Palo Alto-based Guardant Health (NASDAQ:GH), Inc. has entered into a sales agreement with Jefferies LLC for an at-the-market equity offering program, which could reach up to $400 million in gross proceeds. The agreement, effective as of Thursday, allows the medical laboratory services provider to sell shares of its common stock from time to time at its discretion.
The shares will be offered under a shelf registration statement filed with the SEC on May 22, 2023, which became effective immediately. A prospectus supplement related to the offering was also filed on Thursday.
Under the terms of the sales agreement, Jefferies will endeavor to sell the shares at market prices, subject to Guardant Health's instructions regarding the minimum price per share. The company retains the right to alter the number of shares or suspend the offering based on market conditions. Additionally, either party can terminate the agreement at any time upon written notice.
Jefferies will receive up to 3% of the gross sales price per share as compensation for its services. Guardant Health, however, is not under any obligation to sell a specific number of shares and has agreed to indemnify Jefferies against certain liabilities, including those under the Securities Act.
The sales agreement's full details can be found in the exhibit filed with the company's current report on Form 8-K. Also included in the filing is the legal opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP regarding the validity of the shares being offered.
This current report does not constitute an offer to sell the shares, nor a solicitation of an offer to buy, and sales will not be conducted in jurisdictions where such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The information presented is based on a press release statement.
In other recent news, Guardant Health Inc. has demonstrated robust growth with its second-quarter revenue reaching $177.2 million, marking a 29% increase year-over-year. This growth has been driven by the company's oncology business, which conducted a record 49,400 clinical tests in Q2 and saw a 56% increase in biopharma test volumes. The company's revenue projections for the full year stand between $690 million to $700 million.
Another highlight is the FDA approval of Guardant Health's Shield blood test for colorectal cancer screening for adults aged 45 and over, which is also included in Medicare coverage. The company expects to administer over 1 million of these tests by 2028.
TD Cowen, while retaining its Buy rating on Guardant Health's stock, raised its price target from $41.00 to $42.00 following these developments.
Continuing on the positive trajectory, Guardant Health also raised its 2024 guidance by $15 million after an 8% sales increase in the second quarter.
TD Cowen noted that the sales beat was driven by pharmaceutical collaborations and price adjustments for past tests. Despite a projected negative free cash flow for 2024, the company expects an improvement from 2023.
InvestingPro Insights
As Guardant Health, Inc. embarks on its equity offering program, insights from InvestingPro suggest a mixed financial landscape for the company. Analysts have recently revised their earnings upwards for the upcoming period, reflecting potential optimism in the company's growth prospects. Moreover, Guardant Health's liquid assets surpass its short-term obligations, indicating a solid liquidity position that could support its operational needs and potential investments.
Despite these positive indicators, analysts remain cautious about the company's profitability, not expecting it to be profitable this year. Additionally, while the company operates with a moderate level of debt, it has not been profitable over the last twelve months. On a brighter note, the company has experienced a strong return over the last three months, with a significant price uptick in the past six months, possibly reflecting investor confidence in its long-term strategy.
From a valuation standpoint, Guardant Health's market capitalization stands at $3.56 billion, with a negative P/E ratio reflecting its current lack of profitability. However, the company's revenue has grown by 26.2% in the last twelve months as of Q2 2024, signaling robust top-line growth. Investors interested in deeper analysis can find additional InvestingPro Tips for Guardant Health, which can be accessed on the platform.
For investors considering Guardant Health's stock, it is also worth noting that the company does not pay a dividend, which could influence the investment strategy for those seeking income-generating assets. The current fair value estimates from analysts stand at $42, while InvestingPro's fair value is slightly lower at $28.72, offering a range of perspectives on the stock's potential value.
Overall, these InvestingPro insights provide a snapshot of Guardant Health's financial health and market performance, which could be valuable for investors as they assess the company's at-the-market equity offering program.
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