutical companies and all 28 National Comprehensive Cancer Network, or NCCN, Centers. Our GuardantOMNI test, launched in 2017, ~~is specifically built for~~has been used by our biopharmaceutical customers as a comprehensive genomic profiling tool to help accelerate clinical development programs in both immuno-oncology and targeted therapy. ~~Our~~These tests fuel development of our LUNAR ~~early detection~~ program, which aims to address the needs of early stage cancer patients with neoadjuvant and adjuvant treatment selection, cancer survivors with surveillance, ~~and~~ asymptomatic individuals eligible for cancer screening and individuals at a higher risk for developing cancer with ~~screening. In late~~early detection. Our LUNAR-1 assay was launched in 2018 ~~we launched our LUNAR assay~~ for research use ~~by biopharmaceutical~~ and ~~academic researchers. In April~~in late 2019 ~~at the American Association~~ for Cancer Research, or AACR, annual meeting, we presented exploratory data around the use of our LUNAR assay for potential screening applications in a cohort of 229 recently diagnosed colorectal cancer patients and aged-matched cancer-free controls. This data demonstrated average LUNAR assay sensitivity exceeding 80% with specificity of 94% for patients with stage I/II colorectal cancer in this cohort (76% in stage I and 87% in stage II). To further pursue this potential market opportunity, we are planning to start a prospective colorectal screening study of over 10,000 patients in the second half of 2019.investigational use.

Since our inception, we have devoted substantially all of our resources to research and development activities related to our Guardant360 and GuardantOMNI tests and our LUNAR program, including clinical and regulatory initiatives to obtain approval by the U.S. Food and Drug Administration, or the FDA, as well as sales and marketing activities. We have over 4050 approved, completed or active clinical outcomes studies, more than ~~110~~150 peer-reviewed publications and more than ~~300~~400 scientific abstracts. We are pioneering the clinical comprehensive liquid biopsy market with our

Guardant360 and GuardantOMNI tests, both of which analyze circulating tumor DNA in blood. Our Guardant360 test is a molecular diagnostic test measuring 74 cancer-related genes and has been used by clinicians to help inform which

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therapy may be effective for advanced stage cancer patients with solid tumors and by biopharmaceutical companies for a range of applications, including identifying target patient populations to accelerate translational science research, clinical trial enrollment, and drug development, and post-approval commercialization. Our GuardantOMNI test has a broader 500-gene panel, including genes associated with homologous recombination repair deficiency and biomarkers for immuno-oncology applications, such as tumor mutational burden and microsatellite instability, and has achieved comparable analytical performance in clinical studies, including for translational science applications in collaboration with several biopharmaceutical companies, including AstraZeneca, Bristol-Myers Squibb, Merck MSD, Merck KGaA ~~Pfizer, AstraZeneca~~of Darmstadt, Germany and ~~Bristol-Myers Squibb.~~Pfizer.

~~The~~

Our Guardant360 and GuardantOMNI tests have each been designated by the FDA ~~granted~~as a breakthrough device for use as a companion diagnostic in connection with certain specified therapeutic products of our biopharmaceutical customers. Among other things, designation as a breakthrough device ~~for our Guardant360 test in January 2018 for companion diagnostic use, and for our GuardantOMNI test in December 2018 for companion diagnostic use. Breakthrough device designation, among other things,~~ provides for priority review by the FDA and more interactive communication with the FDA during the development process. Our Guardant360 and GuardantOMNI tests are both being developed as companion diagnostics under collaborations with biopharmaceutical ~~companies.~~companies, including AstraZeneca and Amgen.

We perform our Guardant360, GuardantOMNI and other tests in our clinical laboratory located in Redwood City, California. Our 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.

The analytical and clinical data that we have generated in our efforts to establish clinical utility, combined with the support we have developed with key opinion leaders, or KOLs, in the oncology space have led to positive coverage decisions by a number of commercial payers. Our Guardant360 test is currently covered by Cigna, Priority Health, ~~and~~ multiple Blue Cross Blue Shield plans as well as the health plans associated with eviCore, which have adopted ~~reimbursement~~ policies that specifically cover Guardant360 test for non-small cell lung cancer, or NSCLC, which we believe gives us a competitive advantage with these payers.

In July 2018, Palmetto GBA, the Medicare Administrative Contractor, or MAC, responsible for administering Medicare’s Molecular Diagnostic Services Program, or MolDx, issued a local coverage determination, or LCD, for our Guardant360 test for NSCLC patients who meet certain clinical criteria. ~~We worked with Palmetto GBA~~Subsequently in 2018, Noridian Healthcare Solutions, or Noridian, a participant in MolDx and the MAC responsible for adjudicating claims in California, where our laboratory is located, also finalized its LCD for our Guardant360 test. Pursuant to ~~obtain~~ this ~~positive coverage decision through~~Noridian LCD, in September 2018, we began to submit claims for reimbursement for Guardant360 clinical testing performed for NSCLC patients covered under the ~~submission of a detailed dossier of analytical~~LCD who meet certain clinical criteria, and ~~clinical data~~in October 2018, we began to ~~substantiate that the test meets Medicare’s medical necessity requirements.~~ receive payments for these services from Medicare.

We estimate that approximately 75% of Medicare patients tested for NSCLC are covered by the ~~LCD.~~LCDs for NSCLC patients. For the three months ended March 31, 2020 and 2019, respectively, approximately 43% and ~~2018, approximately~~ 47% ~~and 46%~~ of our U.S. clinical tests were for patients tested for NSCLC. Noridian Healthcare Solutions, the MAC responsible for adjudicating claims in California, where our laboratory is located, and a participant in the MolDx, recently finalized its LCD for Guardant360 test.

In September 2018, we began to submit claims for reimbursement for Guardant360 clinical testing performed for Medicare beneficiaries covered under the LCDs, and in October 2018, we began to receive payments from Medicare. In MarchDecember 2019, Palmetto GBA ~~posted a proposed~~finalized its expanded LCD ~~that, if finalized as written, would~~for our Guardant360 test to provide limited Medicare coverage for use of Guardant360 for qualifying patients diagnosed with solid tumor cancers of non-central nervous system ~~origin. The coverage requirements necessitate that patients are recurrent, relapsed, refractory, metastatic, or advanced cancer patients who are seeking further treatment and are potential candidates~~origin with an effective date in February 2020. In May 2019, Noridian also issued an expanded draft LCD for ~~an FDA-approved or NCCN-recommended (for Category 1 or 2A level of evidence) biomarker targeted therapy. Additionally, the patient must not have had a previous~~our Guardant360 test ~~and must be untreated or not responding on~~consistent with the patient’s current therapy. A patient who has previously been tested with Guardant360 and has progressed with new malignant growth since the patient’s prior test is considered to have a new primary cancer diagnosis and thus is eligible to have another test. Finally, for qualifying cancers other than NSCLC, tissue-based comprehensive genomic profiling must be infeasible for coverage. NSCLC patients would be eligible for coverage if tissue-based testing is infeasible or if previous tissue-based comprehensive genomic profiling returned no actionable results.

If finalized, we believe the proposed LCD will significantly expand coverage for Medicare patients based on historic physician ordering patterns. Palmetto GBA is accepting and evaluating public comments, after which theexpanded draft LCD ~~may be finalized and implemented by MACs that follow MolDx coverage policies. We can provide no assurances, however, that the draft LCD will be finalized as written or implemented~~issued by Palmetto GBA orin March 2019. We believe that, in accordance with the ~~California MAC.~~21st Century Cures Act, Noridian needs to finalize its expanded draft LCD by May 16, 2020. We cannot predict whether and when Noridian will be able to issue a final expanded LCD equivalent to the expanded LCD issued by Palmetto GBA. We also cannot predict whether Noridian will retire the current draft expanded LCD if it does not finalize such draft LCD by May 16, 2020, nor whether Noridian will issue another draft expanded LCD if it retires the current draft LCD.

~~We anticipate approval by the FDA, if obtained, may also support improvements in coverage and reimbursement for the Guardant360 test.~~

In the United States, we market our tests to clinical customers through our sales organization, which is engaged in sales efforts and promotional activities primarily targeting oncologists and cancer centers. Outside the United States, we market our tests to clinical customers through distributors and direct contracts with healthcare institutions. We also market our tests to biopharmaceutical customers globally through our business development team, which promotes the broad utility of our tests throughout drug development and commercialization. Additionally, we have established a joint venture with SoftBank to accelerate commercialization of our products including in Asia, the Middle East and Africa, with our initial focus being on Japan. Our products are currently marketed in approximately 40 countries.

The recent global outbreak of coronavirus 2019, or COVID-19, has disrupted, and we expect will continue to disrupt, our operations. To protect the health and well-being of our workforce, partners, vendors and customers, we have rolled-out free, voluntary COVID-19 testing for employees working on-site, implemented social distance and building entry policies at work, restricted travel and facility visits, and followed California’s “shelter in place” public health orders and the guidance from the Centers for Disease Control and Prevention. Employees who can perform their duties remotely are asked to work from home and those on site are asked to follow our social distance guidelines. Our sales, marketing and business development efforts are also constrained by our operational response to the COVID-19 pandemic. We expect to continue to adjust our operational norms in an effort to help slow the spread of COVID-19 in the coming months, including complying with government directives and guidelines as they are modified and supplemented.

The COVID-19 global pandemic also has started to negatively affect, and we expect will continue to negatively affect, our revenue and our clinical studies. For example, cancer patients may have more limited access to hospitals, healthcare providers and medical resources as they take steps to control the spread of COVID-19. Our biopharmaceutical customers are facing challenges in recruiting patients and in conducting clinical trials to advance their pipelines, for which our tests could be utilized. As a result of the COVID-19 pandemic, beginning in the latter half of March 2020, we have been receiving fewer samples for testing on a daily average basis from our clinical and biopharmaceutical customers than before the outbreak of the COVID-19 pandemic. Further, our clinical studies, especially those such as our ECLIPSE trial and the COBRA study that are deemed as preventive care or are not part of a standard of care, as well as our development services arrangements with our biopharmaceutical customers, are expected to take longer to complete, if at all, than what we expected before the outbreak of the COVID-19 pandemic.

The limited availability of broad-based COVID-19 diagnostic testing has hindered recovery efforts to date. As a result, in early April 2020 we initiated a feasibility assessment that has included our research and development team working to determine our ability to bring a new COVID-19 test to market utilizing our current laboratory facilities, as well as our outreach to potential public and private partners for their assistance in operationalizing such test. However, this assessment is still in progress, and we have not yet determined the scale and financial elements of any program that may result from this assessment.

The ultimate impact of the COVID-19 pandemic on our business and financial condition will depend on many factors, including the duration of the outbreak and the mitigation requirements affecting our operations, and healthcare delivery and society in general. As a result, we expect our revenue and results of operations to be adversely affected until testing, treatments and vaccines substantially eliminate the impact of the COVID-19 pandemic.

We generated total revenue of ~~$36.7~~$67.5 million and ~~$16.7~~$36.7 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. We also incurred net losses of ~~$21.4~~$31.8 million and ~~$13.8~~$21.4 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. We have funded our operations to date principally from the sale of our stock and revenue from our precision oncology testing and development services. In October 2018, we completed our initial public offering, or IPO, selling 14,375,000 shares of our common stock and raising $249.5 million net of underwriting discounts and commissions and other expenses payable by us. As of March 31, ~~2019,~~2020, we had cash, cash equivalents and marketable securities of ~~$492.8~~$758.3 million.

Factors affecting our performance

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

~~Testing volume, pricing and customer mix.~~ Our revenue and costs are affected by the volume of testing and mix of customers from period to period. We evaluate both the volume of tests that we perform for patients on behalf of clinicians and the number of tests we perform for biopharmaceutical companies. Our performance depends on our ability to retain and broaden adoption with existing customers, as well as attract new customers. We believe that the test volume we receive from clinicians and biopharmaceutical companies are indicators of growth in each of these customer verticals. Customer mix for our tests has the potential to significantly affect our results of operations, as the average selling price for biopharmaceutical sample testing is currently higher than our average selling price for clinical tests since

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Testing volume, pricing and customer mix. Our revenue and costs are affected by the volume of testing and mix of customers from period to period. We evaluate both the volume of tests that we perform for patients on behalf of clinicians and the number of tests we perform for biopharmaceutical companies. Our performance depends on our ability to retain and broaden adoption with existing customers, as well as attract new customers. We believe that the test volume we receive from clinicians and biopharmaceutical companies are indicators of growth in each of these customer verticals. Customer mix for our tests has the potential to significantly affect our results of operations, as the average selling price for biopharmaceutical sample testing is currently higher than our average selling price for clinical tests because we are not a contracted provider for, or our tests are not covered by clinical patients’ insurance for, the majority of the tests that we perform for patients on behalf of clinicians. Approximately 38% and 38% of our U.S. clinical tests for the three months ended March 31, 2020 and 2019, respectively, were for Medicare beneficiaries.

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Regulatory approval. Our Guardant360 test was the first comprehensive liquid biopsy test approved by NYSDOH. In addition, we believe our facility was the first comprehensive liquid biopsy laboratory to be CLIA-certified, CAP-accredited and NYSDOH-permitted. In the fourth quarter of 2019, we submitted a premarket approval, or PMA, application to seek the FDA’s approval of our Guardant360 test to be used as a companion diagnostic, initially

in connection with one therapeutic product of a biopharmaceutical customer, and to provide tumor mutation profiling for cancer patients with solid tumors. In February 2020, we submitted an additional module of the tests that we perform for patients on behalf of clinicians. Approximately 38% and 37% of our U.S. clinical tests for three months ended March 31, 2019 and 2018, respectively, were for Medicare beneficiaries. Prior to the third quarter of 2018, Medicare did not cover our tests and we did not submit claims for reimbursement. In September 2018, we began to submit claims to Medicare for reimbursement for Guardant360 clinical tests for certain Medicare beneficiaries, and in October 2018, we began to receive payments from Medicare for these clinical tests. In March 2019, Palmetto GBA posted a proposed LCD that, if finalized as written, would provide limited Medicare coverage for use of Guardant360 for qualifying patients diagnosed with solid cancers of non-central nervous system origin. We can provide no assurances, however, that the draft LCD will be finalized as written or implemented by Palmetto GBA or the California MAC.

~~Regulatory approval.~~ Our Guardant360 test was the first comprehensive liquid biopsy test approved by NYSDOH. In addition, we believe our facility was the first comprehensive liquid biopsy laboratory to be CLIA-certified, CAP-accredited and NYSDOH-permitted. The FDA granted designation as a breakthrough devicePMA application for our Guardant360 test to the FDA. Medicare’s National Coverage Determination for Next Generation Sequencing established in 2018 and subsequently updated in 2020 provides coverage for molecular diagnostic tests such as aour Guardant360 test, if, among other criteria, such tests are offered within their FDA-approved companion diagnostic in January 2018 and for our GuardantOMNI test as a companion diagnostic in December 2018. Breakthrough Device designation, which, supersedes the EAP designation and, among other things, provides for priority review and more interactive communication with the FDA during the development process. While FDA approval is currently not required to market our tests in the United States, we intend to submit an application for a pre-market approval, or PMA, for each of our Guardant360 and GuardantOMNI tests for use as companion diagnostics. In March 2018, the Centers for Medicare and Medicaid Services, or CMS, published a Decision Memorandum for next-generation sequencing tests for patients with advanced cancer who meet certain clinical criteria, or the NGS Decision Memorandum. The NGS Decision Memorandum states that coverage would be available for next-generation sequencing FDA-approved tests offered within the FDA-approved labeling. ~~FDA approval therefore provides a path to reimbursement by Medicare under the NGS Decision Memorandum.~~ We believe that this establishes a competitive advantage for tests receiving FDA approval and that FDA approval will be increasingly necessary for diagnostic tests to gain adoption, both in the United States and abroad. We believe FDA approval, if obtained, will help increase adoption of our tests andfacilitate favorable reimbursement decisions by Medicare and commercial payers. We also intend to pursue regulatory approvals in specific markets outside of the United States, including in Europe, Japan and China. Any negative regulatory decisions or changes in regulatory requirements affecting our business could adversely impact our operations and financial results.

~~Payer coverage and reimbursement~~. Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payers, including both commercial and government payers. Payment from commercial payers differs depending on whether we have entered into a contract with the payers as a “participating provider” or do not have a contract and are considered a “non-participating provider.” Payers often reimburse non-participating providers, if at all, at a lower amount than participating providers. We have received a substantial portion of our revenue from a limited number of commercial payers, most of which have not contracted with us to be a participating provider. We have received reimbursement for tests of patients with a variety of cancers, though for amounts that on average are significantly lower than for participating providers. Historically, we have experienced situations where commercial payers proactively reduced the amounts they were willing to reimburse for our tests, and in other situations, commercial payers have determined that the amounts they previously paid were too high and have

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Payer coverage and reimbursement. Our revenue depends on achieving broad coverage and reimbursement for our tests from third-party payers, including both commercial and government payers. Payment from commercial payers can vary depending on whether we have entered into a contract with the payers as a “participating provider” or do not have a contract and are considered a “non-participating provider.” Payers often reimburse non-participating providers, if at all, at a lower amount than participating providers. We have received a substantial portion of our revenue from a limited number of commercial payers, most of which have not contracted with us to be a participating provider. We have received reimbursement for tests of patients with a variety of cancers, though for amounts that on average are significantly lower than for participating providers. We have experienced situations where commercial payers proactively reduced the amounts they were willing to reimburse for our tests, and in other situations, commercial payers have determined that the amounts they previously paid were too high and have sought to recover those perceived excess payments by deducting such amounts from payments otherwise being made. When we contract with a payer to serve 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. Becoming a participating provider can result in higher reimbursement amounts for covered uses of our test and, potentially, no reimbursement for non-covered uses identified under the payer’s policies or the contract. As a result, the potential for more favorable reimbursement associated with becoming a participating provider may be offset by a potential loss of reimbursement for non-covered uses of our tests. Current Procedural Terminology, or CPT, coding plays a significant role in how our Guardant360 test is reimbursed both from commercial and governmental payers. Changes to the codes used to report the Guardant360 test to payers may result in significant changes in its reimbursement. If our Guardant360 test receives approval from the FDA, we may be required to obtain a new code to report the Guardant360 test on claims submitted to U.S. payers. If a coding change were to occur, payments for certain uses of the Guardant360 test could be reduced or eliminated by such payers. Cigna, Priority Health, multiple Blue Cross Blue Shield plans as well as the health plans associated with eviCore adopted policies that cover our Guardant360 test for the majority of NSCLC patients we test. If their policies were to change in the future to cover additional cancer indications, we anticipate that our total reimbursement would increase. In September 2018, we began to submit claims to Medicare for reimbursement with respect to Guardant360 clinical tests performed for NSCLC patients covered under the 2018 Noridian LCD who meet certain clinical criteria, and in October 2018, we began to receive payments from Medicarefor these clinical tests. In March 2020, we began to receive reimbursement from Medicare for claims submitted, in accordance with the draft expanded LCD issued by Noridian, with respect to Guardant360 clinical tests performed for qualifying patients diagnosed with solid tumor cancers of non-central nervous system origin other than NSCLC. Because Noridian has not finalized the draft expanded LCD, we cannot guarantee that Medicare reimbursement for clinical tests of solid tumor cancers other than NSCLC will continue, especially after May 16, 2020, the deadline we believe for Noridian to finalize the draft expanded LCD. If such Medicare reimbursement for clinical tests of solid tumor cancers other than NSCLC is disrupted or reduced, it could have a material adverse impact on our business and results of operations. . We estimate total coverage in the United States for the Guardant360 test to be more than 170 million lives, including Medicare beneficiaries and members of several commercial health plans. If we fail to obtain or maintain coverage and adequate reimbursement from third-party payers, including from Medicare, we may be unable to increase our testing volume and revenue as expected. Retrospective reimbursement adjustments, such as deductions from further payments and clawbacks, can also negatively impact our revenue and cause our financial results to fluctuate. Due to the inherent variability of the insurance landscape, historic success of, and payments from, appeals of reimbursement denials by payers are not indicative of future success of and payments from such appeals.


•	Biopharmaceutical customers. Our revenue also depends on our ability to attract new, and to maintain and expand relationships with existing, biopharmaceutical customers, and we expect to increase our sales and marketing expense in furtherance of this goal. As we continue to develop these relationships, we expect to support a growing

sought to recover those perceived excess payments by deducting such amounts from payments otherwise being made. When we contract with a payer to serve 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. Becoming a participating provider generally results in higher reimbursement for covered indications and lack of reimbursement for non-covered indications. As a result, the impact of becoming a participating provider with a specific payer will vary based on historical reimbursement as a non-participating provider for that payer, and in some situations, the benefit of increased reimbursement for covered testing could be offset by the loss of reimbursement on tests for non-covered indications previously received when we served as a non-participating provider. Current Procedural Terminology, or CPT, coding plays a significant role in how our Guardant360 test is reimbursed both from commercial and governmental payers. Changes in how the Guardant360 test is coded may result in a significant change in its reimbursement amongst commercial payers. If our Guardant360 test receives approval from the FDA, we may be required to obtain a separate code for the Guardant360 test to bill U.S. based payers. If a coding change were to occur, payments for uncovered Guardant360 testing may be reduced or eliminated by commercial payers. The impact to our revenue may be in proportion to the volume of tests we performed as a non-participating provider. Cigna, Priority Health and multiple Blue Cross Blue Shield plans adopted reimbursement policies that cover our Guardant360 test for the majority of NSCLC patients we test. If their reimbursement policies were to change in the future to cover additional cancer indications, we anticipate that our total reimbursement would increase. In September 2018, we began to submit claims for reimbursement at the rate of $3,500 per test with respect to Guardant360 clinical testing performed for NSCLC patients covered under Medicare’s Molecular Diagnostic Services Program who meet certain clinical criteria, and in October 2018, we began to receive payments from Medicare. In addition, our Guardant360 test is expected to be a covered benefit for the members of the health plans associated with eviCore, a technology assessment company, as being considered medically necessary to assist in selecting therapy for patients with advanced lung cancer. When the eviCore policy becomes effective July 1, 2019, with added coverage for over 38 million Americans, we expect total lung cancer coverage in the United States for the Guardant360 test will increase to a total of more than 150 million lives, including Medicare beneficiaries and members of several health plans. If we fail to obtain or maintain coverage and adequate reimbursement from third-party payers, we may be unable to increase our testing volume and revenue as expected. Retrospective reimbursement adjustments can also negatively impact our revenue and cause our financial results to fluctuate. We have experienced situations where commercial payers proactively reduce the amounts they were willing to reimburse for our tests or determine that the amounts they previously paid were too high and have sought to recover those perceived excess payments by deducting such amounts from payments otherwise being made.

~~Biopharmaceutical customers.~~ Our revenue also depends on our ability to attract new, and to maintain and expand relationships with existing, biopharmaceutical customers, and we expect to increase our sales and marketing expense in furtherance of this goal. As we continue to develop these relationships, we expect to support a growing number of clinical trials both in the United States and internationally. If our relationships expand with biopharmaceutical customers, we believe we may continue to have opportunities to offer our platform to such customers for companion diagnostic development, ~~and for~~ novel target discovery and validation as well as clinical trial enrollment, and to grow into other business opportunities. For example, we believe that our genomic data, in combination with clinical outcomes or claims data, has revenue-generating potential, ~~including for~~supporting novel ~~target identification~~drug development and ~~clinical trial enrollment.~~companion diagnostic development.

~~Research and development.~~ A significant aspect of our business is our investment in research and development, including the development of new products, such as those being developed as part of our LUNAR early detection program. In particular, we have invested heavily in clinical studies, including more than 40 clinical outcomes studies, the largest-ever liquid-to-tissue concordance study, and a prospective interventional clinical utility study demonstrating clinical overall response rates in line with tissue biopsy approaches. Our clinical research has resulted in over 110 peer-reviewed publications. For example, the positive results from the Noninvasive vs. Invasive Lung Evaluation (NILE) study, a head-to-head comparison of the Guardant360 assay to standard-of-care tissue testing for the identification of guideline-recommended biomarkers in first-line advanced NSCLC patients, was published in Clinical Cancer Research. Beyond meeting its primary endpoint of demonstrating that the Guardant360 test was as accurate as standard-of-care tissue testing for the detection of guideline-recommended biomarkers in advanced NSCLC, the NILE study showed that (i) Guardant360 testing resulted in guideline-recommended testing for three times as many patients as standard-of-care tissue testing; (ii) when results for Guardant360 and tissue testing were both available for a patient, they were concordant in more than 90% of cases; (iii) the median time to results for Guardant360 was 9 days versus 15 days for standard-of-care tissue testing, and (iv) the Guardant360 test’s clinical sensitivity for EGFR L858R mutations was 90%. In addition, we are collaborating with investigators from multiple academic cancer centers, including MD Anderson Cancer Center, the University of Colorado, Memorial Sloan Kettering Cancer Center, Massachusetts General Cancer Center, Wake Forest Cancer Center and the University of California San Francisco, as well as several international institutions. We believe these studies are critical to

gaining physician adoption and driving favorable coverage decisions by payers, and expect our investments to increase. We expect to increase our research and development expense with the goal of fueling further innovation.

~~International expansion.~~ A component of our long-term growth strategy is to expand our commercial footprint internationally, and we expect to increase our sales and marketing expense to execute on this strategy. We currently offer our tests in countries outside the United States primarily through distributor relationships or direct contracts with hospitals. In May 2018, we formed and capitalized a joint venture, Guardant Health AMEA, Inc., which we refer to as the Joint Venture, with SoftBank, relating to the sale, marketing and distribution of our tests generally outside the Americas and Europe. We expect to rely on the Joint Venture to accelerate commercialization of our products in Asia, the Middle East and Africa, with our initial focus being on Japan.

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Research and development. A significant aspect of our business is our investment in research and development, including the development of new products, such as those being developed as part of our LUNAR program. In particular, we have invested heavily in clinical studies, including more than 50 clinical outcomes studies, the largest-ever liquid-to-tissue concordance study, and a prospective interventional clinical utility study demonstrating clinical overall response rates in line with tissue biopsy approaches. Our clinical research has resulted in over 150 peer-reviewed publications. With respect to our LUNAR program, we initiated a prospective screening study, which we refer to as the ECLIPSE trial, aiming to recruit approximately 10,000 patients and evaluate the performance of our LUNAR-2 assay in detecting colorectal cancer in average-risk adults, and in collaboration with a National Clinical Trials Network group, initiated a prospective multi-center randomized controlled trial, which we refer to as the COBRA study, in approximately 1,400 patients with resected stage II colon cancer to use our LUNAR-1 assay to evaluate recurrence-free survival in patients who receive ctDNA-directed therapy as compared to the current standard-of-care active surveillance. Furthermore, we are collaborating with investigators from multiple academic cancer centers, including MD Anderson Cancer Center, the University of Colorado, Memorial Sloan Kettering Cancer Center, Massachusetts General Cancer Center, Wake Forest Cancer Center and the University of California San Francisco, as well as several international institutions. The COVID-19 global pandemic has negatively impacted, and is expected to continue to negatively impact, the recruitment for clinical studies, especially those that are deemed as preventive care or are not part of a standard of care, including the ECLIPSE trial and the COBRA study. We believe these studies are critical to gaining physician adoption and driving favorable coverage decisions by payers, and expect our investments in clinical studies to increase. We expect to increase our research and development expense with the goal of fueling further innovation.

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International expansion. A component of our long-term growth strategy is to expand our commercial footprint internationally, and we expect to increase our sales and marketing expense to execute on this strategy. We currently offer our tests in countries outside the United States primarily through distributor relationships or direct contracts with hospitals. In May 2018, we formed and capitalized a joint venture, Guardant Health AMEA, Inc., which we refer to as the Joint Venture, with SoftBank, relating to the sale, marketing and distribution of our tests generally outside the Americas and Europe. We expect to rely on the Joint Venture to accelerate commercialization of our products in Asia, the Middle East and Africa, with our initial focus being on Japan. That effort could be negatively impacted by the COVID-19 global pandemic.

While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019, and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q, for more information.

Components of results of operations

Revenue

We derive our revenue from two sources: (i) precision oncology testing and (ii) development services.

~~Effective January 1, 2019, we adopted a new revenue recognition standard FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers,~~ or ASC 606, which primarily impacted our recognition of revenue related to patient claims paid by third-party commercial and governmental payors. We adopted ASC 606 using the modified retrospective method, which means that the cumulative effect of applying ASC 606 has been recognized to beginning accumulated deficit at January 1, 2019, the date of adoption of ASC 606, and prior comparative periods were not recast to reflect ASC 606. As a result, revenue for three months ended March 31, 2018 is presented in accordance with FASB ASC Topic 605, ~~Revenue Recognition~~, or ASC 605, whereas revenue for the three months ended March 31, 2019 is presented under ASC 606. ASC 606 provides a five-step model for recognizing revenue that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

Precision oncology testing. Precision oncology testing revenue is generated from sales of our Guardant 360 and GuardantOMNI ~~tests.~~tests to clinical and biopharmaceutical customers. In the United States, through March 31, ~~2019,~~2020, we generally performed tests as an out-of-network service provider without contracts with health insurance companies. We submit claims for payment for tests performed for patients covered by U.S. private payers. ~~Prior to the third quarter of 2018, Medicare did not cover our tests and we did not submit claims for reimbursement for these tests. In September 2018, we began to~~We submit claims to Medicare for reimbursement for Guardant360 clinical testing performed for NSCLC patients covered under Medicare’s Molecular Diagnostic Services Program who meet certain clinical criteria. Tests for patients covered by Medicare represented approximately 38% and ~~37%~~38% of U.S. tests processed for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. Due to the historical general lack of contracts with U.S. private payers and variability in payments received for claims submitted to them, as well as the limited claims experience to date with Medicare, from inception through the end of 2018 revenue had not been recognized by us at the time the service was performed as the price of the transaction was not fixed or determinable and collectability was not reasonably assured. As weWe also provide precision oncology testing to biopharmaceutical customers under contracts for which all recognition criteria are met, and we have recognized revenue on an accrual basis for those services.

Development ~~services.~~services. Development services revenue represents services, other than precision oncology testing, that we provide to biopharmaceutical companies and large medical institutions. It includes companion diagnostic development and regulatory approval services, clinical trial referrals and liquid biopsy testing development and support. We collaborate with biopharmaceutical companies in the development and clinical trials of new drugs. As part of these

collaborations, we provide services related to regulatory filings with the FDA to support companion diagnostic device submissions for our liquid biopsy 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 can vary over time as different projects start and complete.

Costs and operating expenses

Cost of precision oncology testing. Cost of precision oncology testing generally consists of cost of materials, direct labor, including bonus, benefit and stock-based compensation; equipment and infrastructure expenses associated with processing liquid biopsy test samples, including sample accessioning, library preparation, sequencing, quality control

analyses and shipping charges to transport blood samples; freight; curation of test results for physicians; and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Costs associated with performing our tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to the tests. Royalties for licensed technology are calculated as a percentage of revenues generated using the associated technology and recorded as expense at the time the related revenue is recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the patents. While we do not believe the technologies underlying these licenses are necessary to permit us to provide our tests, we do believe these technologies are potentially valuable and of possible strategic importance to us or our competitors. ~~Cost of precision oncology testing revenue included royalty expense of $0.6 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively.~~

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

Cost of development services. Cost of development services includes costs incurred for the performance of development services requested by our customers. For development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of revenue. Cost of development services will vary depending on the nature, timing and scope of customer projects.

Research and development expense. Research and development expenses consist of costs incurred to develop technology and include salaries and benefits, reagents and supplies used in research and development laboratory work, infrastructure expenses, including allocated facility occupancy and information technology costs, contract services, other outside costs and costs to develop our technology capabilities. Research and development expenses also include costs related to activities performed under contracts with biopharmaceutical companies before technological feasibility has been achieved. Research and development costs are expensed as incurred. Payments made prior to the receipt of goods or services to be used in research and development are deferred and recognized as expense in the period in which the related goods are received or services are rendered. Costs to develop our technology capabilities are recorded as research and development unless they meet the criteria to be capitalized as internal-use software costs.

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 ~~trials. This expense is expected to increase, particularly to drive~~trials with a particular focus on our LUNAR program. ~~Long term we expect it to decrease modestly as a percentage of revenue, though it may fluctuate as a percentage of revenue from period to period due to the timing and extent of these expenses.~~

Sales and marketing expense. Our sales and marketing expenses are expensed as incurred and include costs associated with our sales organization, including our direct sales force and sales management, client services, marketing and reimbursement, medical affairs, as well as business development personnel who are focused on our biopharmaceutical customers. These expenses consist primarily of salaries, commissions, bonuses, employee benefits, travel expenses and stock-based compensation, as well as marketing and educational activities and allocated overhead expenses.

We expect our sales and marketing expenses to increase in absolute dollars as we expand our sales force, increase our presence within and outside of the United States, and increase our marketing activities to drive further awareness and adoption of our Guardant360 and GuardantOMNI tests. Development of products from our LUNAR program is expensive and we do not expect to generate profits from such products until they reach commercial scale. Sales and marketing expenses, though expected to increase in absolute dollars, are expected to decrease modestly as a percentage of revenue in the long term, though they may fluctuate as a percentage of revenue from period to period due to the timing and extent of these expenses.

General and administrative expense. Our general and administrative expenses include costs for our executive, accounting and finance, legal and human resources functions. These expenses consist principally of salaries, bonuses, employee benefits, travel expenses and stock-based compensation, as well as professional services fees such as consulting, audit, tax and legal fees, and general corporate costs and allocated overhead expenses.

We expect that our general and administrative expenses will continue to increase in absolute dollars, ~~in 2019,~~ primarily due to increased headcount and costs associated with operating as a public company, including expenses related to legal, accounting, regulatory, maintaining compliance with exchange listing and requirements of the SEC, director and officer insurance premiums and investor relations. These expenses, though expected to increase in absolute dollars, are expected

to decrease modestly as a percentage of revenue in the long term, though they may fluctuate as a percentage of revenue from period to period due to the timing and extent of these ~~expenses.~~

expenses being incurred.

Interest income

Interest income consists of interest earned on our cash, cash equivalents and marketable securities.

Interest expense

Interest expense consists primarily of interest from finance leases or capital leases and royalty obligations.

Other income (expense), net

In the first quarter of 2018, we settled a commercial legal dispute. In connection with the settlement, we received a payment of $4.25 million, which was recognized as one-time other income for the three months ended March 31, 2018.

Other income (expense), net also consists of foreign currency exchange gains and losses. Foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar, primarily comprised of a royalty obligation denominated in Euros. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates.

~~Joint venture~~

In connection with SoftBank’s purchase of our Series E convertible preferred stock, we agreed to enter into a joint venture agreement with Softbank relating to the commercialization and distribution of products in in all areas worldwide outside of North America, Central, America, South America, the United Kingdom, all other member states of the European Union as of May 2017, Iceland, Norway, Switzerland and Turkey, or the JV Territory. Upon the incorporation of the Joint Venture (Guardant Health AMEA, Inc.) in May 2018, SoftBank purchased 40,000 shares of common stock of the Joint Venture in exchange for $41.0 million in cash and we purchased 40,000 shares of common stock of the Joint Venture in exchange for $9.0 million in cash. We also entered into various ancillary agreements with the Joint Venture necessary to operate its business. Under the terms of the joint venture agreement, neither we nor SoftBank is obligated to make any further capital contribution, in cash or otherwise, to the Joint Venture. In the event the Joint Venture requires any additional funding for its operations, the Joint Venture may seek debt financing from financial institutions or additional financing in debt or equity from its shareholders, which will be on a ~~pro rata~~ ~~basis among such shareholders unless they agree otherwise.~~

~~Initial public offering~~

On October 9, 2018, we completed an initial public offering, or the IPO, in which we issued and sold 14,375,000 shares of our common stock at a price of $19.00 per share. We received net proceeds of $249.5 million after deducting underwriting discounts and commissions and offering expenses payable by us. All then-outstanding warrants to purchase our common stock were exercised prior to the completion of the IPO. In addition, in connection with the IPO, all shares of our then-outstanding convertible preferred stock were automatically converted into 58,264,577 shares of our common stock, and all then-outstanding warrants to purchase our convertible preferred stock were automatically converted into warrants to purchase 7,636 shares of our common stock.

Results of operations

The following table set forth the significant components of our results of operations for the periods presented.


		Three Months Ended March 31,							Three Months Ended March 31,
		2019			2018				2020			2019

		(unaudited)						(unaudited)
	(in thousands)							(in thousands)
Revenue:
Precision oncology testing		$	28,837		$	14,191			$	60,246		$	28,837
Development services		7,818			2,501				7,264			7,818
Total revenue		36,655			16,692				67,510			36,655
Costs and operating expenses:
Cost of precision oncology testing⁽¹⁾		11,023			8,045				18,191			11,023
Cost of development services		2,512			1,208				2,315			2,512
Research and development expense⁽¹⁾		16,316			8,255				37,016			16,316
Sales and marketing expense⁽¹⁾		17,807			11,312				25,115			17,807
General and administrative expense⁽¹⁾		12,661			6,519				19,785			12,661
Total costs and operating expenses		60,319			35,339				102,422			60,319
Loss from operations		(23,664		)	(18,647		)		(34,912		)	(23,664		)
Interest income		2,485			985				3,318			2,485
Interest expense		(293		)	(331		)		(12		)	(293		)
Other income (expense), net		147			4,149				(209		)	147
Loss before provision for income taxes		(21,325		)	(13,844		)		(31,815		)	(21,325		)
Provision for income taxes		26			—				14			26
Net loss		$	(21,351	)	$	(13,844	)		$	(31,829	)	$	(21,351	)


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


	Three Months Ended March 31,					Three Months Ended March 31,
	2019		2018			2020		2019

	(unaudited)				(unaudited)
	(in thousands)				(in thousands)
Cost of precision oncology testing	$	170	$	63		$	303	$	170
Research and development expense	1,210		204			2,364		1,210
Sales and marketing expense	826		374			1,798		826
General and administrative expense	976		636			1,873		976
Total stock-based compensation expense	$	3,182	$	1,277		$	6,338	$	3,182

Comparison of the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019

Revenue


	Three Months Ended March 31,				Change				Three Months Ended March 31,				Change
	2019		2018		$		%		2020		2019		$			%

	(unaudited)								(unaudited)
	(in thousands)								(in thousands)
Precision oncology testing	$	28,837	$	14,191	$	14,646	103	%	$	60,246	$	28,837	$	31,409		109	%
Development services	7,818		2,501		5,317		213	%	7,264		7,818		(554		)	(7	)%
Total revenue	$	36,655	$	16,692	$	19,963	120	%	$	67,510	$	36,655	$	30,855		84	%

Total revenue was $67.5 million for the three months ended March 31, 2020 compared to $36.7 million for the three months ended March 31, 2019, ~~compared~~an increase of $30.9 million, or 84%.

Precision oncology testing revenue increased to ~~$16.7~~$60.2 million for the three months ended March 31, ~~2018, an increase of $20.0 million, or 120%.~~

~~Precision oncology testing revenue increased to~~2020 from $28.8 million for the three months ended March 31, 2019, ~~from $14.2 million for the three months ended March 31, 2018,~~ an increase of ~~$14.6~~$31.4 million, or ~~103%~~109%. This increase in precision oncology testing revenue was primarily due to an increase in tests ~~processed.~~processed as well as increase in average selling price per test. Precision oncology revenue from tests for clinical customers was $38.0 million in the three months ended March 31, 2020 and $17.1 million in the three months ended March 31, 2019, respectively. Tests for clinical customers increased to 15,257 for the three months ended March 31, 2020 from 9,521 for the three months ended March 31, 2019 ~~from 7,246 for the three months ended March 31, 2018~~ mainly due to an increase in the number of physicians ordering Guardant360 tests. In March 2020, we began to receive reimbursement from Medicare for claims submitted, in accordance with the draft expanded LCD issued by Noridian in May 2019, with respect to Guardant360 clinical tests performed forqualifying patients diagnosed with solid tumor cancers of non-central nervous system origin other than NSCLC. Commencement of Medicare reimbursement for clinical tests of solid tumor cancers other than NSCLC was the main driver of the increase in average selling price per clinical testfor the three months ended March 31, 2019. Medicare reimbursement for clinical tests of solid tumor cancers other than NSCLC could be disrupted if Noridian does not finalize their expanded draft LCD.

Precision oncology revenue from tests for ~~clinical~~biopharmaceutical customers was ~~$17.2~~$22.3 million in the three months ended March 31, 2020 and $11.7 million in the three months ended March 31, 2019, ~~and $7.3 million in~~respectively. Tests for biopharmaceutical customers increased to 5,266 for the three months ended March 31, ~~2018, respectively. Precision oncology testing revenue increased due to increases in test volume for clinical customers, revenue earned~~2020 from most tests of Medicare lung cancer patients starting in the fourth quarter of 2018 and increases in commercial payer payments that were beneficially affected by the Protecting Access to Medicare Act of 2014. The change to accrual basis revenue under ASC 606 also contributed to the increase in precision oncology revenue from clinical customers, as cash basis revenue under ASC 605 in the three months ended March 31, 2019 would have been approximately $18.2 million. Tests for biopharmaceutical customers increased to 3,762 for the three months ended March 31, 2019 ~~from 2,334 for the three months ended March 31, 2018~~ due to an increase in the number of biopharmaceutical customers and their contracted projects. The average selling price of biopharmaceutical tests was $4,230 for the three months ended March 31, 2020, up from $3,109 for the three months ended March 31, 2019 ~~up from $2,966 for the three months ended March 31, 2018~~ due to a greater number of such tests being the GuardantOMNI test, which has a higher selling price than the Guardant360 test. As a result of the COVID-19 pandemic, beginning in the latter half of March 2020, we have been receiving fewer samples for testing on a daily average basis from our clinical and biopharmaceutical customers than before the outbreak of the COVID-19 pandemic. Our sample volumes and precision oncology revenue may be adversely impacted by the COVID-19 pandemic for the affected periods.

Development services revenue ~~increased~~decreased to $7.3 million for the three months ended March 31, 2020 from $7.8 million for the three months ended March 31, 2019, ~~from $2.5 million for the three months ended March 31, 2018, an increase~~a decrease of ~~$5.3~~$0.6 million, or ~~213%~~7%. This ~~increase~~decrease in development services revenue was due to ~~new~~a slower progression in projects ~~in 2019 and was mainly received~~ from biopharmaceutical customers for companion diagnostic development and regulatory approval ~~services.~~

~~Costs~~ services during the three months ended March 31, 2020. We expect our development services arrangements with biopharmaceutical customers and ~~operating expenses~~development services revenue to be adversely impacted by the COVID-19 pandemic for the affected periods.

Cost of ~~precision oncology testing~~Revenue and Gross Margin

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Cost of precision oncology testing $ 11,023
$ 8,045
$ 2,978
37 %



	Three Months Ended March 31,						Change
	2020			2019			$		%

	(unaudited)
	(dollars in thousands)
Cost of revenue	$	20,506		$	13,535		$	6,971	52	%
Gross profit	$	47,004		$	23,120
Gross margin	70		%	63		%

Cost of revenue was $20.5 million for the three months ended March 31, 2020 compared to $13.5 million for the three months ended March 31, 2019, an increase of $7.0 million, or 52%.

Cost of precision oncology testing revenue was $18.2 million for the three months ended March 31, 2020 compared to $11.0 million for the three months ended March 31, 2019, ~~compared to $8.0 million for the three months ended March 31, 2018,~~ an increase of ~~$3.0~~$7.2 million, or ~~37%~~65%. This increase in cost of precision oncology testing was attributable to an increase in sample volumes and was primarily due to a ~~$1.7 million increase in material costs, a $0.9 million increase in other costs including freight, royalties and curation of test results for physicians and a $0.4~~$3.8 million increase in production labor and overhead costs and a $3.2 million increase in material costs.

~~Cost of development services~~

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Cost of development services $ 2,512
$ 1,208
$ 1,304
108 %

Cost of development services was $2.3 million for the three months ended March 31, 2020 compared to $2.5 million for the three months ended March 31, 2019, a decrease of $0.2 million, or 8%. This decrease in cost of development services was due to slower progression in development programs during the three months ended March 31, 2020 which resulted in lower material and labor costs related to companion diagnostic development and regulatory approval service contracts.

Gross margin for the three months ended March 31, 2020 was 70% compared to ~~$1.2~~63% for the three months ended March 31, 2019. Gross margin improvement reflects the impact of, higher sample volumes, increased average selling price per test, and cost efficiencies. We expect our gross margin to be adversely impacted by the COVID-19 pandemic for the affected periods.

Operating Expenses

Research and development expense



	Three Months Ended March 31,				Change
	2020		2019		$		%

	(unaudited)
	(in thousands)
Research and development	$	37,016	$	16,316	$	20,700	127	%

Research and development expenses were $37.0 million for the three months ended March 31, ~~2018, an increase of $1.3 million, or 108%. Costs include material and labor costs incurred after technological feasibility was achieved on the development programs.~~

~~Research and development expense~~

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Research and development $ 16,316
$ 8,255
$ 8,061
98 %

~~Research and development expenses were~~2020 compared to $16.3 million for the three months ended March 31, 2019, ~~compared to $8.3 million for the three months ended March 31, 2018,~~ an increase of ~~$8.1~~$20.7 million, or ~~98%~~127%. This increase in research and development expense was primarily due to an increase of ~~$4.8~~$8.5 million relating to IPR&D technology expensed in connection with a patent license acquisition that took place in March 2020, $4.4 million in personnel-related costs for employees in our research and development group, including a ~~$1.0~~$1.2 million increase in stock-based compensation, as we increased our headcount to support continued investment in our technology. The increase is also attributable to an increase of ~~$1.7 million in material costs incurred for the development of the LUNAR assay, and an increase of $0.5~~$3.6 million in development consulting fees, an increase of $2.5 million in material costs and an increase of ~~$0.4~~$0.8 million related to allocated ~~facilities~~facility and information technology infrastructure costs.

Sales and marketing expense

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Sales and marketing $ 17,807
$ 11,312
$ 6,495
57 %



	Three Months Ended March 31,				Change
	2020		2019		$		%

	(unaudited)
	(in thousands)
Sales and marketing	$	25,115	$	17,807	$	7,308	41	%

Selling and marketing expenses were $25.1 million for the three months ended March 31, 2020 compared to $17.8 million for the three months ended March 31, 2019, ~~compared to $11.3 million for the three months ended March 31, 2018,~~ an increase of ~~$6.5~~$7.3 million, or ~~57%~~41%. This increase was primarily due to an increase of ~~$4.8~~$4.4 million in personnel-related costs, including a ~~$0.5~~$1.0 million increase in stock-based compensation, associated with the expansion of our commercial organization, an increase of ~~$0.7~~$0.8 million in travel expense, an increase of ~~$0.3 million related to allocated facilities and information technology infrastructure costs, and an increase of $0.3~~$0.8 million in professional service expenses related to marketing ~~activities.~~activities and an increase of $0.8 million related to allocated facility and information technology infrastructure costs.

General and administrative expense

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
General and administrative $ 12,661
$ 6,519
$ 6,142
94 %



	Three Months Ended March 31,				Change
	2020		2019		$		%

	(unaudited)
	(in thousands)
General and administrative	$	19,785	$	12,661	$	7,124	56	%

General and administrative expenses were $19.8 million for the three months ended March 31, 2020 compared to $12.7 million for the three months ended March 31, 2019, ~~compared to $6.5 million for the three months ended March 31, 2018,~~ an increase of ~~$6.1~~$7.1 million, or ~~94%~~56%. This increase was primarily due to an increase of ~~$2.2~~$2.8 million in personnel-related costs, including a ~~$0.3~~$0.9 million increase in stock-based compensation related to an increase in our headcount, an increase of ~~$2.6~~$1.2 million related to settlement costs in connection with a patent license acquisition that took place in March 2020, an increase of $0.8 million in professional service expenses related to outside legal, accounting, consulting and IT services, and an increase of ~~$0.8~~$1.1 million related to allocated facilities and information technology infrastructure costs.

Interest income

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Interest income $ 2,485
$ 985
$ 1,500
152 %



	Three Months Ended March 31,				Change
	2020		2019		$		%

	(unaudited)
	(in thousands)
Interest income	$	3,318	$	2,485	$	833	34	%

Interest income was $3.3 million for the three months ended March 31, 2020 compared to $2.5 million for the three months ended March 31, 2019, ~~compared to $1.0 million for the three months ended March 31, 2018,~~ an increase of ~~$1.5~~$0.8 million, or ~~152%~~34%. This increase was primarily due to a significant increase in cash, cash equivalents and marketable securities ~~during~~related to the ~~three months ended March 31, 2019 primarily as a result~~receipt of cash proceeds from our ~~initial public offering.~~follow-on offering completed in May 2019.

Interest expense

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Interest expense $ 293
$ 331
$ (38 ) (11 )%



	Three Months Ended March 31,				Change
	2020		2019		$			%

	(unaudited)
	(in thousands)
Interest expense	$	12	$	293	$	(281	)	(96	)%

Interest expense was ~~$0.3 million~~immaterial for the three months ended March 31, ~~2019~~2020 compared to $0.3 million for the three months ended March 31, ~~2018,~~2019, a decrease of ~~$38,000,~~$0.3 million, or ~~11%~~96%. This decrease was primarily due to ~~reduced outstanding balance of an~~a reduction in our royalty obligation during the three months ended March 31, 2020 related to the termination of a ~~royalty in connection with a~~prior patent license ~~agreement entered into in January 2017.~~agreement.

Other income (expense), net

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Other income (expense), net $ 147
$ 4,149
$ (4,002 ) (96 )%



	Three Months Ended March 31,					Change
	2020			2019		$			%

	(unaudited)
	(in thousands)
Other income (expense), net	$	(209	)	$	147	$	(356	)	(242	)%

Other income (expense), net included ~~a gain~~foreign currency exchange losses of ~~$4.25~~$0.2 million ~~for settlement of a commercial legal dispute~~ for the three months ended March 31, ~~2018. There was no similar charge or gain~~2020 and foreign currency exchange gains of $0.1 million for the three months ended March 31, 2019.

Other income (expense), net also included foreign currency exchange gains of $147,000 for the three months ended March 31, 2019 and foreign currency exchange losses of $209,000 for the three months ended March 31, 2018. This increase was primarily due to an obligation denominated in Euros in connection with a license agreement entered into in January 2017.

Provision for income taxes

Three Months Ended March 31, Change
2019 2018 $ %

(unaudited)
(in thousands)
Provision for income taxes $ 26
$ —
$ 26
*



	Three Months Ended March 31,				Change
	2020		2019		$			%

	(unaudited)
	(in thousands)
Provision for income taxes	$	14	$	26	$	(12	)	*


*	Not meaningful

Provision for income taxes was ~~very small~~immaterial for the three months ended March 31, ~~2019~~2020 and ~~2018 due to the losses incurred by us. The net change was insignificant.~~2019.

Liquidity and capital resources

We have incurred losses and negative cash flows from operations since our inception, and as of March 31, ~~2019,~~2020, we had an accumulated deficit of ~~$303.2~~$380.5 million. We expect to incur additional operating losses in the near future and our operating expenses will increase as we continue to ~~expand our sales organization, increase our marketing efforts to drive market adoption of our Guardant360 and GuardantOMNI tests,~~ invest in clinical trials and develop new product offerings from our research programs, including our LUNAR ~~program. As demand for~~program, expand our sales organization, and increase our marketing efforts to drive market adoption of our Guardant360 and GuardantOMNI ~~tests are expected to continue to increase from physicians and biopharmaceutical companies, we anticipate that our~~tests. Our capital expenditure requirements ~~will~~could also increase ~~in order to~~if we build additional laboratory capacity. Moreover, we expect to continue to incur additional costs associated with operating as a public company, including expenses related to legal, accounting, regulatory, maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations.

We have funded our operations to date principally from the sale of stock, and revenue from precision oncology testing and ~~development service and the incurrence of indebtedness.~~development. As of March 31, ~~2019,~~2020, we had cash and cash equivalents of ~~$153.8~~$152.2 million and marketable securities of ~~$339.0~~$606.1 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to provide liquidity ~~and~~while ensuring capital preservation. Currently, our funds are held in marketable securities consisting of United States treasury securities and corporate bonds.

Based on our current business plan, we believe our current cash, cash equivalents and marketable securities and anticipated cash ~~flow~~flows from operations, will be sufficient to meet our anticipated cash requirements over at least the next 12 months from the date of this report. We may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons. As revenue from precision oncology testing and development service is expected to grow long-term, we expect our accounts receivable and inventory balances to increase. Any increase in accounts receivable and inventory may not be completely offset by increases in accounts payable and accrued expenses, which could result in greater working capital requirements.

If our available cash, ~~balances~~cash equivalents and marketable securities and anticipated cash ~~flow~~flows from operations are insufficient to satisfy our liquidity requirements including 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 report, we may seek to sell additional common or preferred equity or convertible debt securities, enter into ~~an additional~~a credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities

could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our platform technologies or products or grant licenses on terms that are not favorable to us. Additional capital may not be available to us on reasonable terms, or at all.

Cash flows

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


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019

	(unaudited)						(unaudited)
	(in thousands)						(in thousands)
Cash used in operating activities	$	(4,303	)	$	(6,559	)	$	(13,282	)	$	(4,303	)
Cash provided by investing activities	$	15,329		$	8,470		$	20,804		$	15,329
Cash provided by financing activities	$	2,288		$	1,267		$	1,466		$	2,288



Delaware		45-4139254
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~505 Penobscot Dr.~~ ~~Redwood City, California~~		~~94063~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~



Large ~~accelerated filer~~Accelerated Filer	o☒	Accelerated filer	o☐

Non-accelerated filer	x☐ (Do not check if a smaller reporting company)	Smaller reporting company	o☐

Emerging growth company	x☐



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001	GH	The Nasdaq ~~Stock~~Global Select Market ~~LLC~~



	PART I – FINANCIAL INFORMATION
		Page
Item 1.	Unaudited Condensed Consolidated Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to the Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3031
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4847
Item 4.	Controls and Procedures	4947

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	5049
Item 1A.	Risk Factors	5049
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
~~Item 5.~~	~~Other Information~~	50
~~Item 6.~~	~~Exhibits~~	51
Item 5.	~~Signatures~~Other Information	51
Item 6.	Exhibits	52
	Signatures	53


	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	153,790		$	140,544		$	152,239		$	143,228
Short-term marketable securities	313,069			278,417			367,853			379,574
Accounts receivable	28,989			35,690
Accounts receivable, net							48,015			47,986
Inventory	10,256			9,136			25,148			15,181
Prepaid expenses and other current assets	6,151			5,204			14,137			11,389
Total current assets	512,255			468,991			607,392			597,358
Long-term marketable securities	25,916			77,563			238,206			268,783
Property and equipment, net	30,581			31,003			46,685			43,668
Right-of-use assets							30,132			29,140
Intangible assets, net							17,681			8,524
Goodwill							3,290			3,290
Capitalized license fees	7,557			7,800			60			6,890
Other assets	2,862			2,046			4,721			4,882
Total Assets⁽¹⁾	$	579,171		$	587,403		$	948,167		$	962,535
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,163		$	10,642		$	24,378		$	16,197
Accrued compensation	14,683			12,986			22,935			18,557
Accrued expenses	9,137			7,081			23,073			25,703
Capital lease, current	96			97
Deferred revenue	17,113			16,138			11,936			12,277
Total current liabilities	48,192			46,944			82,322			72,734
Capital lease, net of current portion	100			119
Deferred rent, net of current portion	8,975			7,844
Long-term operating lease liabilities							33,773			33,256
Obligation related to royalty	7,120			7,338			—			6,880
Other long-term liabilities	150			206			1,459			1,672
Total Liabilities⁽¹⁾	64,537			62,451			117,554			114,542
Commitments and contingencies (Note 7)
Redeemable noncontrolling interest	46,500			41,800			45,500			49,600
Stockholders’ equity:
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 86,098,474 and 85,832,454 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	1			1
Common stock, par value of $0.00001 per share; 350,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 94,509,011 and 94,261,414 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							1			1
Additional paid-in capital	771,009			764,033			1,157,945			1,150,090
Accumulated other comprehensive loss	333			(83		)
Accumulated other comprehensive income							7,705			1,111
Accumulated deficit	(303,209		)	(280,799		)	(380,538		)	(352,809		)
Total Stockholders’ Equity	468,134			483,152			785,113			798,393
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity	$	579,171		$	587,403		$	948,167		$	962,535


x ☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Redeemable Noncontrolling Interest		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
	Redeemable Noncontrolling Interest		Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
Balance as of December 31, 2018	$	41,800	85,832,454	$	1	$	764,033	$	(83	)	$	(280,799	)	$	483,152
Cumulative effect adjustment for Topic 606 adoption	—		—	—		—		—			4,907			4,907
Cumulative effect adjustment for ASU 2018-07 adoption	—		—	—		1,266		—			(1,266		)	—
Issuance of common stock upon exercise of stock options	—		146,318	—		538		—			—			538
Vesting of common stock exercised early	—		—	—		56		—			—			56
Common stock issued under employee stock purchase plan	—		119,702	—		1,933		—			—			1,933
Stock-based compensation	—		—	—		3,183		—			—			3,183
Fair value adjustment of redeemable noncontrolling interest	4,700		—	—		—		—			(4,700		)	(4,700		)
Other comprehensive gain, net of tax impact	—		—	—		—		416			—			416
Net loss	—		—	—		—		—			(21,351		)	(21,351		)
Balance as of March 31, 2019	$	46,500	86,098,474	$	1	$	771,009	$	333		$	(303,209	)	$	468,134



	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
Balance as of December 31, 2017	78,627,369	$	499,974	11,896,882	$	—	$	4,900	$	(532	)	$	(195,736	)	$	308,606
Issuance of common stock upon exercise of stock options	—	—		421,264	—		1,103		—			—			1,103
Issuance of common stock upon early exercise of stock options	—	—		44,268	—		—		—			—			—
Issuance of common stock upon exercise of warrants	—	—		31,713	—		4		—			—			4
Stock-based compensation	—	—		—	—		1,277		—			—			1,277
Other comprehensive loss, net of tax impact	—	—		—	—		—		(298		)	—			(298		)
Net loss	—	—		—	—		—		—			(13,844		)	(13,844		)
Balance as of March 31, 2018	78,627,369	$	499,974	12,394,127	$	—	$	7,284	$	(830	)	$	(209,580	)	$	296,848


Cash and cash equivalents—Beginning of period					143,228		140,544
Cash and cash equivalents—End of period					$	152,239	$	153,789
Supplemental Disclosures of Cash Flow Information:
Operating lease liabilities arising from obtaining right-of-use assets					$	1,957	$	—
Supplemental Disclosures of Noncash Investing and Financing Activities:
Purchases of property and equipment included in accounts payable and accrued expenses	$	490	$	3,351	$	1,365	$	490



	Balance as of December 31, 2018			Adjustments Due to ASC 606		Balance as of January 1, 2019
	(in thousands)
Assets:
Accounts receivable	$	35,690		$	4,907	$	40,597
Equity:
Accumulated deficit	$	(280,799	)	$	4,907	$	(275,892	)



	Three Months Ended March 31, 2019
	As Reported Under ASC 606			Effect of Change		Balances Without Adoption of ASC606
	(in thousands)
Revenue:
Precision oncology testing	$	28,837		$	994	$	29,831
Development services	7,818			—		7,818

	March 31, 2019
	As Reported Under ASC 606			Effect of Change		Balances Without Adoption of ASC606
	(in thousands)
Assets:
Accounts receivable	$	28,989		$	994	$	29,983
Equity:
Accumulated deficit	(303,209		)	994		(302,215		)


5.	Fair Value Measurements, Cash Equivalents and Marketable Securities


	March 31, 2019								March 31, 2020
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3

	(unaudited)								(unaudited)
	(in thousands)								(in thousands)
Financial Assets:
Money market funds	$	10,093	$	10,093	$	—	$	—	$	35,592	$	35,592	$	—	$	—
Total cash equivalents	10,093		10,093		—		—		$	35,592	$	35,592	$	—	$	—

Corporate bonds	43,083		—		43,083		—		$	4,035	$	—	$	4,035	$	—
U.S. government debt securities	264,992		—		264,992		—		363,818		—		363,818		—
U.S. government agency bonds	4,994		—		4,994		—
Total short-term marketable securities	313,069		—		313,069		—		$	367,853	$	—	$	367,853	$	—

Corporate bonds	2,005		—		2,005		—
U.S. government debt securities	23,911		—		23,911		—		$	238,206	$	—	$	238,206	$	—
Total long-term marketable securities	25,916		—		25,916		—		$	238,206	$	—	$	238,206	$	—
Total	$	349,078	$	10,093	$	338,985	$	—	$	641,651	$	35,592	$	606,059	$	—

Financial Liabilities:
Contingent consideration									$	1,175	$	—	$	—	$	1,175
Total									$	1,175	$	—	$	—	$	1,175


	March 31, 2019									March 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value

	(unaudited)									(unaudited)
	(in thousands)									(in thousands)
Money market fund	$	10,093	$	—	$	—		$	10,093	$	35,592	$	—	$	—	$	35,592
Corporate bond	45,065		26		(3		)	45,088		4,035		—		—		4,035
U.S. government debt securities	288,522		455		(74		)	288,903		594,064		7,961		—		602,025
U.S. government agency bonds	4,995		—		(1		)	$	4,994
Total	$	348,675	$	481	$	(78	)	$	349,078	$	633,691	$	7,961	$	—	$	641,652


1.	Description of Business


2.	Summary of Significant Accounting Policies


*	less than 10%


6.	~~Patent License Agreement~~Intangible Assets, Net and Goodwill



	March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Remaining Weighted Average Useful Life

	(unaudited)
	(in thousands)							(in years)
Intangible assets subject to amortization:
Acquired license	$	11,886	$	(499	)	$	11,387	10.6
Non-compete agreements and other covenant rights	5,100		(406		)	4,694		5.6
Total intangible assets subject to amortization	16,986		(905		)	16,081
Intangible assets not subject to amortization:
IPR&D	1,600		—			1,600
Goodwill	3,290		—			3,290
Total purchased intangible assets	$	21,876	$	(905	)	$	20,971



Year Ending December 31,
	(unaudited)
	(in thousands)
Remainder of 2020	$	1,496
2021	1,909
2022	1,909
2023	1,910
2024	1,915
2025 and thereafter	6,942
Total	$	16,081



	Amount
	(in thousands)
Cash	$	521
Identified intangible assets	6,700
Goodwill	3,289
Net liabilities assumed	(1,802		)
Total	$	8,708



	Fair Value		Estimated Useful Life
	(in thousands)
Acquired license	$	5,100	10 years
IPR&D	1,600		*
Total	$	6,700



			Options Outstanding
	Shares Available for Grant		Shares Subject to Options Outstanding		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value

								(in thousands)
Balance as of December 31, 2019	2,726,225		4,494,889		$	10.90	7.7	$	306,392
2018 plan annual increase⁽¹⁾	3,689,000		—
Granted	(6,902	)	6,902		84.61
Exercised	—		(242,003	)	6.21
Canceled	12,406		(31,798	)	10.90
Restricted stock units granted	(14,548	)	—		—
Restricted stock units canceled	16,164		—		—
Balance as of March 31, 2020	6,422,345		4,227,990		$	11.29	7.5	$	253,161
Vested and Exercisable as of March 31, 2020			2,034,629		$	5.77	7.1	$	130,646


(1)	Effective as of January 1, 2020, an additional 3,689,000 shares of common stock became available for issuance under the 2018 Plan, as a result of the operation of an automatic annual increase provision therein.



	Restricted Stock Units Outstanding		Weighted-Average Grant Date Fair Value

Balance as of December 31, 2019	496,131		$	82.08
Granted	14,548		85.30
Vested	(5,594	)	67.81
Canceled	(16,164	)	71.97
Balance as of March 31, 2020	488,921		$	82.67



	Restricted Stock Units Outstanding		Weighted-Average Grant Date Fair Value

Unvested balance as of December 31, 2018	—		$	—
Granted	120,835		44.02
Canceled	(18,337	)	41.30
Unvested balance as of March 31, 2019	102,498		$	44.50


~~10.~~12.	Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders


(1)	No single country outside of the United States accounted for more than 10% of total revenue during the three months ended March 31, 2020 and 2019, ~~and 2018.~~respectively, except for Germany which accounted for 10% of total revenue during the three months ended March 31, 2019.



		GUARDANT HEALTH, INC.

Dated:	May ~~10, 2019~~7, 2020	By:	/s/ Derek Bertocci
		Name:	Derek Bertocci
		Title:	Chief Financial Officer (Principal Financial and Accounting Officer)