Guardant Health Annual Report 2022

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FY2022 Annual Report · Guardant Health

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Annual
Report

$450M

$293M

2022

523%
GROSS
PROFIT
(in millions)

395%
GROSS
REVENUE
(in millions)

$91M

$47M

2018

Comparison of Five-Year
Cumulative Total Return

IXIC

NBI

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________
FORM 10-K
_____________________

(Mark One)
☒

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

For the fiscal year ended December 31, 2022

☐

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

For the transition period from

Commission File Number: 001-38683
_____________________

GUARDANT HEALTH, INC.

(Exact Name of Registrant as Specified in its Charter)
_____________________

Delaware
(State or other jurisdiction of
incorporation or organization)

45-4139254
(I.R.S. Employer
Identification No.)

3100 Hanover Street
Palo Alto, California 94304
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (855) 698-8887

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.00001

The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None
___________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Exchange Act. Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Yes ☐ No ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period
pursuant to § 240.10D-1(b). Yes ☐ No ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Non-accelerated Filer

Emerging growth company

☒

☐

Accelerated Filer

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of the last
business day of the registrant’s most recently completed second fiscal quarter was approximately $4.0 billion (based on the
closing price of the registrant’s common stock on the Nasdaq Global Select Market on June 30, 2022 of $40.34 per share).

As of February 17, 2023, the registrant had 102,663,734 shares of common stock, $0.00001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement relating to its annual meeting of stockholders to be held in 2023, or the
2023 Annual Meeting, to be filed with the Securities and Exchange Commission, or the SEC, within 120 days after the end of
the fiscal year to which this Annual Report on Form 10-K relates, are incorporated herein by reference where indicated.
Except with respect to information specifically incorporated by reference in this Annual Report on Form 10-K, such proxy
statement is not deemed to be filed as part hereof.

GUARDANT HEALTH, INC.
FORM 10-K

For the Fiscal Year Ended December 31, 2022

TABLE OF CONTENTS

PART I

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Item 3.

Properties

Legal Proceedings

Item 4. Mine Safety Disclosures

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities

Item 6.

[Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Item 9.

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures

Page

100

144

145

146

147

150

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including the sections titled “Business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future
events and our future results that are based on our current expectations, estimates, forecasts and projections about
our business, our results of operations, the industry in which we operate and the beliefs and assumptions of our
management. Words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “would,” “could,”
“should,” “intend” and “expect,” variations of these words, and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are only predictions and are subject to risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and
adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such
differences include, but are not limited to, those discussed in Part I, Item 1A,“Risk Factors,” of this Annual Report
on Form 10-K and elsewhere herein, and in other reports we file with the U.S. Securities and Exchange
Commission, or the SEC. While forward-looking statements are based on the reasonable expectations of our
management at the time that they are made, you should not rely on them. We undertake no obligation to revise or
update publicly any forward-looking statements for any reason, whether as a result of new information, future
events or otherwise, except as may be required by law.

Each of the terms the “Company,” “we,” “our,” “us” and similar terms used herein refer collectively to Guardant
Health, Inc., a Delaware corporation, and its consolidated subsidiaries, unless otherwise stated.

RISK FACTOR SUMMARY

Our business is subject to numerous risk and uncertainties, including those described in Part I, Item 1A. “Risk
Factors” in this Annual Report on Form 10-K. You should carefully consider these risks and uncertainties when
investing in our common stock, including the full discussion of risks included in this Annual Report on Form 10-K.
The principal risks and uncertainties affecting our business include the following:

• We have incurred significant losses since inception, we may continue to incur losses in the future and we

may not be able to generate sufficient revenue to achieve and maintain profitability.

• We may not be able to generate sufficient revenue to achieve and maintain profitability and our current or

future products may not achieve or maintain sufficient commercial market acceptance.

•

Our operating results may fluctuate significantly, which makes our future operating results difficult to
predict and could cause our operating results to fall below expectations or any guidance we may provide.

New product development and commercialization involve a lengthy and complex process and we may be
unable to develop or commercialize new products on a timely basis, or at all.

Our current revenue is primarily generated from sales of our tests and we are highly dependent on them for
our success.

If our products do not meet the expectations of patients and our customers, our operating results, reputation
and business could suffer.

If we are unable to support demand for our current and future products, including ensuring that we have
adequate capacity to meet increased demand, or we are unable to successfully manage our anticipated
growth, our business could suffer.

If we cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical
companies, our revenue prospects could be reduced.

If we cannot compete successfully with our competitors, we may be unable to increase or sustain our
revenue or to achieve and then sustain profitability.

• We have experienced challenges attracting and retaining qualified personnel due to competitive labor
markets and may continue to do so, and may be unable to manage our future growth effectively, all of
which could make it difficult to execute our business strategy.

• We rely on a limited number of suppliers or sole suppliers for some of our laboratory instruments and

materials and may not be able to find replacements or promptly transition to alternative suppliers.

•

The COVID-19 global pandemic and the worldwide attempts to contain it have adversely impacted our
supply chain and other aspects of our business, as well as our results of operations, and could continue to
do so.

• We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations
may, directly or indirectly, reduce our revenue, adversely affect our operations and financial condition, and
harm our business.

•

Certain of our tests are currently marketed as laboratory developed tests, or LDTs, and future changes in
FDA enforcement discretion for LDTs could subject our product offerings to more significant regulatory
requirements.

If third-party payers, including commercial payers and government healthcare programs, do not provide
coverage of, or adequate reimbursement for, our tests, our business and results of operations will be
negatively affected.

Our billing and claim processing are complex and time-consuming, and any delay in submitting claims or
failure to comply with applicable billing requirements could hinder collection and have an adverse effect on
our revenue.

Issued patents covering our products, services or technology could be found invalid or unenforceable if
challenged.

The price of our common stock has fluctuated substantially and may do so in the future, and you may not
be able to resell shares of our common stock at or above the price at which you purchased them.

Our indebtedness could expose us to risks that could adversely affect our business, financial condition and
results of operations or result in dilution to our stockholders.

PART I

Item 1. Business

Overview

We are a leading precision oncology company focused on helping conquer cancer globally through the use of our
proprietary tests, vast data sets and advanced analytics. We believe our tests can transform cancer care by unlocking
insights that will help patients at all stages of the disease, including at its earliest stages, when it’s most treatable. For
patients with advanced-stage cancer, we have commercially launched Guardant360 laboratory developed test, or
LDT, and Guardant360 CDx, the first comprehensive liquid biopsy test approved by the U.S. Food and Drug
Administration, or the FDA, to provide tumor mutation profiling with solid tumors and to be used as a companion
diagnostic in connection with non-small cell lung cancer, or NSCLC, and breast cancer. We have also launched the
Guardant360 TissueNext tissue test for advanced-stage cancer, Guardant Reveal blood test to detect residual and
recurring disease in early-stage cancer patients, and Guardant360 Response blood test to predict patient response to
immunotherapy or targeted therapy eight weeks earlier than current standard-of-care imaging.

We also collaborate with biopharmaceutical companies in clinical studies by providing the above-mentioned tests, as
well as the GuardantOMNI blood test for advanced-stage cancer, and the GuardantINFINITY blood test, launched in
September 2022, which is a next-generation smart liquid biopsy that provides new, multi-dimensional insights into
the complexities of tumor molecular profiles and immune response to advance cancer research and therapy
development. Using data collected from our tests, we have also developed our GuardantINFORM platform to help
biopharmaceutical companies accelerate precision oncology drug development through the use of this in-silico
research platform to unlock further insights into tumor evolution and treatment resistance across various biomarker-
driven cancers.

In May 2022, we launched the Shield LDT test to address the needs of individuals eligible for colorectal cancer
screening. From a simple blood draw, Shield uses a novel multimodal approach to detect colorectal cancer signals in
the bloodstream, including DNA that is shed by tumors. In addition, in December 2022, we announced positive
results from ECLIPSE, an over 20,000 patient registrational study evaluating the performance of our Shield blood
test for detecting colorectal cancer in average-risk adults. We also expect to expand into lung and multi-cancer
screening with our investigational, next-generation Shield assay.

Our strategy

Our objective is to be the leading provider of precision oncology and screening products for cancer management
across all stages of the disease and drive commercial adoption of our products. To achieve this, we intend to:

•

Increase awareness of our products by:

▪

building awareness of liquid biopsy and pioneering a blood-first paradigm for genotyping cancer patients;

educating biopharmaceutical companies, key opinion leaders, or KOLs, and advocacy groups;

advocating for inclusion of our tests in treatment guidelines; and

expanding access to our products globally through direct investment and by leveraging our global network
of partners.

•

Expand clinical utility and increase reimbursement for our products by:

▪

working with private and public payers to establish coverage and reimbursement for our tests;

investing in clinical evidence directly and through relationships with academia and biopharmaceutical
companies to establish expanded indications for use;

demonstrating improved clinical utility and health economics from use of our tests to patients, physicians
and payers; and

pursuing FDA and other regulatory approval internationally of our tests to facilitate reimbursement and
global market access.

•

Strengthen our relationships with customers by:

▪

demonstrating the utility of our products in connection with standard of care treatments thereby
encouraging clinical adoption;

developing and seeking approval of our products as companion diagnostics for targeted therapies and
immuno-oncology therapies; and

providing earlier insights into emerging clinically relevant biomarkers.

•

Expand our product portfolio by:

▪

using our commercial engine as a force multiplier of returns on research and development investment to
generate data and analytical insights to enable development of new products;

taking a disciplined and systematic approach to product and market development, by starting with therapy
selection and then expanding sequentially towards early cancer detection;

utilizing our data, sample biobank and insights into biology of circulating tumor-related biomarkers in
blood to develop our new products;

building on our regulatory and commercial infrastructure to accelerate new product launches and drive
commercial efficiencies; and

using our strategic relationships, including our partnerships with European cancer centers and research
organizations, to drive global commercialization of our products.

Our products and development program

We have launched various products and programs using our digital sequencing technology, which is enabled by
robust, high-efficiency biochemistry at the front-end, next-generation sequencing and a machine learning augmented
bioinformatics pipeline. We believe our product portfolio could address the full continuum of cancer care for
selected indications, and has utility in both the clinical and biopharmaceutical markets.

Therapy Selection

Guardant360 CDx Test

We believe our Guardant360 CDx test was the first comprehensive liquid biopsy test approved by the FDA, and is
the market leading comprehensive liquid biopsy test, based on the number of tests ordered. Our Guardant360 CDx
test is a 55-gene test to provide tumor mutation profiling to be used by qualified health professionals in accordance
with professional guidelines in oncology for cancer patients with any solid malignant neoplasm. Our Guardant360
CDx test has also been approved by the FDA for use as a companion diagnostic to identify NSCLC patients who
may benefit
(amivantamab-vjmw),
LUMAKRASTM (sotorasib) and ENHERTU® (fam-trastuzumab deruxtecan-nxki), and breast cancer patients who
may benefit from treatment with ORSERDUTM (elacestrant), marketed by biopharmaceutical companies. Additional
gene content and immune-oncology biomarkers (e.g. microsatellite instability, or MSI) are reported in a professional
services compendium to the FDA approved CDx report. Results are typically delivered within seven days following
receipt of sample and delivered by a clinical report.

(osimertinib), RYBREVANTTM

treatment with TAGRISSO®

from

Guardant360 LDT

The number of personalized therapy options for advanced cancer patients continues to grow, giving patients who
may have cycled through standard of care therapies additional options. Focused on addressing patient care
throughout the diagnostic journey, we launched an updated and expanded version of our LDT to support new
guideline-recommended biomarkers. Our Guardant360 LDT test measures 80+ cancer-related genes, and has been
used over 300,000 times by clinicians to help inform which therapy may be effective for advanced stage cancer
patients with solid tumors, without the need to obtain archival tissue or subject the patient to another invasive
biopsy. Results are typically delivered, ten days following receipt of sample and delivered by a clinical report.

Guardant360 Response Test

Our Guardant360 Response test, launched as an LDT, is the first blood-only liquid biopsy that enables doctors to
view molecular response, or changes in circulating tumor DNA (ctDNA) levels, from a simple blood draw to
potentially gain early insight regarding patient response to treatment. For doctors, knowing early and confidently if a
patient’s treatment is working is critical in deciding whether to continue, stop, or explore other options. Studies
across cancers and therapies show the Guardant360 Response test predicted treatment response eight weeks earlier
than current standard-of-care radiological and imaging scans.

Guardant360 TissueNext Test

To complement our liquid biopsy-based products, we launched Guardant360 TissueNext as an LDT, our first tissue-
based test which is designed to identify patients with advanced cancer who may benefit from biomarker-informed
treatment. Tissue genotyping is currently widely available to physicians and patients. We believe many tissue
genotyping products currently available to physicians and patients have experienced long delays in getting results to
physicians and high failure rates because of the inability to obtain enough tissue or high-quality DNA for analysis.
Such delay or inability to produce results from tissue genotyping can adversely affect providing the right treatment
to patients at the right time. We therefore believe our Guardant360 TissueNext, together with our liquid biopsy-
based products, have the potential to help address the challenges with tissue genotyping products currently in the
market.

Recurring Monitoring / Minimum Residual Disease

Guardant Reveal Test

In the management of early-stage cancer, current tools do not identify all high-risk patients who will benefit from
adjuvant therapy or detect recurrence early enough when it is most curable. We plan to address this need, first in
early-stage colorectal, breast and lung cancers, with our Guardant Reveal test launched as an LDT for residual
disease and recurrence monitoring. We believe the Guardant Reveal test has the potential to enable oncologists to
improve the care of early-stage cancer patients by correctly identifying more high-risk patients than
clinicopathologic review alone and by detecting recurrent disease months earlier than current standard of care
methods like imaging carcinoembryonic antigen tests. We believe the Guardant Reveal test can improve turnaround
by simultaneously interrogating both genomic and epigenomic signals from a single blood draw without the need for
tissue. Similar to our data development effort for our Guardant360 tests, we are investing heavily in establishing
clinical utility for the use of Guardant Reveal in adjuvant treatment settings. We also believe our Guardant Reveal
test may help biopharmaceutical companies identify new drug development opportunities. In return, these
relationships could help us establish clinical utility for our tests and create new testing opportunities related to
emerging therapies.

Screening

Shield Test

According to American Cancer Society: Colorectal Cancer Facts & Figures 2020-2022, it is estimated that only 66%
of adults at 50 years and older are screened despite compelling evidence that routine cancer screening can reduce
colorectal cancer mortality, the second leading cause of cancer death. Therefore, we believe that there is a critical
need to develop products to expand precision oncology to earlier stage cancer settings. These products could enable
clinicians to precisely detect, and intervene in the disease evolution when the disease is more likely to be curable,
key to significantly improving patient clinical outcomes. In order to systematically address this need, in May 2022,
we launched the Shield LDT test to address the needs of individuals eligible for colorectal cancer screening. From a
simple blood draw, Shield uses a novel multimodal approach to detect colorectal cancer signals in the bloodstream,
including DNA that is shed by tumors. Our research and development results to date indicate that somatic signatures
alone may be insufficient for detection of early-stage cancers with high sensitivity. For this reason, we have
incorporated epigenomic signatures to enhance the performance of our Shield assay in these settings. In addition, in
December 2022, we announced positive results from ECLIPSE, an over 20,000 patient registrational study
evaluating the performance of our Shield blood test for detecting colorectal cancer in average-risk adults. The test
demonstrated 83% sensitivity in detecting individuals with colorectal cancer. Specificity was 90% in both
individuals without advanced neoplasia and in those who had a negative colonoscopy result. These results exceed
the performance criteria set forth by the Centers for Medicare and Medicaid Services, or CMS, for reimbursement.
This test also demonstrated 13% sensitivity in detecting advanced adenomas. Based on these study results, we plan
to complete our premarket approval, or PMA, submission to the FDA in the first quarter of 2023.

We also expect to expand into lung and multi-cancer screening with our investigational, next-generation Shield
assay. To clinically validate the performance of our next-generation Shield blood test in detecting lung cancer in
high-risk individuals ages 50-80, in January 2022, we enrolled the first patient in a nearly 10,000-patient
prospective, registrational study, which we refer to as the SHIELD LUNG study. The study is anticipated to run in
approximately 100 centers in the United States and Europe. We believe that developing a blood test for early
detection of cancer requires a vast amount of molecular and clinical data across all stages of the disease in order to
better understand the biology and clinical relevance of tumor-specific biomarkers in blood. While we believe the
benefits of early detection on clinical outcomes are widely known, early detection may also benefit
biopharmaceutical companies by identifying a much larger at-risk population who may benefit from early
therapeutic intervention or from preventative medicines.

Biopharmaceutical Offerings

GuardantOMNI Test

Our GuardantOMNI test has a significantly larger genomic panel footprint than the Guardant360 LDT test and has
achieved comparable analytical performance in clinical studies, including for translational science applications in
collaboration with several biopharmaceutical companies. It covers 500 genes, including genes associated with
homologous recombination repair deficiency and biomarkers for immuno-oncology applications, such as tumor
mutational burden and microsatellite instability.

In order to preserve performance characteristics of our Guardant360 LDT test across a broader gene panel, we
implemented additional enhancements to the assay efficiency and bioinformatics analysis to improve the sensitivity
of our GuardantOMNI test. These enhancements are critical in the context of using the GuardantOMNI test in the
retrospective testing of clinical study samples for translational science applications in collaboration with
biopharmaceutical customers, as those samples are often available with only a limited volume of plasma.

Validation data indicates that the GuardantOMNI test exceeds the Guardant360 LDT test’s sensitivity for detecting
clinically actionable biomarkers. At the same time, broader panel-wide performance of small variants is roughly
similar to that of Guardant360 LDT test. The broad genomic footprint of our GuardantOMNI test enables accurate
measurement of tumor mutational burden.

GuardantINFINITY Test

In September 2022, we launched GuardantINFINITY, a next-generation smart liquid biopsy test that provides new,
multi-dimensional insights into the complexities of tumor molecular profiles and immune response to advance
cancer research and therapy development. Our GuardantINFINITY assay provides a more comprehensive molecular
profile of tumors than earlier assays, giving researchers access to novel genomic and epigenomic insights to provide
a simultaneously deeper and more complete understanding of a tumor’s biology, its system-wide interactions and the
associated immune response in a range of applications, from therapy selection to molecular response and
longitudinal monitoring. The assay’s extensive methylome panel helps identify the unique methylation pattern that
each tumor delivers, providing an important new dimension of research insights that has been largely unexplored in
clinical development to date. GuardantINFINITY is available as a single modular assay with flexible configurations
that can be tailored to fit a current application, along with the ability to unlock additional content modules at any
time, without incurring the burden or delay of additional sample collection. The core module offers genotyping
coverage of more than 800 genes with sample-level methylation detection and tumor fraction score for biomarker
discovery, clinical research, therapy selection and response monitoring.

GuardantConnect

Because cancer patients often exhaust standard of care treatment options as the disease progresses and guidelines
recommend clinical studies for cancer patients, clinical study matching is an acute need in oncology. At the same
time, biopharmaceutical companies need to fill clinical studies that require screening hundreds of thousands of
patients. Despite these needs, clinical study enrollment in oncology has severely lagged, with only approximately
8% of cancer patients enrolling in clinical studies. GuardantConnect is our integrated software-based solution
designed for our clinical and biopharmaceutical customers, seeking to connect patients tested with our assays with
actionable alterations with potentially relevant clinical studies.

GuardantINFORM

In June 2020, we launched GuardantINFORM, our real-world evidence platform featuring an extensive clinical-
genomic dataset of advanced cancer patients. The GuardantINFORM platform is intended to help accelerate research
and development of the next generation of cancer therapeutics by offering biopharmaceutical partners an in silico
resource that combines de-identified longitudinal clinical information and genomic data collected from our tests.
This robust dataset offers real-world insights into anti-cancer therapy use and associated outcomes, and molecular
drivers of treatment response and resistance for over 60 advanced cancers including non-small cell lung, breast,
colon, and prostate. Applications for the GuardantINFORM platform cover research and development, clinical study
planning and modelling, and commercial applications.

Smart Liquid Biopsy Platform

Our smart liquid biopsy platform drives significant research and development efficiencies and operating leverage,
which supports performance improvements, cross-development of new applications, cost savings and improved
turnaround time. While products continue to evolve by leveraging commonality in equipment, reagents, and staffing,
this platform also provides a foundation for future product evolutions and data integration. We expect to migrate our
products to the platform and we believe our smart liquid biopsy platform has the potential to unlock the power of the
epigenome, broaden the view of what drives cancer biology, and provide industry leading high-sensitivity genomic
and epigenomic detection at ultra-high specificity and low cost.

Guardant Galaxy

Our Guardant Galaxy suite of advanced analytical technologies have been developed internally and through outside
partnerships to enhance the performance and clinical utility of our portfolio of cancer tests, and to power the next
generation of biomarker and drug discovery. The first application in the Guardant Galaxy suite is an AI-backed
digital pathology platform developed by Lunit®, for the enhanced Guardant360 TissueNext PD-L1 test, which
improves detection of the cancer biomarker compared to manual pathologist interpretation in NSCLC cases. Future
planned applications include deep learning-driven genomic, epigenomic and spatial biomarker discovery via
collaboration with biopharmaceutical partners and integration with GuardantINFORM real-world clinical data
platform.

Clinical Studies and Publications

The goal of our clinical development with our tests is to support its use for comprehensive genomic profiling across
multiple tumor types, including as a preferred alternative to tissue testing to inform first line treatment right after
diagnosis and at time of disease progression. We publish peer-reviewed studies in order to influence treatment
guidelines, to educate clinicians and other oncology stakeholders about the value proposition of our test and to set
the stage for reimbursement with private and public payers. We have over 90 targeted therapy outcomes studies,
more than 300 peer-reviewed publications and more than 700 scientific abstracts. We are proactively pursuing
studies to support the use of our tests as a preferred alternative to tissue testing to inform first line treatment right
after diagnosis, with the goal to provide evidence that our tests detect genomic alterations at a similar rate compared
to standard of care tissue testing in the United States, Europe and Asia. Such a strategy is predicated on the tests’
ability to offer accurate, reliable and fast guideline-directed comprehensive genotyping for all adult solid tumors
without exposing patients to invasive biopsy procedures’ risks, delays or chance of failure.

Commercialization

Successful commercial adoption of our tests by clinicians and biopharmaceutical companies is critical to our
business. For clinicians, endorsement by KOLs, utilization by academic centers and inclusion in national treatment
guidelines are important, especially for adoption in the local community setting where 80% of cancer treatment
occurs. We believe that our relationships with key stakeholders across the oncology space have helped facilitate the
use of our tests by over 12,000 oncologists, who have collectively ordered our Guardant360 LDT test over 300,000
times, and over 150 biopharmaceutical companies.

U.S. clinical commercial efforts

We sell our tests to clinical customers in the United States through our targeted sales organization. Our clinician-
focused sales organization in the United States is engaged in sales efforts and promotional activities primarily
targeting oncologists and cancer centers. Our sales representatives typically have extensive backgrounds in
laboratory testing, therapeutics and oncology. We have supplemented the team with clinical oncology specialists
with extensive medical affairs experience for molecular information support in the field.

Our clinical commercial efforts are focused on driving adoption with academic research institutions and with
community oncology practices, including through leading physician networks. As we continue to grow our sales
organization, we are also expanding our reach to include large community practices, community oncology networks,
integrated delivery/ payer-owned systems and government medical facilities that are looking for a reliable partner
for comprehensive molecular information testing.

Biopharmaceutical commercial efforts

Our business development team is focused on enterprise selling to biopharmaceutical companies in the United States
and internationally, and we believe we can support our biopharmaceutical customers across many applications,
including:

•

discovery of new targets and mechanisms of acquired resistance;

retrospective sample analysis to rapidly identify biomarkers associated with response and lack of response;

prospective screening and referral services to accelerate clinical study enrollment; and

companion diagnostic development to support the approval and commercialization of therapeutics.

We also expect to be able to capture other commercial opportunities from our genomic data, which can be used in
combination with clinical outcomes or claims data for multiple applications, including novel target identification.

International commercial efforts and 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 direct contacts with insurers and hospitals, distributor relationships, and
laboratory partnerships. Specifically, we have already demonstrated the ability to deploy our technology to partner
laboratories such as cancer centers, for the development of test assays based on our technology platform. We believe
that this capability will be important in accelerating adoption of our platform and the performance of our testing in
certain countries. We are conducting studies in various jurisdictions and have started efforts to secure reimbursement
in several countries. As these studies progress and we near commercial opportunities there, we are seeking to
establish in-country laboratories and direct sales organizations.

In May 2018, we formed and capitalized a joint venture, Guardant Health AMEA, Inc., with SoftBank, which we
refer to as the Joint Venture or Guardant AMEA, relating to the sale, marketing and distribution of our tests
generally outside the Americas and Europe and to accelerate commercialization of our products in Asia, the Middle
East and Africa. In February 2021, an affiliate of Guardant AMEA, submitted an application to Japan's Ministry of
Health, Labour and Welfare, or the MHLW, for regulatory approval of Guardant360 CDx. In December 2021,
MHLW granted regulatory approval of Guardant360 CDx as a companion diagnostic for identifying patients with
metastatic NSCLC who may benefit from treatment with LUMAKRAS™ (sotorasib). In March 2022, MHLW
granted regulatory approval of Guardant360® CDx in patients with advanced solid tumors. MHLW also approved
Guardant360 CDx as a companion diagnostic to identify patients with microsatellite instability-high (MSI-High)
solid tumors who may benefit from Keytruda® (pembrolizumab) and patients with MSI-High advanced colorectal
cancer who may benefit from Opdivo® (nivolumab). In February 2022, we received CAP accreditation for our
laboratory in Japan where we expect to commence processing samples following receipt of additional certification
for processing In Vitro Diagnostic, or IVD, samples and reimbursement approval.

As part of our international expansion and to obtain full control over operations throughout the Asia, Middle East
and Africa region, in November 2021, we exercised our call right contained in the joint venture agreement with
SoftBank to purchase all of the shares held by SoftBank and its affiliates in consideration for the payment of the
aggregate purchase price to be determined based on an independent third-party valuation. Upon our exercise of the
call right in November 2021, SoftBank no longer had the option to exercise its put right. In June 2022, we purchased
all of the shares held by SoftBank and its affiliates in consideration for a cash payment of the aggregate purchase
price of $177.8 million, as determined by an independent valuation firm, which resulted in $99.8 million of fair
value adjustments to the noncontrolling interest liability for the year ended December 31, 2022.

In June 2022, we signed a strategic partnership agreement with Adicon Holdings Limited, a leading independent
clinical laboratory company based in China, to offer our industry-leading comprehensive genomic profiling tests to
biopharmaceutical companies conducting clinical studies in China. We expect the partnership to help
biopharmaceutical companies bring the next generation of cancer therapies to patients in the region.

In preparation for wider commercialization in the European Union, or the EU, we obtained a CE mark for our
Guardant360 CDx, Guardant360 LDT, and Guardant Reveal tests. In December 2020, we signed our first public
private partnership agreement with Vall D'Hebron Institute of Oncology, or VHIO, one of Europe’s leading cancer
research institutions, and in May 2022, the first blood-based cancer testing services in Europe based on our industry-
leading digital sequencing platform became available at the VHIO testing facility in Spain. In October 2021, we
signed a partnership agreement with The Royal Marsden NHS Foundation Trust, a premier cancer center within the
United Kingdom for patient care, research and teaching of all types of cancer. We expect these partnerships will lead
to the establishment of our testing services at the partner laboratories, using our digital sequencing technology, as
well as generation of clinical and economic evidence to support commissioning in other areas of Europe.

Payer coverage and reimbursement

Commercial 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. 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 tests 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.

We have provided testing services to patients covered by commercial payers with many cancer types and
indications, some of the time as a non-participating provider through 2022. We received reimbursement for tests
across the spectrum of these patients, though for amounts that on average were significantly lower than for
participating providers. Because we are not contracted with these payers, they determine the amount that they are
willing to reimburse us for any of our tests and they can prospectively and retrospectively adjust the amount of
reimbursement, subject to statue of limitations.

Our tests are currently covered by various commercial payers and our reimbursement is directly impacted by their
policies. We have experienced situations where commercial payers proactively reduced the amounts they were
willing to reimburse for our tests, and where commercial payers have determined that the amounts previously paid
were too high and sought to recover those perceived excess payments by deducting such amounts from payments
owed to us.

In addition to our existing contracted payers, various laboratory benefit managers and evidence review organizations
working with commercial payers have endorsed coverage of our Guardant360 test.

We are actively engaged to expand coverage among existing contracted payers and to achieve coverage with the
remaining key commercial payers, laboratory benefit managers and evidence review organizations. This includes
addressing variable coverage requirements and evidence required, and the need for enhanced guideline support.

As we broaden our coverage amongst contracted payers to include additional tests of ours, we may begin to
experience increases in average revenue per test performed; however, we cannot make any assurances that we will
be successful in broadening our coverage on a timely basis or at all. Similarly, as we have experienced with our
existing contracted payers, we cannot assure that the addition of new contracted payers will increase our average
selling price or revenue.

Government payers

Medicare coverage is limited to items and services that are within the scope of a Medicare benefit category that are
reasonable and necessary for the diagnosis or treatment of an illness or injury. National coverage determinations are
made through an evidence-based process by the CMS, with opportunities for public participation. Medicare’s
National Coverage Determination, or NCD, for Next Generation Sequencing, or NGS, provides coverage for
molecular diagnostic tests such as our Guardant360 CDx test, if, among other criteria, such tests are offered within
their FDA-approved companion diagnostic labeling.

In March 2020, we began to receive reimbursement from Medicare for claims submitted with respect to
Guardant360 clinical tests performed for qualifying patients diagnosed with solid tumor cancers of non-central
nervous system origin other than NSCLC. In May 2020, Noridian issued a coverage article and confirmed limited
Medicare coverage for our Guardant360 test for qualifying patients diagnosed with solid tumor cancers of non-
central nervous system origin who meet the criteria of Medicare’s National Coverage Determination for Next
Generation Sequencing established in March 2018. Under Medicare, payment for laboratory tests like ours is
generally made under the Clinical Laboratory Fee Schedule, or CLFS, with payment amounts assigned to specific
procedure billing codes. In April 2014, Congress passed the Protecting Access to Medicare Act of 2014, or PAMA,
which included substantial changes to the way in which clinical laboratory services are paid under Medicare. On
June 23, 2016, CMS published the final rule implementing the reporting and rate-setting requirements under PAMA.
Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the CLFS
were required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced
diagnostic laboratory tests” (ADLTs)), commercial payer payment rates and volumes for each test they perform.
CMS uses this data to calculate a weighted median payment rate for each test, which is used to establish revised
Medicare CLFS reimbursement rates for the test. We are subject to reporting requirements under PAMA and the
Medicare rate for our tests will be calculated based on our private payer rates. On December 10, 2021, Congress
passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which delayed the next data
reporting period by one year and prevented any reduction in payment amounts from commercial payer rate
implementation in 2022. On November 2, 2022, CMS published its final rule for the Medicare Physician Fee
Schedule for calendar year (CY) 2023, including changes for clinical laboratories that take effect on January 1,
2023. Changes include updated regulatory definitions to specify the data collection period for the data reporting
period of January 1, 2023 through March 31, 2023; revisions to indicate that data reporting is required every 3 years
beginning January 2023; and to confirm that for CY 2022, payment may not be reduced by more than 0% as
compared to CY 2021, and for CYs 2023 through 2025, payment may not be reduced by more than 15% as
compared to the amount established for the preceding year. On December 29, 2022, Congress passed the
Consolidated Appropriations Act, 2023, which prevented any reduction in payment amounts from commercial payor
rate implementation for 2023; delayed by one year data reporting requirements for tests other than ADLTs; and
extended the three-year period in which payment may not be reduced by more than 15%, to CYs 2024 through 2026.

Current Procedural Terminology, or CPT, coding plays a significant role in how our tests are reimbursed both from
commercial and governmental payers. In addition, Z-Code Identifiers are used by certain payers, including under
Medicare's MolDx, to supplement CPT codes for our molecular diagnostics tests. Changes to the codes used to
report to payers may result in significant changes in reimbursement. If their policies were to change in the future to
cover additional cancer indications, we anticipate that our total reimbursement would increase. In January 2021, a
PLA code was issued for our Guardant360 CDx test with an effective date in April 2021. Additionally, based on this
new PLA code, we applied to the CMS for our Guardant360 CDx test to become an advanced diagnostic laboratory
test, or ADLT. In March 2021, CMS approved ADLT status to the Guardant360 CDx test, based on which Medicare
paid us at the lowest available commercial rate per test, from April 1, 2021 to December 31, 2021. Effective January
1, 2022, Medicare has started to reimburse Guardant360 CDx services at the median rate of claims paid by
commercial payers and this rate will apply until December 2023. In March 2022, Palmetto GBA, the Medicare
administrative contractor for MolDX, has conveyed coverage for our Guardant360 TissueNext test under the
existing local coverage determination. The policy covers our Guardant360 TissueNext test for Medicare fee-for-
service patients with advanced solid tumor cancers. In July 2022, Palmetto GBA conveyed coverage for our
Guardant Reveal test for fee-for-service Medicare patients in the United States with stage II or III colorectal cancer
whose testing is initiated within three months following curative intent therapy, with an effective date of December
2021.

State Medicaid programs make individual coverage decisions for diagnostic tests and have taken steps to control the
cost, utilization and delivery of healthcare services. We believe that additional state and federal health care reform
measures may be adopted in the future, any of which could have a material adverse effect on the clinical laboratory
industry and our ability to successfully commercialize our tests. Any of these or other changes could substantially
impact our revenues and increase costs. We cannot predict how future healthcare policy changes, if any, will affect
our business and financial success.

Other Considerations

Where we are not reimbursed in full or at all, we may elect to appeal the insurer’s underpayment or denial of
payment or seek payment from the patient. However, insurer appeal and patient collection efforts take a substantial
amount of time and resources and are often unsuccessful. We cannot guarantee future success of, or any payments
from, appeals of reimbursement denials by payers. Historic success and payments are not indicative of future
success of and payments from such appeals.

Due to the inherent variability and unpredictability of the reimbursement landscape, including related to the amount
that payers reimburse us for any of our tests, we estimate the amount of revenue to be recognized at the time a test is
provided and record revenue adjustments if and when the cash subsequently received differs from the revenue
recorded. Due to this variability and unpredictability, previously recorded revenue adjustments are not indicative of
future revenue adjustments from actual cash collections, which may fluctuate significantly. Additionally, if coding
changes were to occur, payments for certain uses of our tests could be reduced, put on hold, or eliminated. This
variability and unpredictability could increase the risk of future revenue reversal and result in our failing to meet any
previously publicly stated guidance we may provide.

Operations

We currently perform our tests in our laboratories located in Redwood City, California, and San Diego, California.
Our Redwood City laboratory is CAP-accredited, CLIA-certified, NYSDOH-permitted, and licensed in California,
Florida, Maryland, Pennsylvania and Rhode Island, and also achieved ISO15189 accreditation. Our San Diego
laboratory is CAP-accredited and CLIA-certified. In addition, our Palo Alto, California laboratory is currently
operated as a center for our research and technology development. In February 2022, we received CAP accreditation
for our laboratory in Japan where we expect to commence processing samples following receipt of additional
certification for processing IVD samples and reimbursement approval.

The proprietary validated methods utilize robust semi-automated workflows designed for high throughput sample
testing. This methodology allows for rapid scaling of testing volume without impacting performance metrics. Our
testing process includes sample collection, laboratory processing, analysis and reporting. All major processing steps
utilize quality control to ensure consistent and reproducible results.

Supply chain

We utilize industry leading vendors for our supply chain. Most reagents and materials are sourced from a limited
number of vendors and would require qualification to transition to a different vendor. To mitigate risk, we employ a
multi-month, multi-lot safety stock strategy to ensure an uninterrupted supply of reagent and materials to our
laboratories. In the event that a latent defect is identified, the lot of material in use is expected to be timely
quarantined and changed for a new lot that has been previously qualified and released for use. The experience with
our vendors has provided us confidence in their ability to produce consistent and quality instrumentation, reagents
and materials.

In September 2014, we entered into a supply agreement with Illumina, Inc., or Illumina, for Illumina to provide
products and services that can be used for certain research and clinical activities, including certain sequencers,
reagents, and other consumables for use with the Illumina sequencers, as well as service contracts for the
maintenance and repair of the sequencers. The initial term of the supply agreement, as amended, continues until
January 2033, and automatically renews for additional one-year terms thereafter unless either we or Illumina
terminate the supply agreement for the other’s uncured material breach, bankruptcy or insolvency-related events, or
in the event a regulatory authority notifies such party that continued performance under the supply agreement would
violate applicable laws or regulations. We may also terminate the supply agreement for convenience upon 90 days’
prior written notice.

Competition

Our competitors within the liquid biopsy space for therapy selection include Foundation Medicine, Inc., which was
acquired by Roche Holdings, Inc. in 2018; Roche Molecular Systems, Inc., Thermo Fisher Scientific, Inc., Illumina,
Inc., Qiagen N.V., Invitae Corporation, Caris Life Science, Tempus Labs, Inc., and Agilent Technologies, Inc. In
addition, NeoGenomics Laboratories, Inc., Natera, Inc., and Exact Sciences Corp., among others, are our
competitors in minimal residual disease testing. Additionally, our competitors in the early screening testing space
include GRAIL, Inc., Exact Sciences Corp., Freenome Holdings, Inc., Delfi Diagnostics and InterVenn Biosciences.

Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-
Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., as well as companies
such as Myriad Genetics, Inc., and most if not all of the competitors within the liquid biopsy space for therapy
selection, that sell molecular diagnostic tests for cancer to physicians and have or may develop tests that compete
with our tests. In addition, we are aware that certain of our customers are also developing their own tests and may
decide to enter our market or otherwise stop using our tests.

In addition to developing kits, certain diagnostic companies also provide next-generation sequencing platforms that
could be used for liquid biopsy testing. These include Illumina, Inc., Thermo Fisher Scientific Inc., Pacific
Biosciences of California, Inc., Ultima Genomics, Inc., Oxford Nanopore Technologies Limited, and other
companies developing next-generation sequencing platforms that are sold directly to biopharmaceutical companies,
clinical laboratories and research centers. While many of the applications for these platforms are focused on research
and development applications, each of these companies has launched and could continue to commercialize products
focused on the clinical oncology market. These tests could include FDA-approved diagnostic kits, which can be sold
to the clients who have purchased their platforms.

Furthermore, many companies are developing information technology-based tools to support the integration of next-
generation sequencing testing into the clinical setting. These companies may also use their own tests or others to
develop an integrated system which could limit our access to certain networks.

The promise of liquid biopsy is also leading to more companies attempting to enter the space and compete with us.
Over the last year, that has included new and accelerated development programs by a number of potential
competitors, and increasing levels of merger and acquisition activity by both existing and new competitors.

We believe key competitive factors affecting our success are the price and performance of our products, evidence of
clinical differentiation, support by KOLs, commercial competitiveness, turnaround time and scope and quality of
payer contracts. Our competitive landscape may change over the next few years as a result of new competitors
entering through investment and acquisition activity.

Intellectual property

Protection of our intellectual property is fundamental to the long-term success of our business. We seek to ensure
that investments made into the development of our technology are protected by relying on a combination of patents,
trademarks, copyrights, trade secrets (such as know-how), license agreements, confidentiality agreements and
procedures, non-disclosure agreements, invention disclosure and assignment agreements and other contractual rights
and obligations.

Our patent strategy is focused on seeking coverage for our core technology, our digital sequencing platform, and
specific follow-on applications and implementations for detecting and monitoring cancer or other diseases by
determining genetic variations in patient samples. In addition, we file for patent protection in connection with our
on-going research and development activities, particularly those related to early-stage cancer detection, including
those based on pattern recognition based on analyzing our extensive patient blood sample database, among others.

Our patent portfolio includes owned and licensed patents and patent applications, generally falling into three broad
categories:

•

issued patents and patent applications relating to our digital sequencing platform, including claims directed to
methods for sequencing cell-free DNA, identifying CNVs, SNVs, indels and fusions in cell-free DNA and
techniques for enriching nucleic acid samples;

issued patents and patent applications relating to detecting and monitoring cancer and other diseases by
determining genetic variations in biological samples; and

issued patents and patent applications relating to early-stage cancer detection.

Issued U.S. patents and their international counterparts currently in our patent portfolio that relate to various aspects
of our technology and products are expected to expire between 2026 and 2039.

We also bolster our proprietary technology by acquiring or in-licensing technologies developed by third parties.
While we developed our digital sequencing platform internally, we believe the technologies we in-licensed from
third parties, which mostly relate to improvements to next-generation sequencing technologies, are potentially
valuable and of possible strategic importance to us or our competitors. Under some of our in-license agreements, we
are obligated to pay low single-digit percentage running royalties on net sales of the product or service where the
licensed technology is used in, subject to minimum annual royalties or fees for certain of the in-license agreements.

Our customers and partners recognize us as being a leader in the liquid biopsy field. Thus, just as patent and trade
secret protection is essential to protecting our technology, we believe that it is equally as important for us to protect
our brand and identity. We have filed for trademark protection in our name, logo and products globally, in the
United States, Australia, South America, Europe and Asia.

We intend to pursue additional intellectual property protection to the extent we believe it would advance our
business objectives. Despite our efforts to protect our intellectual property rights, however, we may not be
successful and our intellectual property rights may be invalidated, circumvented or challenged and found
unenforceable. In addition, laws of various foreign countries where our products are or expected to be sold may not
protect our intellectual property rights to the same extent as laws in the United States.

We also rely on trade secrets, including know-how, to protect our unpatented technology and other proprietary
information, and to maintain and strengthen our competitive position. We have determined that certain technologies,
such as aspects of our sample preparation methods and some bioinformatic analysis techniques, are better kept as
trade secrets. To mitigate the chance of trade secret misappropriation, it is our policy to enter into nondisclosure and
confidentiality agreements with parties who have access to our trade secrets, such as our employees, collaborators,
outside scientific collaborators, consultants, advisors and other third parties. We also enter into invention disclosure
and assignment agreements with our employees and consultants that obligate them to assign to us any inventions
they have developed while working for us.

Government regulations

Federal and state laboratory licensing requirements

Under CLIA, a laboratory is any facility that performs laboratory testing on specimens derived from humans for the
purpose of providing information for the diagnosis, prevention or treatment of disease, or the impairment of or
assessment of health. CLIA requires that a laboratory hold a certificate applicable to the type of laboratory
examinations it performs and that it complies with, among other things, standards covering operations, personnel,
facilities administration, quality systems and proficiency testing, which are intended to ensure, among other things,
that clinical laboratory testing services are accurate, reliable and timely.

To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with
program standards. Because we are a CAP accredited laboratory, CMS does not perform this survey and inspection
and relies on our CAP survey and inspection. We also may be subject to additional unannounced inspections.
Laboratories performing high complexity testing are required to meet more stringent requirements than laboratories
performing less complex tests. In addition, a laboratory that is certified as “high complexity” under CLIA may
develop, manufacture, validate and use proprietary tests referred to as LDTs. CLIA requires analytical validation
including accuracy, precision, specificity, sensitivity and establishment of a reference range for any LDT used in
clinical testing. The regulatory and compliance standards applicable to any testing we perform may change over time
and any such changes could have a material effect on our business.

CLIA provides that a state may adopt laboratory regulations that are more stringent than those under federal law,
and a number of states have implemented their own more stringent laboratory regulatory requirements. For example,
state laws may require that nonresident laboratories, or out-of-state laboratories, maintain an in-state laboratory
license to perform tests on samples from patients who reside in that state. As a condition of state licensure, these
state laws may require that laboratory personnel meet certain qualifications, specify certain quality control
procedures or facility requirements or prescribe record maintenance requirements. Because our laboratory is located
in the State of California, we are required to and do maintain a California state laboratory license. We maintain a
current license with NYSDOH for our laboratory. In addition, our laboratory is licensed in a few states where
nonresident laboratories are required to obtain state laboratory licenses under certain circumstances, including
Florida, Maryland, Pennsylvania and Rhode Island. Other states may currently have or adopt similar licensure
requirements in the future, which may require us to modify, delay or stop its operations in those states.

Failure to comply with CLIA certification and state clinical laboratory licensure requirements may result in a range
of enforcement actions, including certificate or license suspension, limitation, or revocation, directed plan of action,
onsite monitoring, civil monetary penalties, criminal sanctions, and revocation of the laboratory’s approval to
receive Medicare and Medicaid payment for its services, as well as significant adverse publicity.

CLIA and state laws and regulations, operating together, sometimes limit the ability of laboratories to offer
consumer-initiated testing (also known as “direct access testing”). CLIA certified laboratories are permitted to
perform testing only upon the order of an “authorized person,” defined as an individual authorized under state law to
order tests or receive test results, or both. Many states do not permit persons other than licensed healthcare providers
to order tests. We currently do not offer direct access testing and our CLIA tests may only be ordered by authorized
healthcare providers.

Regulatory framework for medical devices in the United States

Pursuant to its authority under the Federal Food, Drug and Cosmetic Act, or the FDCA, the FDA has jurisdiction
over medical devices, which are defined to include, among other things, IVDs. The FDA regulates, among other
things, the research, design, development, pre-clinical and clinical testing, manufacturing, safety, effectiveness,
packaging, labeling, storage, recordkeeping, pre-market clearance or approval, adverse event reporting, marketing,
advertising and promotion activities, sales, distribution and import and export of medical devices to ensure that
medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the
requirements of the FDCA. Unless an exemption applies, each new or significantly modified medical device we seek
to commercially distribute in the United States will require either a premarket notification to the FDA requesting
permission for commercial distribution under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, or
approval from the FDA of a PMA application. Both the 510(k) clearance and PMA processes can be resource
intensive, expensive, and lengthy, and require payment of significant user fees.

Device classification

Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III-depending on
the degree of risk associated with each medical device and the extent of control needed to provide reasonable
assurances with respect to safety and effectiveness.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be
reasonably assured by adherence to a set of FDA regulations, referred to as the General Controls for Medical
Devices, which require compliance with the applicable portions of the FDA’s quality system regulation, or QSR,
facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and
non-misleading labeling and promotional materials. Some Class I devices also require premarket clearance by the
FDA through the 510(k) premarket notification process described below. Most Class I products are exempt from the
premarket notification requirements.

Class II devices are those that are subject to the General Controls, as well as special controls as deemed necessary by
the FDA to ensure the safety and effectiveness of the device. These special controls can include performance
standards, patient registries, FDA guidance documents and post-market surveillance. Most Class II devices are
subject to premarket review and clearance by the FDA. Premarket review and clearance by the FDA for Class II
devices is accomplished through the 510(k) premarket notification process.

Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-
sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent
following the 510(k) process. The safety and effectiveness of Class III devices cannot be reasonably assured solely
by the General Controls and special controls described above. Therefore, these devices are subject to the PMA
process, which is generally more costly and time-consuming than the 510(k) process. As part of the PMA process,
the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness
of the device for its intended use to the FDA’s satisfaction. Accordingly, a PMA typically includes, but is not limited
to, extensive technical information regarding device design and development, pre-clinical and clinical study data,
manufacturing information, labeling and financial disclosure information for the clinical investigators in device
studies. A PMA must also provide valid scientific evidence that demonstrates to the FDA’s satisfaction a reasonable
assurance of the safety and effectiveness of the device for its intended use.

The 510(k) clearance process

Under the 510(k) clearance process, the manufacturer must submit to the FDA a premarket notification,
demonstrating that the device is “substantially equivalent” to a legally marketed predicate device. A predicate device
is a legally marketed device that is not subject to a PMA, i.e., a device that was legally marketed prior to May 28,
1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class
III to Class II or I, or a device that was previously found substantially equivalent through the 510(k) process. To be
“substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either
have the same technological characteristics as the predicate device or have different technological characteristics and
not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required
to support substantial equivalence.

After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review.
If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification. If it is
accepted for filing, the FDA begins a substantive review. By statute, the FDA is required to complete its review of a
510(k) notification within 90 days of receiving the 510(k) notification. As a practical matter, clearance often takes
longer, and clearance is never assured. Although many 510(k) premarket notifications are cleared without clinical
data, the FDA may require further information, including clinical data, to make a determination regarding substantial
equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially
equivalent, it will grant clearance to commercially market the device.

If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is
automatically classified into Class III, the device sponsor must then fulfill the much more rigorous pre-marketing
requirements of the PMA approval process, or seek reclassification of the device through the de novo process. The
de novo classification process is an alternate pathway to classify medical devices that are automatically classified
into Class III but which are low to moderate risk. A manufacturer can submit a petition for direct de novo review if
the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device
presents a moderate or low risk. De novo classification may also be available after receipt of a “not substantially
equivalent” letter following submission of a 510(k) to FDA.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness,
or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending
on the modification, could require a PMA or de novo request. The FDA requires each manufacturer to determine
whether the proposed change requires a new submission in the first instance, but the FDA can review any such
decision and disagree with a manufacturer’s determination. Many minor modifications are accomplished by a letter-
to-file in which the manufacture documents the change in an internal letter-to-file. The letter-to-file is in lieu of
submitting a new 510(k) to obtain clearance for such change. The FDA can always review these letters to file in an
inspection. If the FDA disagrees with a manufacturer’s determination regarding whether a new premarket
submission is required for the modification of an existing 510(k)-cleared device, the FDA can require the
manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or approval of a PMA is
obtained or a de novo request is granted. In addition, in these circumstances, the FDA can impose significant
regulatory fines or penalties for failure to submit the requisite application(s).

In addition, over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such
proposals could include increased requirements for clinical data and a longer review period, or could make it more
difficult for manufacturers to utilize the 510(k) clearance process for their products. For example, in September
2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket
review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence
under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria
established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of
their medical devices to specific predicate devices in the clearance process. The FDA has developed and maintain a
list device types appropriate for the “safety and performance based” pathway and continues to develop product-
specific guidance documents that identify the performance criteria for each such device type, as well as
recommended testing methods, where feasible.

The PMA process

We currently market our Guardant360 CDx test pursuant to an approved PMA. The PMA process is more
demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the
device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical
studies and human clinical studies. The PMA must also contain a full description of the device and its components, a
full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following
receipt of a PMA, the FDA conducts an administrative review to determine whether the application is sufficiently
complete to permit a substantive review. If it is not, the agency will refuse to file the PMA. If it is, the FDA will
accept the application for filing and begin the review. The FDA has 180 days to review a filed PMA, although the
review of an application more often occurs over a significantly longer period of time. During this review period, the
FDA may request additional information or clarification of information already provided and may issue a major
deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA.

Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and
provide the FDA with the committee’s recommendation on whether the FDA should approve the submission,
approve it with specific conditions, or not approve it. The FDA is not bound by the recommendations of an advisory
committee, but it considers such recommendations carefully when making decisions.

Prior to approval of a PMA, the FDA may conduct inspections of the clinical study data and clinical study sites, as
well as inspections of the manufacturing facility and processes. Overall, the FDA review of a PMA generally takes
between one and three years but may take significantly longer.

If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval order, or an approvable letter,
the latter of which usually contains a number of conditions that must be met in order to secure final approval of the
PMA. When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA
approval letter authorizing commercial marketing of the device, subject to the conditions of approval and the
limitations established in the approval letter. If the FDA’s evaluation of a PMA or manufacturing facilities is not
favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The FDA may also determine
that additional tests or clinical studies are necessary, in which case the PMA approval may be delayed for several
months or years while the studies are conducted and data is submitted in an amendment to the PMA, or the PMA is
withdrawn and resubmitted when the data are available. The PMA process can be expensive, uncertain and lengthy
and a number of devices for which the FDA approval has been sought by other companies have never been approved
for marketing.

In approving a PMA, as a condition of approval, the FDA may require some form of post-approval study or post-
market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a
number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to
protect the public health or to provide additional or longer term safety and effectiveness data for the device. The
FDA may also approve a PMA with other post-approval conditions intended to ensure the safety and effectiveness
of the device, such as restrictions on labeling, promotion, sale, distribution and use. New PMAs or PMA
supplements may also be required for modifications to approved diagnostic tests, including modifications to
manufacturing processes, device labeling and device design, based on the findings of post-approval studies. Failure
to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of
the approval.

Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control
procedures, or changes in the design performance specifications, which could affect the safety or effectiveness of the
device, require submission of a PMA supplement. PMA supplements often require submission of the same type of
information as a PMA, except that the supplement is limited to information needed to support any changes from the
device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory
panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design
change causes a different intended use, mode of operation, and technical basis of operation, or when the design
change is so significant that a new generation of the device will be developed, and the data that were submitted with
the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and
effectiveness.

The IDE process

Clinical studies are almost always required to support a PMA or a de novo request, and are sometimes required to
support 510(k) submissions. All clinical investigations of devices to determine safety and effectiveness must be
conducted in accordance with the FDA’s investigational device exemption, or IDE, regulations which govern
investigational device labeling, prohibit promotion of the investigational device, and specify an array of
recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device
presents a “significant risk” to human health, as defined by the FDA, the FDA requires the device sponsor to submit
an IDE application to the FDA, which must become effective prior to commencing human clinical studies. If the
device under evaluation does not present a significant risk to human health, then the device sponsor is not required
to submit an IDE application to the FDA before initiating human clinical studies, but must still comply with
abbreviated IDE requirements when conducting such studies. A significant risk device is one that presents a
potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or
sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise
preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE
application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe
to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become
effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin.
If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification,
the FDA may permit a clinical study to proceed under a conditional approval.

Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and
conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site. The IRB is
responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of
the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical studies may begin at
a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device
presents a non-significant risk to the patient, a sponsor may begin the clinical study after obtaining approval for the
study by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE
requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and
labeling and record-keeping requirements. Acceptance of an IDE application for review does not guarantee that the
FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine
that the data derived from the studies support the safety and effectiveness of the device or warrant the continuation
of clinical studies. An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or
investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the
rights, safety or welfare of human subjects.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example,
study monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB
review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on
making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to
FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study
protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping
requirements. Additionally, after a study begins, the sponsor, the FDA or the IRB could suspend or terminate a
clinical study at any time for various reasons, including a belief that the risks to study subjects outweigh the
anticipated benefits.

Expedited development and review programs

Following passage of the 21st Century Cures Act, the FDA implemented the Breakthrough Devices Program, which
is a voluntary program offered to manufacturers of certain medical devices and device-led combination products that
may provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or
conditions. The goal of the program is to provide patients and health care providers with more timely access to
qualifying devices by expediting their development, assessment and review, while preserving the statutory standards
for PMA approval, 510(k) clearance and de novo classification. The program is available to medical devices that
meet certain eligibility criteria, including that the device provides more effective treatment or diagnosis of life-
threatening or irreversibly debilitating diseases or conditions, and that the device meets one of the following criteria:
(i) the device represents a breakthrough technology, (ii) no approved or cleared alternatives exist, (iii) the device
offers significant advantages over existing approved or cleared alternatives, or (iv) the availability of the device is in
the best interest of patients. Breakthrough Device designation provides certain benefits to device developers,
including more interactive and timely communications with FDA staff, use of postmarket data collection, when
scientifically appropriate, to facilitate expedited and efficient development and review of the device, opportunities
for efficient and flexible clinical study design, and prioritized review of premarket submissions.

FDA regulation of laboratory developed tests

Although the FDA has statutory authority to assure that medical devices, including IVDs, are safe and effective for
their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable
regulations with respect to in vitro diagnostics that are designed, manufactured, and used within a single laboratory
for use only in that laboratory. We believe certain of our diagnostic testing products qualify as LDTs subject to the
FDA’s enforcement discretion.

Legislative and administrative proposals to clarify or amend FDA’s oversight of LDTs have been introduced in
recent years and we expect that new legislative and administrative proposals regarding the regulation of LDTs will
continue to be introduced from time to time. It is possible that legislation could be enacted into law or regulations or
guidance could be issued by the FDA which may result in new or increased regulatory requirements for us to
continue to offer our LDTs or to develop and introduce new tests as LDTs. For example, in recent years, FDA has
stated its intention to modify its enforcement discretion policy with respect to LDTs. Specifically, on July 31, 2014,
the FDA notified Congress of its intent to modify, in a risk-based manner, its policy of enforcement discretion with
respect to LDTs. On October 3, 2014, the FDA issued two draft guidance documents titled “Framework for
Regulatory Oversight of Laboratory Developed Tests (LDTs),” or the Framework Guidance, and “FDA Notification
and Medical Device Reporting for Laboratory Developed Tests (LDTs),” or the Reporting Guidance. The
Framework Guidance stated that FDA intends to modify its policy of enforcement discretion with respect to LDTs in
a risk-based manner consistent with the classification of medical devices generally in Classes I through III. The
Reporting Guidance would have further enabled FDA to collect information regarding the LDTs currently being
offered for clinical use through a notification process, as well as to enforce its regulations for reporting safety issues
and collecting information on any known or suspected adverse events related to the use of an LDT.

On November 18, 2016, the FDA announced that it would not finalize either guidance document to allow for further
public discussion on an appropriate oversight approach to LDTs and to give Congressional authorizing committees
the opportunity to develop a legislative solution, and the FDA issued a discussion paper on possible approaches to
LDT regulation in January 2017. The FDA could ultimately modify its current approach to LDTs in a way that
would subject LDTs to additional regulatory requirements. Moreover, legislative measures could likewise result in a
change to the approach to FDA’s regulation over LDTs, including a requirement for premarket review of LDTs,
among other things.

Research use only or investigational use only devices

Some of our products are currently available for research use only, or RUO, or for investigational use only, or IUO,
depending on the proposed application. An RUO device is an IVD that is in the laboratory research phase of
development. RUO devices must bear prominent labeling stating: “For Research Use Only. Not for use in diagnostic
procedures.” An IUO device is an IVD that in the product testing phase of development. An IUO device must bear
prominent labeling stating: “For Investigational Use Only. The performance characteristics of this product have not
been established.” Neither RUO or IUO devices may be used in clinical practice, and such devices cannot be
advertised or promoted for clinical or diagnostic purposes. Devices that are intended for RUO or IUO and are
properly labeled as RUO or IUO are exempt from compliance with many FDA requirements discussed above,
including the approval or clearance and QSR requirements. A device labeled RUO or IUO but intended to be used
diagnostically may be viewed by the FDA as adulterated and misbranded under the FDCA and is subject to FDA
enforcement activities. The FDA may consider the totality of the circumstances surrounding distribution and use of
an RUO or IUO device, including how the device is marketed, when determining its intended use.

FDA Regulation of Companion Diagnostics

If safe and effective use of drug or biologic depends on an in vitro diagnostic, then the FDA may require approval
or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the
therapeutic product. In August 2014, the FDA issued final guidance clarifying the requirements that will apply to
approval of therapeutic products and in vitro companion diagnostics. According to the guidance, if the FDA
determines that a companion diagnostic device is essential to the safe and effective use of a novel therapeutic
product for that indication, the FDA may will not approve the drug or new indication if the companion diagnostic
device is not also approved or cleared for that indication. Approval or clearance of the companion diagnostic device
will ensure that the device has been adequately evaluated and has adequate performance characteristics in the
intended population.

Our Guardant 360 CDx test has been approved by the FDA for use as a companion diagnostic to identify NSCLC
and breast cancer patients who may respond to certain therapies marketed by our biopharmaceutical customers.

Pervasive and continuing FDA regulation

After a device enters commercial distribution, numerous regulatory requirements continue to apply. These include:

•

establishment registration and device listing with the FDA;

the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design,
testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality
assurance procedures during all aspects of the manufacturing process;

labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of
products for uncleared, unapproved or off-label uses;

advertising and promotion requirements;

restrictions on sale, distribution or use of a device;

PMA annual reporting requirements;

PMA approval of product modifications, or the potential for new 510(k) clearances for certain modifications to
510(k)-cleared devices;

• medical device reporting regulations, which require that manufacturers report to the FDA if their device may
have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or
contribute to a death or serious injury if the malfunction were to recur;

• medical device correction and removal reporting regulations, which require that manufacturers report to the
FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the
device or to remedy a violation of the FDCA that may present a risk to health;

•

recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause
serious adverse health consequences or death;

an order of repair, replacement or refund;

•

device tracking requirements; and

post-market surveillance regulations, which apply when necessary to protect the public health or to provide
additional safety and effectiveness data for the device.

The FDA has broad post-market and regulatory enforcement powers. Medical device manufacturers are subject to
unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance
with the QSR and other applicable regulations, and these inspections may include the manufacturing facilities of any
suppliers. Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA,
which may include sanctions such as: warning letters, fines, injunctions, consent decrees and civil penalties;
unanticipated expenditures, repair, replacement, refunds, recall or seizure of our products; operating restrictions,
partial suspension or total shutdown of production; the FDA’s refusal of our requests for 510(k) clearance or
premarket approval of new products, new intended uses or modifications to existing products; the FDA’s refusal to
issue certificates to foreign governments needed to export products for sale in other countries; and withdrawing
510(k) clearance or premarket approvals that have already been granted and criminal prosecution.

Foreign regulation of medical devices

Medical devices (including in vitro diagnostic medical devices) are subject to extensive regulation, such as
premarket review, marketing authorization or certification, by similar agencies or notified bodies in other countries.
Regulatory requirements and approval or certification processes are not harmonized and vary from one country to
another. International regulators and notified bodies are independent and not bound by the findings of the FDA.

Regulation of Medical Devices in the EU

The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigations,
conformity assessment, labeling and adverse event reporting for medical devices (including in vitro diagnostic
medical devices).

In the EU, there is currently no premarket government review of medical devices (including in vitro diagnostic
medical devices). However, the EU requires that all in vitro diagnostic medical devices placed on the market in the
EU must meet the essential requirements of the EU In Vitro Diagnostic Medical Devices Directive (Directive 98/79/
EC), or IVDD, including the requirement that an in vitro diagnostic medical device must be designed and
manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and
health of users and others. In addition, the device must achieve the performances intended by the manufacturer and
be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various
standards applicable to medical devices. There are also harmonized standards relating to design and manufacture.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential
requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that essential
requirement.

Compliance with the essential requirements of the IVDD is a prerequisite for European conformity marking, or CE
mark, without which in vitro diagnostic medical devices cannot be marketed or sold in the EU. To demonstrate
compliance with the essential requirements laid down in Annex I to the IVDD, medical device manufacturers must
undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk)
classification. As a general rule, demonstration of conformity of in vitro diagnostic medical devices and their
manufacturers with the essential requirements must be based, among other things, on the evaluation of clinical data
supporting the safety and performance of the products during normal conditions of use. Specifically, a manufacturer
must demonstrate that the device achieves its intended performance during normal conditions of use, that the known
and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its
intended performance, and that any claims made about the performance and safety of the device are supported by
suitable evidence. Except for (general) in vitro diagnostic medical devices (i.e., all in vitro diagnostic medical
devices other than those covered by Annex II to the IVDD and in vitro diagnostic medical devices for self-testing),
where the manufacturer can self-declare the conformity of its products with the essential requirements, a conformity
assessment procedure requires the intervention of a notified body. Notified bodies are independent organizations
designated by EU member states to assess the conformity of devices before being placed on the market. A notified
body would typically audit and examine a product’s technical dossiers and the manufacturers’ quality system
(notified body must presume that quality systems which implement the relevant harmonized standards – which is
ISO 13485:2016 for Quality Management Systems – conform to these requirements). If satisfied that the relevant
product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which
the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE
mark to the device, which allows the device to be placed on the market throughout the EU. We have obtained CE
mark for our Guardant360 CDx test and the non-CDx blood collection kit.

Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits
to verify continued compliance with the applicable requirements. In particular, there will be a new audit by the
notified body before it will renew the relevant certificate(s).

All manufacturers placing in vitro diagnostic medical devices on the market in the EU must comply with the EU
medical device vigilance system. Under this system, incidents must be reported to the relevant authorities of the EU
member states, and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of
death or serious deterioration in the state of health associated with the use of an in vitro diagnostic medical device
that is already placed on the market. An incident is defined as any malfunction or deterioration in the characteristics
and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly
or indirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious
deterioration in their state of health. An FSCA may include the recall, modification, exchange, destruction or
retrofitting of the device. FSCAs must be communicated by the manufacturer or its legal representative to its
customers and/or to the end users of the device through field safety notices.

The advertising and promotion of in vitro diagnostic medical devices is subject to some general principles set forth
by EU directives. According to the IVDD, only devices that are CE marked may be marketed and advertised in the
EU in accordance with their intended purpose. Directive 2006/114/EC concerning misleading and comparative
advertising and Directive 2005/29/EC on unfair commercial practices, while not specific to the advertising of
medical devices, also apply to the advertising thereof and contain general rules, for example requiring that
advertisements are evidenced, balanced and not misleading. Specific requirements are defined at national level. EU
member states laws related to the advertising and promotion of medical devices (including in vitro diagnostic
medical devices), which vary between jurisdictions, may limit or restrict the advertising and promotion of products
to the general public and may impose limitations on promotional activities with healthcare professionals.

Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical
devices (including in vitro diagnostic medical devices), in particular vis-à-vis healthcare professionals and
organizations. Additionally, there has been a recent trend of increased regulation of payments and transfers of value
provided to healthcare professionals or entities and many EU member states have adopted national “Sunshine Acts”
which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the
United States, on medical device manufacturers. Certain countries also mandate implementation of commercial
compliance programs.

In the EU, regulatory authorities have the power to carry out announced and, if necessary, unannounced inspections
of companies, as well as suppliers and/or sub-contractors and, where necessary, the facilities of professional users.
Failure to comply with regulatory requirements (as applicable) could require time and resources to respond to the
regulatory authorities’ observations and to implement corrective and preventive actions, as appropriate. Regulatory
authorities have broad compliance and enforcement powers and if such issues cannot be resolved to their satisfaction
can take a variety of actions, including untitled or warning letters, fines, consent decrees, injunctions, or civil or
criminal penalties.

The EU regulatory landscape concerning medical devices is evolving. On April 5, 2017 Regulation (EU) 2017/746
of the European Parliament and of the Council on in vitro diagnostic medical devices and repealing Directive 98/79/
EC and Commission Decision 2010/227/EU, or IVDR, was adopted to establish a modernized and more robust EU
legislative framework, with the aim of ensuring better protection of public health and patient safety. Unlike the
IVDD, the IVDR is directly applicable in all EU member states without the need for member states to implement
into national law. This aims at reducing the risk of discrepancies in interpretation across the different European
markets. On October 14, 2021, the European Commission proposed a “progressive” roll-out of the IVDR to prevent
disruption in the supply of in vitro diagnostic medical devices. Consequently, if the European Parliament and
Council adopt the proposed regulation, the IVDR will fully apply on May 26, 2022 but there will be a tiered system
extending the grace period for many devices (depending on their risk classification) before they have to be fully
compliant with the regulation.

The IVDR will become applicable five years after publication on May 26, 2022. Once applicable, the IVDR will
among other things:

•

strengthen the rules on placing devices on the market and reinforce surveillance once they are available;

establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and
safety of devices placed on the market;

establish explicit provisions on importers’ and distributors’ obligations and responsibilities;

impose an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance
with the requirements of the new regulation;

improve the traceability of medical devices throughout the supply chain to the end-user or patient through the
introduction of a unique identification number, to increase the ability of manufacturers and regulatory
authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of
medical devices that have been found to present a safety risk;

set up a central database (Eudamed) to provide patients, healthcare professionals and the public with
comprehensive information on products available in the EU; and

strengthen rules for the assessment of certain high-risk devices that may have to undergo an additional check by
experts before they are placed on the market.

Regulation of Companion Diagnostics

In the EU, in vitro diagnostic medical devices are regulated by the IVDD which regulates the placing on the market,
the CE marking, the essential requirements, the conformity assessment procedures, the registration obligations for
manufactures and devices as well as the vigilance procedure. In vitro diagnostic medical devices must comply with
the requirements provided for in the IVDD, and with further requirements implemented at national level (as the case
may be).

The regulation of companion diagnostics will be subject to further requirements once the IVDR will become
applicable on May 26, 2022. The IVDR introduces a new classification system for companion diagnostics which are
now specifically defined as diagnostic tests that support the safe and effective use of a specific medicinal product, by
identifying patients that are suitable or unsuitable for treatment. Companion diagnostics will have to undergo a
conformity assessment by a notified body. Before it can issue a CE certificate, the notified body must seek a
scientific opinion from the European Medicines Agency, or EMA, on the suitability of the companion diagnostic to
the medicinal product concerned if the medicinal product falls exclusively within the scope of the centralized
procedure for the authorization of medicines, or the medicinal product is already authorized through the centralized
procedure, or a marketing authorization application for the medicinal product has been submitted through the
centralized procedure. For other substances, the notified body can seek the opinion from a national competent
authorities or the EMA.

The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of
the 27 EU member states plus Norway, Liechtenstein and Iceland.

Brexit

Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency, or MHRA, has become the
sovereign regulatory authority responsible for Great Britain (i.e. England, Wales and Scotland) medical device
market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as
amended) that sought to give effect to the three pre-existing EU directives governing active implantable medical
devices, general medical devices and in vitro diagnostic medical devices whereas Northern Ireland continues to be
governed by EU rules according to the Northern Ireland Protocol. Following the end of the Brexit transitional period
on January 1, 2021, new regulations require medical devices to be registered with the MHRA (but manufacturers
were given a grace period of four to 12 months to comply with the new registration process) before being placed on
Great Britain market. The MHRA only registers devices where the manufacturer or their United Kingdom, or UK,
Responsible Person has a registered place of business in the UK. Manufacturers based outside the UK need to
appoint a UK Responsible Person that has a registered place of business in the UK to register devices with the
MHRA in line with the grace periods. By July 1, 2023, in Great Britain, all medical devices will require a UKCA, or
UK Conformity Assessed, mark but CE marks issued by EU notified bodies will remain valid until this time.
Manufacturers may choose to use the UKCA mark on a voluntary basis until June 30, 2023. However, UKCA
marking will not be recognized in the EU. The rules for placing medical devices on the market in Northern Ireland,
which is part of the UK, differ from those in the rest of the UK. Compliance with this legislation is a prerequisite to
be able to affix the UKCA mark to our products, without which they cannot be sold or marketed in Great Britain.

An MHRA public consultation was opened until end of November 2021 on the post-Brexit regulatory framework for
medical devices and diagnostics. MHRA seeks to amend the UK Medical Devices Regulations 2002 (which are
based on EU legislation, primarily the EU Medical Devices Directive 93/42/EEC and the IVDD), in particular to
create a new access pathways to support innovation, create an innovative framework for regulating software and
artificial intelligence, or AI, as medical devices, reform IVD regulation, and foster sustainability through the reuse
and remanufacture of medical devices. The regime is expected to come into force in July 2023, coinciding with the
end of the acceptance period for EU CE marks in Great Britain, subject to appropriate transitional arrangements. The
consultation indicated that the MHRA will publish guidance in relation to the changes to the regulatory framework
and may rely more heavily on guidance to add flexibility to the regime.

In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of
information between the parties in the areas of product safety and compliance, including market surveillance,
enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated
product recalls. As such, processes for compliance and reporting should reflect requirements from regulatory
authorities.

Under the terms of the Northern Ireland Protocol, Northern Ireland follows EU rules on medical devices and devices
marketed in Northern Ireland require assessment according to the EU regulatory regime. Such assessment may be
conducted by an EU notified body, in which case a CE mark is required before placing the device on the market in
the EU or Northern Ireland. Alternatively, if a UK notified body conducts such assessment, a ‘UKNI’ mark is
applied and the device may only be placed on the market in Northern Ireland and not the EU.

Other foreign regulations

In February 2021, Guardant Health Japan, an affiliate of Guardant AMEA, submitted an application to the MHLW,
for regulatory approval of Guardant360 CDx. In December 2021, the MHLW granted regulatory approval of
Guardant360 CDx in patients with advanced solid cancers. The Guardant360 CDx test was also granted approval as
a companion diagnostic to identify patients with microsatellite instability-high (MSI-High) solid tumors who may
benefit from Keytruda® (pembrolizumab) and patients with MSI-High advanced colorectal cancer who may benefit
from Opdivo® (nivolumab). The MHLW additionally granted regulatory approval of the Guardant360 CDx liquid
biopsy test as a companion diagnostic for identifying patients with metastatic NSCL cancer who may benefit from
treatment with LUMAKRASTM (sotorasib), a KRAS G12C inhibitor developed and manufactured by Amgen.

To be sold in Japan, most medical devices must undergo thorough safety examinations and demonstrate medical
efficacy before they are granted approval, or “shonin.” The Japanese government, through the MHLW, regulates
medical devices under the Pharmaceutical Affairs Law, or PAL. Oversight for medical devices is conducted with
participation by the Pharmaceutical and Medical Devices Agency, or PMDA, a quasi-government organization
performing many of the review functions for the MHLW. Penalties for a company’s noncompliance with PAL can
be severe, including revocation or suspension of a company’s business license and criminal sanctions. The MHLW
and PMDA also assess the quality management systems of the manufacturer and product conformity to the
requirements of the PAL. We are subject to compliance inspections by these agencies.

We will seek approvals in other countries as may be required in the future.

Federal and state fraud and abuse laws

We are subject to federal fraud and abuse laws such as the federal Anti-Kickback Statute, or AKS, the federal
Eliminating Kickbacks in Recovery Act, or EKRA, the federal prohibition against physician self-referral, or Stark
Law, and the federal false claims law, or the False Claims Act, or FCA. We are also subject to similar state and
foreign fraud and abuse laws.

The AKS prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration, directly or
indirectly, overtly or covertly, in cash or in kind, in return for or to induce such person to refer an individual, or to
purchase, lease, order, arrange for, or recommend purchasing, leasing or ordering, any good, facility, item or service
that is reimbursable, in whole or in part, under a federal healthcare program. A person or entity does not need to
have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In
addition, the government may assert that a claim including items or services resulting from an AKS violation
constitutes a false or fraudulent claim for purposes of the False Claims Act.

The EKRA prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or
patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or rebate) directly
or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in
exchange for an individual using the services of that laboratory. The EKRA applies to all payers including
commercial payers and government payers, and EKRA violations result in significant fines and/or up to 10 years in
jail, separate and apart from existing AKS regulations.

The Stark Law and similar state laws, including California’s Physician Ownership and Referral Act, generally
prohibit, among other things, clinical laboratories and other entities from billing a patient or any governmental or
commercial payer for any diagnostic services when the physician ordering the service, or any member of such
physician’s immediate family, has a direct or indirect investment interest in or compensation arrangement with us,
unless the arrangement meets an exception to the prohibition.

Other federal fraud and abuse laws to which we are subject include but are not limited to the federal civil and
criminal false claims laws including the FCA, which imposes liability on any person or entity that, among other
things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal
government, and the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or
transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it
is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services
reimbursable by Medicare or a state healthcare program, unless an exception applies. Under the FCA, private
citizens can bring claims on behalf of the government through qui tam actions. We must also operate within the
bounds of the fraud and abuse laws of the states in which we do business which may apply to items or services
reimbursed by non-governmental third-party payers, including private insurers.

In addition, the Physician Payments Sunshine Act imposes, among other things, reporting requirements on
manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in
some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and
chiropractors), certain other health care providers such as physician assistants and nurse practitioners, and teaching
hospitals, as well as ownership and investment interests held by physicians (as defined by the statute) and their
immediate family members. Manufacturers must submit reports by the 90th day of each calendar year. Because we
manufacture our own LDTs solely for use by or within our own laboratory, we believe that we are currently exempt
from these reporting requirements.

Efforts to ensure that our business arrangements with third parties comply with applicable laws and regulations will
involve substantial costs. If our operations are found to be in violation of any of these laws or any other
governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative
penalties, damages, fines, imprisonment, exclusion from government-funded healthcare programs, such as Medicare
and Medicaid, disgorgement, contractual damages, reputational harm, diminished profits and future earnings,
additional reporting or oversight obligations if we become subject to a corporate integrity agreement or other
agreement to resolve allegations of non-compliance with the law and the curtailment or restructuring of our
operations, any of which could adversely affect our ability to operate our business and our results of operations. If
any physicians or other healthcare providers or entities with whom we do business is found to be not in compliance
with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from
government-funded healthcare programs.

In January 2022, we received a civil investigative demand, or CID, from the United States Attorney for the Northern
District of California in connection with an investigation under the False Claims Act. The CID requests information
and documents regarding billing government-funded programs for our panel of genetic tests known as Guardant360.
We are fully cooperating with the investigation. At this time, we are unable to predict the outcome of this
investigation. See “Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for
more information.

Data Privacy and Security

Numerous state, federal and foreign laws, regulations and standards govern the collection, use, access to,
confidentiality and security of health-related and other personal information, and could apply now or in the future to
our operations or the operations of our partners. In the United States, numerous federal and state laws and
regulations, including data breach notification laws, health information privacy and security laws and consumer
protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other
personal information. In addition, certain foreign laws govern the privacy and security of personal data, including
health-related data. Privacy and security laws, regulations, and other obligations are constantly evolving, may
conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions
that lead to significant civil and/or criminal penalties and restrictions on data processing.

Cybersecurity

In the normal course of business, we may collect and store personal information and other sensitive information,
including proprietary and confidential business information, trade secrets, intellectual property, information
regarding study participants in connection with clinical studies, sensitive third-party information and employee
information. To protect this information, our existing cybersecurity policies require monitoring and detection
programs, network security precautions, encryption of critical data, and management of third party risk. We
maintain various protections designed to safeguard against cyberattacks, including firewalls and virus detection
software. We have established and test our disaster recovery plan and we protect against business interruption by
backing up our major systems. In addition, we periodically scan our environment for any vulnerabilities, perform
penetration testing and engage third parties to assess effectiveness of our data security practices. In addition, we
maintain insurance that includes cybersecurity coverage.

Our cybersecurity program is led by a team of cybersecurity professionals. The program incorporates industry-
standard frameworks, policies and practices designed to protect the privacy and security of our sensitive
information. Our cybersecurity team reports to the full Board of Directors annually on information security and
cybersecurity matters, or as needed. Our Nominating and Corporate Governance Committee, which is comprised of
several members from our Board of Directors, has oversight responsibility for our data security practices and we
believe the committee has the requisite skills and visibility into the design and operation of our data security
practices to fulfill this responsibility effectively. Five members from our Board of Directors have cybersecurity
experience, including AmirAli Talasaz, Vijaya Gadde, Meghan Joyce, Samir Kaul and Myrtle Potter.

Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant
cyberattack will not occur. A successful attack on our information technology systems could have significant
consequences to the business. While we devote resources to our security measures to protect our systems and
information, these measures cannot provide absolute security. See “Risk Factors – General Risk Factors” for
additional information about the risks to our business associated with a breach or compromise to our information
technology systems.

U.S. healthcare reform

In the United States, there have been a number of legislative and regulatory changes at the federal and state levels
which seek to reduce healthcare costs and improve the quality of healthcare. For example, in March 2010, the
Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability
Reconciliation Act, or the ACA, became law. The ACA substantially changed the way healthcare is financed by
both commercial and government payers and contains a number of provisions expected to impact our business and
operations, some of which in ways we cannot currently predict, including those governing enrollment in federal and
state healthcare programs, reimbursement changes and fraud and abuse.

Since its enactment, there have been efforts to repeal all or part of the ACA. On June 17, 2021, the U.S. Supreme
Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling
on the constitutionality of the ACA. Thus, the ACA will remain in effect in its current form. Further, prior to the
U.S. Supreme Court ruling, President Biden issued an executive order to initiate a special enrollment period from
February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA
marketplace. The executive order also instructed certain governmental agencies to review and reconsider their
existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid
demonstration projects and waiver programs that include work requirements, and policies that create unnecessary
barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2,
2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments
to providers, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in
effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022,
unless additional Congressional action is taken.

We anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and
commercial payers to reduce costs while expanding individual healthcare benefits. Changes in healthcare coverage
landscape could impose additional limitations on the prices we will be able to charge for our tests, the coverage of or
the amounts of reimbursement available for our tests from payers, including commercial and government payers.

Employees and Human Capital

Our Employees and Commitment to Diversity, Equity and Inclusion

As of December 31, 2022, we had 1,793 full-time employees, of which approximately 1,685 are in the U.S., with the
remainder in Asia, Europe and Canada. We have also engaged and may continue to engage independent contractors
to assist us with our operations. None of our employees are represented by a labor union or covered by a collective
bargaining agreement, except as required by local laws such as in some European countries, and we have never
experienced any employment-related work stoppages. We also track voluntary and involuntary turnover rates,
conduct frequent employee engagement surveys, and consider relations with our employees to be good.

As part of our mission to conquer cancer, we continue to advance our environmental, social and governance efforts,
including enhancing the diversity and inclusiveness of our workplace. We believe that diversity of backgrounds and
ideas inspires creativity and helps us create the innovative technologies that patients need. We appreciate one
another’s differences and strengths and we are proud to be an equal opportunity employer. We do not discriminate
on the basis of race, religion, color, sex, gender identity, sexual orientation, age, non-disqualifying physical or
mental disability, national origin, veteran status or any other basis covered by applicable law. All employment is
decided on the basis of qualifications, merit, and business need. Further, we have policies in place that prohibit
harassment of all kinds. We maintain an inclusive culture where all employees feel empowered to be their authentic
selves. We respect and appreciate each employee’s unique perspective and experiences, and value their contribution
to our mission. It is important that we celebrate, encourage and support similarities and differences to drive
innovation for the benefit of our employees, patients and community.

We are proud to employ a diverse workforce that, as of December 31, 2022, was 57% racially/ethnically diverse and
55% female. For leadership positions across the company, which is defined as director level and above, 34% self-
identified as racially/ethnically diverse and 40% self-identified as women. As of December 31, 2022, women held
50% of the independent director seats on our Board.

Culture, Compensation and Benefits

We strive to recruit, hire and retain a talented and diverse team of people who align with our values. Our employees
are supported with training and development opportunities to pursue their career paths and ensure compliance with
our policies. Our compensation and benefits team strive to develop and implement policies and programs that
support our business goals, maintain competitiveness, promote shared fiscal responsibility among our employees,
strategically align talent within our organization and reward performance, while also managing the costs of such
policies and programs. In order to ensure that we are meeting our human capital objectives, we regularly utilize
employee engagement surveys to understand the effectiveness of our employee development and compensation
programs and where we can improve across the company. We also regularly evaluate our compensation programs
with an independent compensation consultant and utilize industry benchmarking in an effort to ensure they are
competitive compared to similar biotechnology and biopharmaceutical companies with which we compete for talent,
as well as fair and equitable across our workforce with respect to gender, race and other personal characteristics.

We are committed to rewarding, supporting, and developing the employees who make it possible to deliver on our
strategy. To that end, we offer a comprehensive total rewards package that includes market-competitive fixed and/or
variable pay, broad-based equity grants and bonuses, access to medical, dental, vision and life insurance benefits,
disability coverage, fertility subsidies, retirement savings plans, paid time off and family leave, caregiving support,
fitness, cellphone and internet reimbursements, and mental health and other wellness benefits.

Available information

Our website is located at https://guardanthealth.com. Our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, including their exhibits, proxy and information statements, and
amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange
Act of 1934, as amended, are available through the “Investors” portion of our website free of charge as soon as
reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information on our
website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically
incorporated herein by reference. In addition, our filings with the SEC may be accessed through the SEC’s
Interactive Data Electronic Applications system at http://www.sec.gov. All statements made in any of our securities
filings, including all forward-looking statements or information, are made as of the date of the document in which
the statement is included, and we do not assume or undertake any obligation to update any of those statements or
documents unless we are required to do so by law.

Item 1A. Risk Factors

Risk Factors

Our operations and financial results are subject to various risks and uncertainties including those described below.
You should consider carefully the risks and uncertainties described below, in addition to other information
contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes.
The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we
are unaware of, or that we currently believe are not material, may also become important factors that adversely
affect our business. If any of the following risks or others not specified below materialize, our business, financial
condition and results of operations could be materially and adversely affected. In that case, the trading price of our
common stock could decline.

Risks related to our business and strategy

We have incurred significant losses since inception, we may continue to incur losses in the future and we may not
be able to generate sufficient revenue to achieve and maintain profitability.

We have incurred significant losses since our inception. For the years ended December 31, 2022, 2021 and 2020, we
incurred net losses of $654.6 million, $384.8 million and $246.3 million, respectively. As of December 31, 2022, we
had an accumulated deficit of $1.7 billion. To date, we have financed our operations principally from the sale of
stock or convertible securities, and revenue from precision oncology testing and our development services. We have
devoted substantially all of our resources to the development and commercialization of our current products and to
research and development activities related to our future products, including clinical and regulatory initiatives to
obtain marketing approval and sales and marketing activities. We will need to generate substantial revenue to
achieve and then sustain profitability, and even if we achieve profitability, we cannot be sure that we will remain
profitable for any period of time. Our failure to achieve or maintain profitability could negatively impact the value
of our common stock.

We may not be able to generate sufficient revenue to achieve and maintain profitability and our current or future
products may not achieve or maintain sufficient commercial market acceptance.

We are currently not profitable. Even if we succeed in increasing adoption of our existing products and services by
physicians, obtaining additional coverage decisions from commercial and government payers, maintaining and
creating relationships with our existing and new biopharmaceutical partners, and developing and commercializing
additional products and services, we may not be able to generate sufficient revenue to achieve or maintain
profitability.

We believe our commercial success is dependent upon our ability to continue to successfully market and sell our
current and future products, to continue to expand our current relationships and develop new relationships with
clinicians and biopharmaceutical customers and to develop and commercialize new products. Our ability to achieve
and maintain sufficient commercial market acceptance of our existing and future products will depend on a number
of factors, including:

•

our ability to increase awareness of our tests and the benefits of liquid biopsy;

the rate of adoption and/or endorsement of our tests by clinicians, KOLs, advocacy groups and
biopharmaceutical companies;

the timing and scope of any approval or certification by regulatory agencies, including the FDA, or notified
bodies for our tests;

our ability to obtain positive coverage decisions for our tests from additional commercial payers and to broaden
the scope of indications included in such coverage decisions;

our ability to obtain reimbursement and expanded coverage from government payers, including Medicare;

the impact of our investments in product innovation and commercial growth;

negative publicity regarding ours or our competitors’ products resulting from defects or errors; and

our ability to further validate our technology through clinical research and accompanying publications.

We cannot assure that we will be successful in addressing each of these criteria or other criteria that might affect the
market acceptance of our products. If we are unsuccessful in achieving and maintaining market acceptance of our
products, our business and results of operations will suffer.

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict
and could cause our operating results to fall below expectations or any guidance we may provide.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our
future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our
control, including, but not limited to:

•

the level of demand for any of our products, which may vary significantly;

the timing and cost of, and level of investment in, research, development, regulatory approval or certification
and commercialization activities relating to our products, which may change from time to time;

the volume and customer mix of our precision oncology testing;

the start and completion of projects in which our development services are utilized;

the introduction of new products or product enhancements by us or others in our industry;

coverage and reimbursement policies with respect to our products and products that compete with our products;

expenditures that we may incur to acquire, develop or commercialize additional products and technologies;

changes in governmental regulations or in the status of our regulatory approvals or certifications or applications;

future accounting pronouncements or changes in our accounting policies;

developments or disruptions in the business and operations of our clinical, commercial and other partners;

the impact of natural disasters, political and economic instability, including wars, terrorism, and political unrest,
epidemics or pandemics, including the ongoing coronavirus pandemic, boycotts, curtailment of trade and other
business restrictions; and

the effects of high inflation or other general market conditions and other factors, including factors unrelated to
our operating performance or the operating performance of our competitors.

Additionally, it is difficult to predict the amount we are able to collect for our tests from commercial payers. We
receive reimbursement for our tests from several commercial payers for whom we are not a participating provider.
Because we are not contracted with these payers, they determine the amount they are willing to reimburse us for
tests. We have provided testing services to patients with many cancer types and indications, some of the time as a
non-participating provider through 2022. When we have received payment as a non-participating provider, the
amounts, on average, were significantly lower than for participating providers. Even when these payers have paid a
claim, they may elect at any time to review previously paid claims for overpayment against these claims. In the
event of an overpayment determination, the payer may offset the amount they determine they overpaid against
amounts they owe us on current claims. We have limited leverage to dispute these retroactive adjustments and we
cannot predict when, or how often, a payer might engage in these reviews. A significant amount of these offsets by
one or more payers in any given quarter could have a material effect on our results of operations and cause them to
fall below expectations or guidance we may provide. Our efforts to become a participating provider of a number of
commercial payers may not be successful. Even when we have obtained positive coverage decisions for our tests
from commercial payers and entered into agreements with them, such agreements typically are standard form
contracts and may allow payers to terminate coverage on short notice, impose significant obligations on us and
create additional regulatory and compliance hurdles for us.

As part of our reimbursement operations, we appeal denials from payers, and if successful, we receive payments
from these appeals. However, due to the inherent variability of the insurance landscape, we cannot guarantee future
success of, or any payments from, appeals of reimbursement denials by payers. Historic success and payments are
not indicative of future success of and payments from such appeals.

The cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our
quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may
not be meaningful. Investors should not rely on our past results as an indication of our future performance.

This variability and unpredictability could also result in our failing to meet the expectations of industry or financial
analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or
investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts
or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even
when we have met any previously publicly stated guidance we may provide.

New product development and commercialization involve a lengthy and complex process and we may be unable to
develop or commercialize new products on a timely basis, or at all.

Products that are under development have taken time and considerable resources to develop, and we may not be able
to complete the development and commercialization of the such products for clinical use on a timely basis, or at all.
For example, there can be no assurance that we will be able to produce commercial products for early detection of
cancer. Before we can commercialize any new products, we will need to expend significant funds in order to:

•

conduct substantial research and development, including validation studies and clinical studies;

further develop and scale our laboratory processes to accommodate different products; and

further develop and scale our infrastructure to be able to analyze increasingly large amounts of data.

Our product development process involves a high degree of risk, and product development efforts may fail for many
reasons, including:

•

failure of the product to perform as expected, including defects and errors;

lack of validation data; or

failure to demonstrate the clinical utility of the product.

Our development plan involves using data and analytical insights generated from our current products as a force
multiplier of returns on research and development investment in our future products. However, if we are unable to
generate additional or compatible data and insights, then we may not be able to advance our products under
development as quickly, or at all, or without significant additional investment.

As we develop products, we have made and will have to make significant investments in product development,
marketing and selling resources, including investing heavily in clinical studies, which could adversely affect our
future cash flows.

Our current revenue is primarily generated from sales of our tests and we are highly dependent on them for our
success.

Our ability to execute our growth strategy and become profitable is highly dependent on the continued adoption and
use of our tests, which accounted for almost all of our revenue in the years ended December 31, 2022, 2021 and
2020. Continued adoption and use of our tests will depend on several factors, including the prices we charge for our
tests, the scope of coverage and amount of reimbursement available from third-party payers for our tests, the
availability of clinical data that supports the value of our tests and the inclusion of our tests in industry treatment
guidelines. In addition, many biopharmaceutical companies have existing relationships with companies that develop
molecular diagnostic tests, including our competitors, and may continue to use their tests instead of ours. Despite our
business development efforts, it could be difficult, expensive and/or time-consuming for biopharmaceutical
companies to switch diagnostic tests for their products, and our tests may not be widely accepted by
biopharmaceutical companies, if at all, which could in turn hinder the growth of sales of our tests. If we are unable
to achieve commercial success for our tests, our business, results of operations and financial condition would be
materially and adversely affected. We cannot assure that our tests will continue to maintain or gain market
acceptance, and any failure to do so would materially harm our business and results of operations.

If our products do not meet the expectations of patients and our customers, our operating results, reputation and
business could suffer.

Our success depends on the market’s confidence that we can provide reliable, high-quality precision oncology
products that will improve clinical outcomes, lower healthcare costs and enable better biopharmaceutical
development. We believe that patients, clinicians and biopharmaceutical companies are likely to be particularly
sensitive to product defects and errors in the use of our products, including if our products fail to detect genomic
alterations with high accuracy from samples or if we fail to list or inaccurately include certain treatment options and
available clinical studies in our test reports, and there can be no guarantee that our products will meet their
expectations. Furthermore, if our competitors’ products do not perform to expectations, it may result in lower
confidence in our tests as well. As a result, the failure of our products to perform as expected could significantly
impair our operating results and our reputation. In addition, we may be subject to legal claims arising from any
defects or errors in our products.

As our volume of test sales grows, we will need to continue to increase our workflow capacity for sample intake,
customer service, billing and general process improvements, expand our internal quality assurance program and
extend our platform to support comprehensive genomic analysis at a larger scale within expected turnaround times.
We will need additional certified laboratory scientists and other scientific and technical personnel to process higher
volumes of our precision oncology products. Portions of our process are not automated and will require additional
personnel to scale. We will also need to purchase additional equipment, some of which can take several months or
more to procure, setup and validate, and increase our software and computing capacity to meet increased demand.
There is no assurance that any of these increases in scale, expansion of personnel, equipment, software and
computing capacities or process enhancements will be successfully implemented, if at all, or that we will have
adequate space in our laboratory facility or be able to secure additional facility space to accommodate such required
expansion.

As we commercialize additional products, we will need to incorporate new equipment, implement new technology
systems and laboratory processes, and hire new personnel with different qualifications. Failure to manage this
growth or transition could result in turnaround time delays, higher product costs, declining product quality,
deteriorating customer service and slower responses to competitive challenges. A failure in any one of these areas
could make it difficult for us to meet market expectations for our products and could damage our reputation and the
prospects for our business.

If we cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical
companies, our revenue prospects could be reduced.

Biopharmaceutical customers collaborate with us for analysis of whole blood or plasma samples for multiple
applications primarily to support clinical studies, including patient identification, companion diagnostics and
retrospective testing. In the years ended December 31, 2022, 2021 and 2020, revenue from our top five
biopharmaceutical customers, including their affiliated entities, accounted for 18%, 18% and 27% of our total
revenue, respectively. The revenue attributable to our biopharmaceutical customers may also fluctuate in the future,
which could have an adverse effect on our financial condition and results of operations. In addition, the termination
of these relationships could result in a temporary or permanent loss of revenue. Adverse speculation about our
existing or potential relationships with biopharmaceutical companies may be a catalyst for adverse speculation about
us, our products and our technology, which can adversely affect our reputation and business.

Our future success depends in part on our ability to maintain relationships and to enter into new relationships with
biopharmaceutical customers, including offering our platform to such customers for companion diagnostic
development, novel target discovery and validation as well as clinical study enrollment, and growing into other
business opportunities. This can be difficult due to many factors, including the type of biomarker support required
and our ability to deliver it and our biopharmaceutical customers’ satisfaction with our products or services, internal
and external constraints placed on these organizations and other factors that may be beyond our control.
Furthermore, our biopharmaceutical customers may decide to decrease or discontinue their use of our current
products and tests, or our future products due to changes in their research and product development plans, failures in
their clinical studies, financial constraints, or utilization of internal testing resources or tests performed by other
parties, or other circumstances outside of our control. Continued usage of our tests by particular biopharmaceutical
customers may also depend on whether the partner obtains positive data in its clinical studies, is able to successfully
obtain regulatory approval and subsequently commercializes a therapy for which we have partnered with them to
develop a companion diagnostic, or other administrative factors that are outside our control. Some of our
biopharmaceutical customers have contracted with us to provide testing for large numbers of samples, which could
strain our testing capacity and restrict our ability to perform tests for other customers. Furthermore,
biopharmaceutical companies may decline to do business with us or decrease or discontinue their use of our tests
due to their broad strategic collaboration with any of our competitors. In addition to reducing our revenue, the loss
of one or more of these relationships may reduce our exposure to research and clinical studies that facilitate the
collection and incorporation of new information into our platform and tests. We engage in conversations with
biopharmaceutical companies regarding potential commercial opportunities on an ongoing basis. There is no
assurance that any of these conversations will result in a commercial agreement, that the resulting relationship will
be successful, or that clinical studies conducted as part of the engagement will produce successful outcomes. If we
cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical companies, our
product development could be delayed and revenue and results of operations could be adversely affected.

Our payer concentration may materially adversely affect our financial condition and results of operations.

We receive a substantial portion of our revenue from a limited number of third-party commercial payers, most of
which have not contracted with us to be a participating provider. If one or more of these payers were to significantly
reduce, or cease to pay, the amount such payer reimburses us for tests we perform, or if such payer does not reach or
maintain favorable coverage and reimbursement decisions for our tests, it could have a material adverse effect on
our business, financial condition and results of operations. 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. If commercial payers
were to decide not to include us as a participating provider, cease paying us altogether, drastically reduce the amount
they were willing to pay us or attempt to recover any amounts they had already paid, it could cause significant
fluctuations in our quarterly results and could harm our business and results of operations.

In September 2018, we began to receive reimbursement from Medicare for claims submitted with respect to
Guardant360 clinical tests performed for NSCLC patients. In March 2020, we began to receive reimbursement from
Medicare for claims submitted with respect to Guardant360 clinical tests performed for qualifying patients
diagnosed with solid tumor cancers of non-central nervous system origin other than NSCLC. Revenue from clinical
tests for patients covered by Medicare represented approximately 45%, 45% and 42% of our precision oncology
revenue from clinical customers for the years ended December 31, 2022, 2021 and 2020, respectively. Revenue
attributable to Medicare accounted for more than 10% of our total revenue in each of the years ended December 31,
2022, 2021 and 2020. In addition, pursuant to CMS regulations, we cannot bill Medicare directly for tests provided
for Medicare beneficiaries in some situations. CMS adopted an exception to its laboratory date of service regulation,
and if certain conditions are met, molecular testing laboratories such as us can rely on that exception to bill Medicare
directly, instead of seeking payment from the hospital. If this exception is repealed or curtailed by CMS, or its
laboratory date of service regulation is otherwise changed to adversely impact our ability to bill Medicare directly,
our revenue could be materially reduced.

If 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, such as deductions
from further payments and clawbacks, can also negatively impact our revenue and cause our financial results to
fluctuate. In addition, as part of our reimbursement operations, we appeal denials from payers, and if successful, we
receive payments from these appeals. However, due to the inherent variability of the insurance landscape, we cannot
guarantee future success of, or any payments from, appeals of reimbursement denials by payers. Historic success
and payments are not indicative of future success of and payments from such appeals.

If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or
to achieve and then sustain profitability.

Growing understanding of the importance of biomarkers linked with therapy selection, response and early screening
is leading to more companies offering services in genomic profiling. The promise of biopsy testing is also leading to
more companies attempting to enter the space and compete with us. Over the last year, that has included new and
accelerated development programs by a number of potential competitors, and increasing levels of merger and
acquisition activity by both existing and new competitors. Currently, our main competition is from diagnostic
companies with products and services to profile genes in cancers based on either single-marker or comprehensive
genomic profile testing, based on next-generation sequencing in either blood or tissue. This may change over the
next few years as a result of new competitors entering through investment and acquisition activity.

Our competitors within the liquid biopsy space for therapy selection include Foundation Medicine, Inc., which was
acquired by Roche Holdings, Inc. in 2018; Roche Molecular Systems, Inc., Thermo Fisher Scientific, Inc., Illumina,
Inc., Qiagen N.V., Invitae Corporation, Caris Life Science, Tempus Labs, Inc., and Agilent Technologies, Inc. In
addition, NeoGenomics Laboratories, Inc., Natera, Inc., Exact Sciences Corp., among others, are our competitors in
minimal residual disease testing. Additionally, our competitors in the early screening testing space include GRAIL,
Inc., Exact Sciences Corp., Freenome Holdings, Inc., Delfi Diagnostics and InterVenn Biosciences.

Competitors within the broader genomics profiling space based on tissue include laboratory companies such as Bio-
Reference Laboratories, Inc., Laboratory Corporation of America and Quest Diagnostics, Inc., as well as companies
such as Foundation Medicine, Inc., Myriad Genetics, Inc., and most if not all of the competitors within the liquid
biopsy space for therapy selection, that sell molecular diagnostic tests for cancer to physicians and have or may
develop tests that compete with our tests. In addition, we are aware that certain of our customers are also developing
their own tests and may decide to enter our market or otherwise stop using our tests.

Some of our competitors and potential competitors may have longer operating histories; larger customer bases;
greater brand recognition and market penetration; substantially greater financial, technological and research and
development resources and selling and marketing capabilities; and more experience dealing with third-party payers.
As a result, they may be able to respond more quickly to changes in customer requirements, devote greater resources
to the development, promotion and sale of their tests than we do or sell their tests at prices designed to win
significant levels of market share. We may not be able to compete effectively against these organizations. Increased
competition and cost-saving initiatives on the part of governmental entities and other third-party payers are likely to
result in pricing pressures, which could harm our sales, profitability or ability to gain market share. In addition,
competitors may be acquired by, receive investments from or enter into other commercial relationships with larger,
well-established and well-financed companies. Certain of our competitors may be able to secure key inputs from
vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more
aggressive pricing policies and devote substantially more resources to product development than we can. In addition,
companies or governments that control access to genetic testing through umbrella contracts or regional preferences
could promote our competitors or prevent us from performing certain services. If we are unable to compete
successfully against current and future competitors, we may be unable to increase market acceptance and sales of
our tests, which could prevent us from increasing our revenue or achieving profitability and could cause our stock
price to decline.

The sizes of the markets for our current and future products have not been established with precision, and may
be smaller than we estimate.

Our estimates of the annual total addressable markets for our current products and products under development are
based on a number of internal and third-party estimates, including, without limitation, the number of patients with
late-stage, solid tumor cancer, the number of individuals who are at a higher risk for developing cancer, and the
assumed prices at which we can sell tests for markets that have not been established. While we believe our
assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be
correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the
predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for
our current or future products may prove to be incorrect. If the actual number of patients who would benefit from
our products, the price at which we can sell our products, or the annual total addressable market for our products is
smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.

The precision oncology industry is subject to rapid change, which could make our current products and any
future products we may develop, obsolete.

Our industry is characterized by rapid changes, including technological and scientific breakthroughs, frequent new
product introductions and enhancements and evolving industry standards, all of which could make our current and
future products obsolete. Our future success will depend on our ability to keep pace with the evolving needs of our
customers on a timely and cost-effective basis and to pursue new market opportunities that develop as a result of
scientific and technological advances. In recent years, there have been numerous advances in technologies relating to
the diagnosis and treatment of cancer. There have also been advances in methods used to analyze very large amounts
of molecular information. We must continuously enhance our platform and develop new products to keep pace with
evolving standards of care. If we do not update our product offerings to reflect new scientific knowledge about
cancer biology, information about new cancer therapies or relevant clinical studies, our products could become
obsolete and sales of our current products and any new products we may develop could decline or fail to grow as
expected.

We have experienced challenges attracting and retaining qualified personnel due to competitive labor markets
and may continue to do so, and may be unable to manage our future growth effectively, all of which could make
it difficult to execute our business strategy.

Since our inception, we have experienced rapid growth and anticipate further growth in our business operations. Our
future growth could create strain on our organizational, administrative and operational infrastructure, including
laboratory operations, quality control, customer service and sales organization management. We expect to continue
to increase headcount and to hire more specialized personnel as we grow our business. We will need to continue to
hire, train and manage additional qualified scientists, laboratory personnel, client and account services personnel, as
well as sales and marketing staff, and improve and maintain our technology to properly manage our growth.

However, we have experienced challenges attracting and retaining qualified personnel due to competitive labor
markets and may continue to do so. In this competitive environment, our business could be adversely impacted by
increases in labor costs triggered by regulatory actions regarding wages, scheduling and benefits, the need to attract
and retain high quality employees with the requisite skill sets, and the ongoing effects of the COVID-19 pandemic.
In addition, if our new hires perform poorly, if we are unsuccessful in training, managing and integrating these new
employees or if we are not successful in developing and retaining our existing employees, our business may be
harmed.

In addition, we may not be able to maintain the quality or expected turnaround times of our products, or satisfy
customer demand as it grows, and our business may be harmed. Our ability to manage our growth properly will also
require us to continue to improve our operational, financial and management controls, as well as our reporting
systems and procedures. The time and resources required to implement these new systems and procedures is
uncertain and could be demanding, and failure to complete this in a timely and efficient manner could adversely
affect our operations.

We may not be able to successfully market, sell or distribute our products, and if we are unable to expand our
sales organization to adequately address our customers’ needs, our business may be adversely affected.

We may not be able to market, sell or distribute our products and tests, and other products we may develop
effectively enough to support our planned growth. We currently sell to clinicians in the United States through our
own sales organization and to biopharmaceutical companies through our business development team.

Each of our target markets is large, distinctive and diverse. As a result, we believe it is necessary for our sales
representatives and business development managers to have established oncology-focused expertise. Competition
for such employees within the precision oncology industry is intense. We may not be able to attract and retain
personnel or be able to build an efficient and effective sales organization or business development team, which could
negatively impact sales and market acceptance of our products and limit our revenue growth and potential
profitability.

Our expected future growth will impose significant added responsibilities on members of management, including the
need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our
ability to commercialize our products, to increase our sales and to compete effectively will depend, in part, on our
ability to manage this potential future growth effectively, without compromising quality.

Outside the United States, we established Guardant AMEA for sales of our products throughout Asia, the Middle
East and Africa. If the sales and marketing efforts for our products in those regions are not successful, our business
would be materially and adversely affected. In other territories, such as Europe, we sell our tests primarily through
distributor relationships or direct contracts with hospitals. Locating, qualifying, engaging and maintaining
relationships with distribution partners and hospitals with local industry experience and knowledge will be necessary
to effectively market and sell our products outside the United States. We may not be successful in finding, attracting
and retaining distribution partners or local hospitals, or we may not be able to enter into such arrangements on
favorable terms. Sales practices utilized by any such parties that are locally acceptable may not comply with sales
practices standards required under U.S. laws that apply to us, which could create additional compliance risk. If our
international sales and marketing efforts are not successful, we may not achieve market acceptance for our products
outside the United States, which would materially and adversely impact our business.

We rely on a limited number of suppliers or, in some cases, sole suppliers, for some of our laboratory instruments
and materials and may not be able to find replacements or promptly transition to alternative suppliers.

We rely on a limited number of suppliers or, in some cases, sole suppliers, including Illumina Inc., or Illumina, for
certain sequencers, reagents, blood tubes and other equipment, instruments and materials that we use in our
laboratory operations. An interruption in our laboratory operations could occur if we encounter delays or difficulties
in securing these laboratory equipment, instruments or materials, and if we cannot then obtain an acceptable
substitute. Any such interruption could significantly and adversely affect our business, financial condition, results of
operations and reputation. We rely on Illumina as the sole supplier of the sequencers and as the sole provider of
maintenance and repair services for these sequencers. Any disruption in operations of Illumina or other sole or
limited suppliers or termination or suspension of our relationships with them could materially and adversely impact
our supply chain and laboratory operations and thus our ability to conduct our business and generate revenue. These
limited or sole suppliers could engage in diverse types of businesses, including selling products or providing
services in competition with us, and there can be no assurance that we can continue to receive required equipment,
instruments or materials from them.

We believe that there are only a limited number of other manufacturers that are capable of supplying and servicing
the equipment and materials necessary for our laboratory operations, including sequencers and various associated
reagents, and potentially replacing our current suppliers. The use of equipment or materials furnished by these
replacement suppliers would require us to alter our laboratory operations. Transitioning to a new supplier would be
time-consuming and expensive, may result in interruptions in our laboratory operations, could affect the
performance specifications of our laboratory operations or could require that we revalidate our tests. There can be no
assurance that we will be able to secure alternative equipment, reagents and other materials, bring such equipment,
reagents and materials online, and revalidate our tests without experiencing interruptions in our workflow. In the
case of an alternative supplier for Illumina, for example, there can be no assurance that replacement sequencers and
various associated reagents will be available or will meet our quality control and performance requirements for our
laboratory operations. If we should encounter delays or difficulties in securing, reconfiguring or integrating the
equipment and reagents we require for our products or in revalidating our products, our business, financial
condition, results of operations and reputation could be materially and adversely affected.

The COVID-19 global pandemic and the worldwide attempts to contain it have adversely impacted our supply
chain and other aspects of our business, as well as our results of operations, and could continue to do so.

The global outbreak of coronavirus 2019, or COVID-19, and the various attempts throughout the world to contain it,
have created significant volatility, uncertainty and disruption, which has and may continue to impact the global
economy, disrupt our supply chain, and create significant volatility and disruption of financial markets.

We have experienced significant reduction in access to our customers, including restrictions on our ability to market
and distribute our tests and to collect samples. Our partners, vendors, suppliers and customers have similarly had
their operations altered or temporarily suspended. Due to impacts and measures resulting from the COVID-19
pandemic, we have experienced and could continue to experience unpredictable reductions in the demand for our
tests as healthcare customers divert medical resources and priorities toward the treatment of the virus. Our
biopharmaceutical customers are facing challenges in recruiting patients and in conducting clinical studies to
advance their product development pipelines, for which our tests could be utilized. To the extent the COVID-19
pandemic continues to cause severe disruption, vendors of equipment and reagents for our operations could also
reduce productions or even go out of business, resulting in supply constraints for us. For example, movement of
supplies has been significantly curtailed worldwide, which has caused supply shortages for certain of our major
suppliers. Disruptions caused by the COVID-19 pandemic have adversely affected the quantity and quality of
certain sequencers, reagents, blood tubes and other similar materials that are critical to our commercial and research
and development programs. We currently have a limited amount of stock of these components. Failure in the future
to secure sufficient supply of critical components could materially and adversely affect our ability to manufacture or
supply marketed products and product candidates or complete our ongoing research and development programs on
the timelines previously established. Our ability to enroll suitable patients in clinical studies has also been negatively
impacted and could continue to be adversely affected by the COVID-19 pandemic.

The full extent to which the COVID-19 pandemic and the various responses to it impacts our business, operations
and financial results will depend on numerous evolving factors that we may not be able to accurately predict,
including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been
and continue to be taken in response to the pandemic; the adverse effects on our manufacturing operations and
supply chain, which may impact our ability to produce and distribute our products, as well as the ability of third
parties to fulfill their obligations to us and could increase our expenses; the possibility that third parties on which we
rely for certain functions and services, suppliers, distributors, logistics providers, and external business partners,
may be adversely impacted by restrictions resulting from COVID-19, which could cause us to experience delays or
incur additional costs; the availability, cost to access and effectiveness of COVID-19 tests, vaccines and medicines;
the effect on our customers and customer demand for and ability to pay for our tests; restrictions on the ability of our
employees and the employees of third parties on which we rely for certain functions and services to work and travel;
disruptions related to the distribution of our tests, including impacts on logistics of shipping and receiving blood
collection kits; and any stoppages, disruptions or increased costs associated with development, production and
marketing of our products. During the COVID-19 pandemic, we may not be able to maintain the same level of
customer outreach and service, which could negatively impact our customers’ perception of us. We will continue to
actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our operations,
as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our
employees, customers and stockholders. It is not clear what the potential effects any such alterations or
modifications may have on our business, including the effects on our financial results.

The COVID-19 pandemic has also led to uncertainties related to our growth, forecast and trends. Our historic results
such as revenues, operating margins, net income, cash flows, tests performed, and other financial and operating
metrics, may not be indicative of our results for future periods. Any past increases in the number of clinical tests
and/or biopharmaceutical tests performed by us may reflect the acceleration of growth that we have experienced but
may not see in subsequent periods given the COVID-19 pandemic. Even if government and other restrictions are
relaxed, our growth may slow or reverse, including due to a slow recovery. The COVID-19 pandemic and its future
developments present uncertainties with respect to our performance, financial condition, volume of business, results
of operations, and cash flows. Due to the uncertain scope and duration of the COVID-19 pandemic and uncertain
timing of any recovery or normalization, we are currently unable to estimate the resulting impacts on our operations
and financial results. In addition to the impacts to our business, the global economy is likely to be significantly
weakened as a result of actions taken in response to the COVID-19 pandemic. To the extent that such a weakened
global economy impacts customers’ ability or willingness to pay for our tests, our business and results of operation
could be negatively impacted. 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.

If our existing laboratory facility becomes damaged or inoperable or we are required to vacate our existing
facility, our ability to perform our tests and pursue our research and development efforts may be jeopardized.

We currently derive the majority of our revenue from tests performed at a single laboratory facility located in
Redwood City, California. Our facility and equipment could be harmed or rendered inoperable by natural or man-
made disasters, including war, fire, earthquake, power loss, communications failure or terrorism, which may render
it difficult or impossible for our laboratory operations. The inability to perform our tests or to reduce the backlog
that could develop if our facility is inoperable, for even a short period of time, may result in the loss of customers or
harm to our reputation, and we may be unable to regain those customers or repair our reputation. Furthermore, our
facility and the equipment we use to perform our research and development work could be unavailable or costly and
time-consuming to repair or replace. It would be difficult, time-consuming and expensive to rebuild our facility, to
locate and qualify a new facility or enable a third party to practice our proprietary technology, particularly in light of
licensure and accreditation requirements. Even if we are able to find a third party with such qualifications to perform
our tests, the parties may be unable to agree on commercially reasonable terms.

We carry insurance for damage to our property and disruption of our business, but this insurance may not cover all
of the risks associated with damage or disruption to our facility and business, may not provide coverage in amounts
sufficient to cover our potential losses and may not continue to be available to us on acceptable terms, if at all.

We are dependent on third parties for the collection of blood samples for our tests.

We rely on third-party phlebotomy providers, including physician offices, to collect blood samples for our tests. Our
current third-party phlebotomy providers may refuse to continue to collect samples for us in the future, in particular
if they have agreements or arrangements with one of our competitors to collect samples for their tests, or if the
phlebotomy provider is owned or controlled by a laboratory that offers tests that compete with ours. There has been
a trend towards consolidation of independent phlebotomy providers. Independent phlebotomy providers, once
acquired by our competitors, may terminate their relationships with us. If our patients are unable to readily access a
phlebotomy provider to collect a blood sample for our tests, we may be unable to compete effectively with other
laboratories that have greater access to phlebotomy providers and our business, financial condition and results of
operations may be harmed.

In addition, if third-party phlebotomy providers fail to adequately and properly obtain and collect viable blood
samples from patients and to properly package and ship the samples to us, our patients and their physicians may
experience problems and delays in receiving test results, which could lead to dissatisfaction with our tests, therefore
harming our reputation and adversely affecting our business, financial condition and results of operations. Similarly,
our contracts with physician owned phlebotomy providers to collect blood could be scrutinized under federal and
state healthcare laws such as the federal Anti-Kickback Statute, or AKS, and the federal law prohibiting physician
self-referral, or Stark Law, to the extent these services to us are deemed to provide a financial benefit to or relieve a
financial burden for a potential referral source, or are subsequently found not to be for fair market value. If our
operations are found to be in violation of any of these laws and regulations, we may be subject to administrative,
civil and criminal penalties, damages, fines, individual imprisonment, exclusion from participation in federal
healthcare programs or from coverage of commercial payers, refunding of payments received by us, and curtailment
or cessation of our operations, any of which could harm our reputation and adversely affect our business, financial
condition and results of operations.

We rely on commercial courier delivery services to transport samples to our laboratory facility in a timely and
cost-efficient manner and if these delivery services are disrupted, our business will be harmed.

Our business depends on our ability to deliver test results quickly and reliably to our customers. Blood samples are
typically received within days from the United States and outside the United States for analysis at our Redwood
City, California facility. Disruptions in delivery services to transport samples to that facility, whether due to labor
disruptions, bad weather, natural disaster, terrorist acts or threats or for other reasons could adversely affect
specimen integrity and our ability to process samples in a timely manner, delay our provision of test results to our
customers, and ultimately our reputation and our business. In addition, if we are unable to continue to obtain
expedited delivery services to transport samples to us on commercially reasonable terms, our operating results may
be adversely affected.

International expansion of our business exposes us to business, regulatory, political, operational, financial, and
economic risks associated with doing business outside of the United States.

We currently have limited international operations, but our business strategy incorporates potentially significant
international expansion, including through Guardant AMEA, which we formed to accelerate the commercialization
of our products in Asia, the Middle East and Africa.

We plan to maintain distributor and partner relationships, to conduct physician and patient association outreach
activities, to extend laboratory capabilities and to expand payer relationships, outside of the United States. Doing
business internationally involves a number of risks, including:

• multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and
import restrictions, economic sanctions and embargoes, employment laws, regulatory requirements and
other governmental approvals, permits and licenses;

•

failure by us, our distributors, or our local partners to obtain regulatory approvals or certifications for the
use of our products in various countries;

presence of additional third-party patents or other intellectual property rights that may be relevant to our
business and may potentially block our expansion;

complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual
property rights;

difficulties in staffing and managing foreign operations;

complexities associated with managing multiple payer reimbursement regimes, government payers, or
patient self-pay systems;

logistics and regulations associated with shipping blood samples, including infrastructure conditions and
transportation delays;

limits in our ability to penetrate international markets if we are not able to perform our tests locally;

financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local
and regional financial crises on demand and payment for our products and exposure to foreign currency
exchange rate fluctuations, currency controls and cash repatriation restrictions;

natural disasters, political and economic instability, including wars, terrorism, and political unrest, boycotts,
curtailment of trade and other business restrictions;

public health or similar issues, such as epidemics or pandemics, that could cause business disruption for our
offices in Japan and Singapore, and make it more difficult to sell our tests in the affected countries or
regions, and

regulatory and compliance risks that relate to maintaining accurate information and control over sales and
distributors’ activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA,
its books and records provisions, or its anti-bribery provisions.

Any of these factors could significantly harm our future international expansion and operations and, consequently,
our revenue and results of operations.

We could be adversely affected by violations of the FCPA and other anti-bribery laws.

We are subject to the FCPA, which prohibits companies and their intermediaries from making payments in violation
of law to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other
improper advantage, as a result of our international customers. Our reliance on independent distributors to sell our
tests internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt
activity, because these distributors could be deemed to be our agents and we could be held responsible for their
actions. Other U.S. companies in the medical device and biopharmaceutical field have faced criminal penalties under
the FCPA for allowing their agents to deviate from appropriate practices in doing business with these individuals.
We are also subject to similar anti-bribery laws in the jurisdictions in which we operate, including the United
Kingdom’s Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail
to prevent bribery. These laws are complex and far-reaching in nature, and, as a result, we cannot assure that we
would not be required in the future to alter one or more of our practices to be in compliance with these laws or any
changes in these laws or the interpretation thereof. Any violations of these laws, or allegations of such violations,
could disrupt our operations, involve significant management distraction, cause us to incur significant costs and
expenses, including legal fees, and result in a material adverse effect on our business, prospects, financial condition
and results of operations. We could also suffer severe penalties, including criminal and civil penalties, disgorgement
and other remedial measures.

Risks related to our highly regulated industry

We conduct business in a heavily regulated industry, and changes in regulations or violations of regulations may,
directly or indirectly, reduce our revenue, adversely affect our results of operations and financial condition, and
harm our business.

The clinical laboratory testing industry is highly regulated, and there can be no assurance that the regulatory
environment in which we operate will not change significantly and adversely to us in the future. Areas of the
regulatory environment that may affect our ability to conduct business include, without limitation:

•

federal, state and foreign laws applicable to test ordering, documentation of tests ordered, billing practices and
claims payment and/or regulatory agencies enforcing those laws and regulations;

federal, state and foreign health care fraud and abuse laws;

federal, state and foreign laboratory anti-mark-up laws;

coverage and reimbursement levels by Medicare, Medicaid, other governmental payers and private insurers;

restrictions on coverage of and reimbursement for tests;

federal, state and foreign laws governing laboratory testing, including CLIA, and state licensing laws;

federal, state and foreign laws and enforcement policies governing the development, use and distribution of
diagnostic medical devices, including laboratory developed tests, or LDTs;

federal, state, local and foreign laws governing the handling and disposal of medical and hazardous waste;

federal and state Occupational Safety and Health Administration rules and regulations;

HIPAA, and similar state or foreign data privacy and security laws; and

consumer protection laws.

In particular, the laws and regulations governing the marketing of clinical laboratory tests are complex, and there are
often no sufficient regulatory or judicial interpretations of these laws and regulations. For example, some of our
clinical laboratory tests are actively regulated by the FDA pursuant to the medical device provisions of the Federal
Food, Drug and Cosmetic Act, or FDCA. The FDA defines a medical device to include any instrument, apparatus,
implement, machine, contrivance, implant, in vitro reagent or other similar or related article, including a component,
part or accessory, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation,
treatment or prevention of disease, in man or other animals. Our clinical laboratory tests are in vitro diagnostic
products that are considered by the FDA to be medical devices. Among other things, pursuant to the FDCA and its
implementing regulations, the FDA regulates the research, design, testing, manufacturing, safety, labeling, storage,
recordkeeping, premarket clearance or approval, marketing and promotion and sales and distribution of medical
devices in the United States to ensure that medical devices distributed domestically are safe and effective for their
intended uses. In addition, the FDA regulates the import and export of medical devices. If we do not comply with
these requirements or fail to adequately comply, our business may be harmed.

Certain of our tests are currently marketed as LDTs, and future changes in FDA enforcement discretion for
LDTs could subject our operations to much more significant regulatory requirements.

We market some of our tests, Guardant360, Guardant360 Response, Guardant360 Tissue Next, and Guardant
Reveal, as LDTs. LDTs are in vitro diagnostic tests that are intended for clinical use and are designed,
manufactured, and used within a single laboratory. Although LDTs are classified as medical devices and the FDA
has statutory authority to ensure that medical devices are safe and effective for their intended uses, the FDA has
historically exercised enforcement discretion and has not enforced certain applicable FDA requirements, including
premarket review, with respect to LDTs. While we believe that we are in material compliance with applicable laws
and regulations, we cannot assure that the FDA will agree with us. If there are changes in FDA policy, or if the FDA
disagrees that we are marketing our tests as LDTs within the scope of its policy of enforcement discretion, we may
become subject to extensive regulatory requirements and may be required to stop selling our existing tests or
launching any other tests we may develop and to conduct additional clinical studies or take other actions prior to
continuing to market our tests. This could significantly increase the costs and expenses of conducting, or otherwise
harm, our business.

Legislative and administrative proposals proposing to amend the FDA’s oversight of LDTs have been introduced in
recent years and we expect that new legislative and administrative proposals will continue to be introduced from
time to time. It is possible that legislation could be enacted into law or regulations or guidance could be issued by
the FDA which may result in new or increased regulatory requirements for us to continue to offer our LDTs or to
develop and introduce new tests as LDTs.

In addition, the FDA and Congress have, for over the past decade, considered a number of proposals to end the
FDA’s enforcement discretion policy for LDTs and subject LDTs to additional regulatory requirements.

Even if the FDA does not modify its policy of enforcement discretion, whether due to changes in FDA policy or
legislative action, the FDA may disagree that we are marketing our LDTs within the scope of its policy of
enforcement discretion and may impose significant regulatory requirements, including the requirement for
premarket review and subsequent marketing authorization. We may also be required to conduct clinical studies to
support our currently marketed products or planned product launches. If we are required to conduct such clinical
studies delays in the commencement or completion of clinical testing could significantly increase our test
development costs and delay commercialization of any currently-marketed tests that we may be required to cease
selling or the commercialization of any future tests that we may develop, which could harm our financial prospects.

There is no guarantee that the FDA will grant 510(k) clearance or a premarket approval of our products or that
similar foreign authorities or notified bodies will grant premarket approval or certify our products and failure to
obtain necessary clearances or approvals or certifications for our products would adversely affect our ability to
grow our business.

Before we begin to label and market our products for use as clinical diagnostics in the United States, including as
companion diagnostics, we may be required to obtain either 510(k) clearance or a premarket approval, or
supplemental premarket approval, or respectively, PMA or PMA supplement, from the FDA, unless an exemption
applies or FDA exercises its enforcement discretion and refrains from enforcing its medical device requirements. For
example, the FDA has a policy of refraining from enforcing such requirements with respect to LDTs, which the
FDA considers to be a type of in vitro diagnostic test that is designed, manufactured and used within a single
laboratory.

The process of obtaining a PMA is a rigorous, costly, lengthy and uncertain process. In the PMA process, the FDA
must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data,
including, but not limited to, technical, pre-clinical, clinical study, manufacturing and labeling data. In the 510(k)
clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally
on the market, known as a “predicate” device, in order to clear the proposed device for marketing. To be
“substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either
have the same technological characteristics as the predicate device or have different technological characteristics and
not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required
to support a substantial equivalence determination.

In order to sell our products in member states of the EU, our products must comply with the essential requirements
of the EU In Vitro Diagnostic Medical Devices Directive (Directive 98/79/EC), or IVDD. Compliance with these
requirements is a prerequisite to be able to affix the European Conformity, or CE, mark to our products, without
which they cannot be sold or marketed in the EU. All medical devices placed on the market in the EU must meet the
essential requirements laid down in Annex I to the IVDD including the requirement that an in vitro diagnostic
medical device must be designed and manufactured in such a way that it will not compromise the clinical condition
or safety of patients, or the safety and health of users and others. In addition, the device must achieve the
performances intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner. To
demonstrate compliance with the essential requirements we must undergo a conformity assessment procedure, which
varies according to the type of medical device and its (risk) classification. As a general rule, demonstration of
conformity of in vitro diagnostic medical devices and their manufacturers with the essential requirements must be
based, among other things, on the evaluation of clinical data supporting the safety and performance of the products
during normal conditions of use. Specifically, a manufacturer must demonstrate that the device achieves its intended
performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are
minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made
about the performance and safety of the device are supported by suitable evidence.

Except for (general) in vitro diagnostic medical devices, where the manufacturer can self-declare the conformity of
its products with the essential requirements of the IVDD, a conformity assessment procedure requires the
intervention of a notified body. Notified bodies are independent organizations designated by EU member states to
assess the conformity of devices before being placed on the market. The Notified Body would typically audit and
examine the product’s technical file and the manufacturer’s quality system (notified body must presume that quality
systems which implement the relevant harmonized standards – which is ISO 13485:2016 for Quality Management
Systems – conform to these requirements). If satisfied that the relevant product conforms to the relevant essential
requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own
declaration of conformity. The manufacturer may then apply the CE mark to the device, which allows the device to
be placed on the market throughout the EU.

The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of
the 27 EU member states plus Norway, Liechtenstein and Iceland.

Any delay or failure to obtain necessary regulatory approvals or clearances or certifications would have a material
adverse effect on our business, prospects, financial condition and results of operations.

The FDA and foreign authorities or notified bodies can delay, limit or deny clearance or approval or certification of
a device for many reasons, including:

•

our inability to demonstrate to the satisfaction of the FDA, similar foreign authorities or notified bodies that our
products are safe or effective for their intended uses;

the disagreement of the FDA, similar foreign authorities or notified bodies with the design, conduct or
implementation of our clinical studies or the analysis or interpretation of data from our pre-clinical or clinical
studies;

serious and unexpected adverse effects experienced by participants in our clinical studies;

the data from our pre-clinical and clinical studies may be insufficient to support clearance or approval, or
certification where required;

our inability to demonstrate that the clinical and other benefits of any of our tests outweigh the risks;

an advisory committee, if convened by the FDA, may recommend against approval of our PMA or other
application for any of our tests or may recommend that the FDA require, as a condition of approval, additional
pre-clinical studies or clinical studies, limitations on approved labeling or distribution and use restrictions, or
even if an advisory committee, if convened, makes a favorable recommendation, the FDA may still not approve
the test; Similar requirements may apply in foreign jurisdictions;

the FDA, similar foreign authorities or notified bodies may identify deficiencies in our marketing application, or
certification application and in our manufacturing processes, facilities or analytical methods or those of our
third-party contract manufacturers;

the potential for approval or certification policies or regulations of the FDA or similar foreign authorities to
change significantly in a manner rendering our clinical data or regulatory filings insufficient for the clearance or
approval or certification; and

the FDA, similar foreign authorities or notified bodies may audit our clinical study data and conclude that the
data is not sufficiently reliable to support a PMA or other applications.

If we are unable to obtain clearance or approval or certification for any tests for which we plan to seek clearance or
approval or certification, our business may be harmed.

Modifications to our FDA-cleared or approved products may require new 510(k) clearances or premarket
approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.

For any product approved pursuant to a PMA, we are required to seek supplemental approval for many types of
changes to the approved product, for which we will need to determine whether a PMA supplement or other
regulatory filing is needed or whether the change may be reported via the PMA Annual Report. Similarly, any
modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would
constitute a major change in its intended use, design, or manufacture, requires new 510(k) clearance or, possibly,
approval of a new PMA. The FDA requires us to make this determination in the first instance, but the FDA may
review and may not agree with our determination. If the FDA disagrees with our determination and requires us to
seek approvals or clearances for modifications to our previously approved or cleared products, for which we
concluded that new approvals or clearances are unnecessary, we may be required to cease marketing or distribution
of our products or to recall the modified product until we obtain the approval or clearance, and we may be subject to
significant regulatory fines or penalties.

Similar requirements apply in foreign jurisdictions. For instance, in the EU, we must inform the notified body that
carried out the conformity assessment of the devices that we market or sell in the EU and EEA of any planned
substantial changes to our quality system or substantial changes to our in vitro diagnostic medical devices that could
affect compliance with the essential requirements laid down in Annex I to IVDD or cause a substantial change to the
intended use for which the device has been CE marked. The notified body will then assess the planned changes and
verify whether they affect the products’ ongoing conformity with the IVDD. If the assessment is favorable, the
notified body will issue a new certificate of conformity or an addendum to the existing certificate attesting
compliance with the essential requirements and quality system requirements laid down in the Annexes to the IVDD.

Our revenue and commercial success depend on achieving coverage and reimbursement for our tests from payers,
including both commercial and government payers. If payers do not provide coverage of, or do not provide adequate
reimbursement for our tests, we may need to seek payment from the patient, which may adversely affect demand for
our tests. Coverage determinations by a payer may depend on a number of factors, including but not limited to a
payer’s determination that a test is appropriate, medically necessary or cost-effective. If we are unable to provide
payers with sufficient evidence of the clinical utility and validity of our test, they may not provide coverage, may
provide limited coverage or may terminate coverage, which will adversely affect our revenues and our financial
condition. To the extent that more competitors enter our markets, the availability of coverage and the reimbursement
rate for our tests may decrease as we encounter pricing pressure from our competitors.

Each payer makes its own decision as to whether to provide coverage for our tests, whether to enter into a contract
with us and the reimbursement rate for a test. Negotiating with payers is time-consuming, and payers often insist on
their standard form contracts. There is no guarantee that a payer will provide adequate coverage or reimbursement
for our tests or that we can reach an agreement with the payer on reasonable terms without being subject to
additional regulatory and compliance risks. In cases where there is no coverage, or we do not have a contracted rate
for reimbursement with the payer, the patient is typically responsible for a greater share of the cost of the test, which
may result in delay of revenue, increase collection costs or decrease the likelihood of collection. We maintain a
financial assistance program, the Guardant Access Program, under which we assess patient financial need and offer
provide discounted or no cost tests to certain patients. This may result in scrutiny by payers of our Guardant Access
Program, and this could result in recoupment actions or termination of coverage of our tests.

Our claims for reimbursement may be denied and we may have to appeal such denials in order to get paid. Such
appeals may not result in payment. Payers may perform audits of historically paid claims and attempt to recoup
funds years after the funds were initially distributed if the payers believe the funds were paid in error or determine
that our tests were medically unnecessary. If a payer's audit of our claims results in a negative finding, and we are
unable to reverse the finding through appeal, any subsequent recoupment could result in a material adverse effect on
our revenue. Additionally, in some cases commercial payers for whom we are not a participating provider may elect
at any time to review claims previously paid and determine the amount they paid was excessive. In these situations,
the payer typically notifies us of its decision and then offsets the amount it determines to be overpaid against
amounts it owes us on current claims. We do not have a mechanism to dispute these retroactive adjustments, and we
cannot predict when, or how often, a payer might engage in these reviews.

When we contract with a payer as a participating provider, reimbursements by the payer are generally made pursuant
to a negotiated fee schedule and are limited to only covered indications or where prior approval has been obtained.
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.

Although we are a participating provider with some commercial payers, certain other large, national commercial
payers, including Anthem, Aetna and Humana, have issued non-coverage policies that consider tissue and liquid
CGP testing, including our Guardant360 test, as experimental or investigational. If we are not successful in
obtaining coverage from such payers, or if other payers issue similar non-coverage policies, our business and results
of operations could be materially and adversely affected.

Medicare’s National Coverage Determination, or NCD, for Next Generation Sequencing, or NGS, first established
in 2018 and subsequently updated in 2020 states that NGS tests, such as our Guardant360 test, are covered by
Medicare nationally, when: (1) performed in a CLIA-certified laboratory, (2) ordered by a treating physician, (3) the
patient meets certain clinical and treatment criteria, including having recurrent, relapsed, refractory, metastatic, or
advanced stages III or IV cancer, (4) the test is approved or cleared by the FDA as a companion in vitro diagnostic
for an FDA approved or cleared indication for use in that patient’s cancer, and (5) results are provided to the treating
physician for management of the patient using a report template to specify treatment options. The NGS NCD also
states that each Medicare Administrative Contractor, or MAC, may provide local coverage of other next-generation
sequencing tests for cancer patients only when the test is performed by a CLIA-certified laboratory, ordered by a
treating physician and the patient meets the same clinical and treatment criteria required of nationally covered next-
generation sequencing tests under the NGS NCD. An NGS test is not covered by Medicare when cancer patients do
not have the above-noted indications for cancer under either national or local coverage criteria. In July 2018,
Palmetto GBA, or Palmetto, the 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 and treatment criteria. Subsequently, in 2018, Noridian Healthcare Solutions, the MAC
responsible for adjudicating claims in California, where our laboratory is located, and a participant in MolDx,
finalized its LCD for our Guardant360 test. In September 2018, we began to receive reimbursement from Medicare
for claims submitted with respect to Guardant360 clinical tests performed for NSCLC patients. In December 2019,
replacing its prior NSCLC patient LCD, Palmetto GBA finalized its expanded LCD for our Guardant360 test that
provides limited Medicare coverage for use of the Guardant360 test for qualifying patients diagnosed with solid
cancers of non-central nervous system origin. In May 2019, Noridian also issued an expanded draft LCD for our
Guardant360 test consistent with the expanded draft LCD issued by Palmetto in March 2019. In May 2020, Noridian
issued a coverage article and confirmed limited Medicare coverage for our Guardant360 test for qualifying patients
diagnosed with solid tumor cancers of non-central nervous system origin who meet the criteria of the NGS NCD.
Noridian also retired the expanded draft LCD issued in May 2019 as being superseded by the coverage article.
Future actions taken by Noridian or Palmetto may change Medicare coverage for our Guardant360 test. In March
2020, we began to receive reimbursement from Medicare for claims submitted, with respect to Guardant360 clinical
tests performed for qualifying patients diagnosed with solid tumor cancers of non-central nervous system origin
other than NSCLC.

Under Medicare, payment for laboratory tests like ours is generally made under the Clinical Laboratory Fee
Schedule, or CLFS, with payment amounts assigned to specific procedure billing codes. In April 2014, Congress
passed the Protecting Access to Medicare Act of 2014, or PAMA, which included substantial changes to the way in
which clinical laboratory services are paid under Medicare. Under PAMA, laboratories that receive the majority of
their Medicare revenue from payments made under the CLFS are generally required to report to CMS, beginning in
2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”, or ADLT),
commercial payer payment rates and volumes for each test they perform. CMS uses this data to calculate a weighted
median payment rate for each test, which is used to establish revised Medicare CLFS reimbursement rates for the
test. Laboratories that fail to report the required payment information may be subject to substantial civil monetary
penalties. We are subject to reporting requirements under PAMA and the Medicare rate for our tests will be
calculated in the future based on our private payer rates. For clinical diagnostic laboratory tests furnished on or after
January 1, 2018, their Medicare CLFS reimbursement rates are established upon these reported private payer rates.
On December 10, 2021, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act,
which delayed by one year the next data reporting period and prevented any reduction in payment amounts from
commercial payer rate implementation in 2022. On November 2, 2022, CMS published its final rule for the
Medicare Physician Fee Schedule for calendar year (CY) 2023, including changes for clinical laboratories that take
effect on January 1, 2023. Changes include updated regulatory definitions to specify the data collection period for
the data reporting period of January 1, 2023 through March 31, 2023; revisions to indicate that data reporting is
required every 3 years beginning January 2023; and to confirm that for CY 2022, payment may not be reduced by
more than 0% as compared to CY 2021, and for CYs 2023 through 2025, payment may not be reduced by more than
15% as compared to the amount established for the preceding year. On December 29, 2022, Congress passed the
Consolidated Appropriations Act, 2023, which prevented any reduction in payment amounts from commercial payor
rate implementation for 2023; delayed by one year data reporting requirements for tests other than ADLTs; and
extended the three-year period in which payment may not be reduced by more than 15%, to CYs 2024 through 2026.
If we are unable to obtain and maintain favorable reimbursement rates from commercial payers for our tests, this
may adversely affect the tests’ Medicare reimbursement rates. It is unclear what impact new Medicare pricing
structures, such as those adopted under PAMA, may have on our business, financial condition, results of operations
or cash flows.

Some payers have implemented, or are in the process of implementing, laboratory benefit management programs,
often using third-party benefit managers to manage these programs. The stated goals of these programs are to help
improve the quality of outpatient laboratory services, support evidence-based guidelines for patient care and lower
costs. The impact on laboratories, such as us, of active laboratory benefit management by third parties is unclear,
and we expect that it would have a negative impact on our revenue in the short term. Payers may resist
reimbursement for our tests in favor of less expensive tests, require pre-authorization for our tests, or impose
additional pricing pressure on and substantial administrative burden for reimbursement for our tests. We expect to
continue to focus substantial resources on increasing adoption of, and coverage and reimbursement for, our current
tests and any future tests we may develop. We believe it may take several years to achieve broad coverage and
adequate contracted reimbursement with a majority of payers for our tests. However, we cannot predict whether,
under what circumstances, or at what price levels payers will cover and reimburse our tests. If we fail to establish
and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue could
be harmed and our business and prospects could suffer.

Our products may in the future be subject to product recalls. A recall of our products, either voluntarily or at the
direction of the FDA or another governmental authority, or the discovery of serious safety issues with our
products, could have a significant adverse impact on us.

The FDA has the authority to require the recall of commercialized products that are subject to FDA regulation in the
event of material deficiencies or defects in design or manufacture. The authority to require a recall must be based on
an FDA finding that there is reasonable probability that the device would cause serious, adverse health consequences
or death. We may also, on our own initiative, recall a product. The FDA requires that certain classifications of
recalls be reported to the FDA within ten working days after the recall is initiated. In the case of our FDA-approved
tests, a government-mandated or voluntary recall by us or one of our distributors could occur as a result of an
unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or
other deficiencies and issues. Recalls of any of our products could impair our ability to produce our products in a
cost-effective and timely manner, which would have an adverse effect on our reputation, results of operations and
financial condition. We may be subject to liability claims, may be required to bear costs or may take other actions
that may have a negative impact on our future sales and our ability to generate profits. Companies are required to
maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls
involving our products in the future that we determine do not require notification to the FDA. If the FDA disagrees
with our determinations, the FDA could require us to report those actions and take enforcement action for failing to
report the recalls when they were conducted. Similar requirements apply in foreign jurisdictions. A future recall
announcement could harm our reputation with customers and negatively affect our sales and financial condition.

If we initiate a correction or removal for one of our tests, issue a safety alert or undertake a field action or recall to
reduce a risk to health imposed by the test, this could lead to increased scrutiny by the FDA and our customers
regarding the quality and safety of our tests and to negative publicity, including FDA alerts, press releases or
administrative or judicial actions. Furthermore, circulation of any such negative publicity could harm our reputation,
be used by competitors against us in competitive situations and cause customers to delay purchase decisions or
cancel orders.

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier
studies and studies may not be predictive of future study results.

Our ongoing research and development and clinical study activities are subject to extensive regulation and review by
numerous governmental authorities both in the United States and abroad; and by notified bodies in some foreign
jurisdictions. Clinical testing is difficult to design and implement, can take many years, can be expensive and carries
uncertain outcomes. The results of nonclinical and clinical studies of our products conducted to date, and ongoing or
future studies of our current, planned or future products may not be predictive of the results of later clinical studies,
and interim results of a clinical study do not necessarily predict final results. The data and results from our clinical
studies does not ensure that we will achieve similar results in future clinical studies. Failure can occur at any stage of
clinical testing. Clinical studies may produce negative or inconclusive results, and we may decide, or regulators may
require us, to conduct additional clinical and nonclinical testing in addition to those we have planned before we are
able to seek marketing authorizations or certifications for our products or product candidates.

We may experience delays in our clinical studies for a number of reasons, which could adversely affect the costs,
timing or successful completion of such clinical studies.

Patient enrollment in clinical studies and completion of patient follow up depend on many factors, including the size
of the patient population, the nature of the study protocol, the proximity of patients to clinical sites, the eligibility
criteria for the clinical study, patient compliance, competing clinical studies and clinicians’ and patients’ perceptions
as to the potential advantages of the product being studied in relation to other available products. In addition,
patients participating in our clinical studies may drop out before completion of the study or experience adverse
medical events unrelated to our products. Delays in patient enrollment or failure of patients to continue to participate
in a clinical study may delay commencement or completion of the clinical study, cause an increase in the costs of the
clinical study and delays, or result in the failure of the clinical study. In addition, the target enrollment for certain of
our clinical studies, including our ECLIPSE study, is based upon our estimates that a given percentage of enrolled
patients will have a specified disease or condition, and we cannot be certain that these estimates will prove correct,
or that our clinical studies, even if fully enrolled, will produce data sufficient to support the submission of a PMA or
other marketing application to the FDA or a comparable regulatory authority. If our clinical studies do not enroll a
sufficient number of patients to support submission of a PMA or similar marketing application, or if the number of
patients enrolled with the target disease or condition is lower than we estimated, we may be required to enroll
additional patients in our clinical studies or conduct additional clinical studies before we are able to seek and/or
obtain marketing authorizations for our product candidates, which may result in significant additional expenses for
us and could delay or prevent us from bringing our product candidates to market.

In addition, we may find it necessary to engage CROs to perform data collection and analysis and other aspects of
our clinical studies, which might increase the cost and complexity of our studies. We may also depend on clinical
investigators, medical institutions and contract research organizations to perform the studies, and would control only
certain aspects of their activities. We would be responsible for ensuring that each of our studies is conducted in
accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties
would not relieve us of our regulatory responsibilities. We and our third-party contractors are required to comply
with good clinical practices, or GCPs, which are regulations and guidelines enforced by the FDA, and comparable
regulations enforced by foreign regulatory authorities for products in clinical development. Regulatory authorities
enforce these GCPs through periodic inspections of study sponsors, principal investigators and study sites. If we or
any third-party contractor fails to comply with applicable GCPs, the clinical data generated in clinical studies may
be deemed unreliable and the FDA or comparable foreign regulatory authorities or notified bodies may require us to
perform additional clinical studies before clearing, or approving our marketing applications or certifying our
products. A failure to comply with these regulations may require us to repeat clinical studies, which would delay the
regulatory clearance, approval or certification process.

If there are delays in testing or clearances, approvals or certifications as a result of the failure to perform by third
parties, our research and development costs would increase, and we may not be able to obtain regulatory clearance,
approval, or certification for our tests. In addition, we may not be able to establish or maintain relationships with
these parties on favorable terms, if at all. Each of these outcomes would harm our ability to market our tests,
generate revenue or to achieve sustained profitability.

Interim, "topline" and preliminary data from our clinical studies that we announce or publish from time to time
may change as more patient data become available and are subject to audit and verification procedures that could
result in material changes in the final data.

From time to time, we may publicly disclose preliminary or topline data from our preclinical studies or clinical
studies, which is based on a preliminary analysis of then-available data, and the results and related findings and
conclusions are subject to change following a more comprehensive review of the data related to the particular study.
We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may
not have received or had the opportunity to fully and carefully evaluate all data at time of disclosure. As a result, the
topline or preliminary results that we report may differ from future results of the same studies, or different
conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.
Topline data also remain subject to audit and verification procedures that may result in the final data being
materially different from the preliminary data we previously published. As a result, topline data should be viewed
with caution until the final data are available.

From time to time, we may also disclose interim data from our preclinical and clinical studies. Interim data from
clinical studies that we may complete are subject to the risk that one or more of the clinical outcomes may materially
change as patient enrollment continues and more patient data become available. Adverse differences between
preliminary, topline or interim data and final data could significantly harm our business prospects. Further,
disclosure of such data by us or by our competitors could result in volatility in the price of our common stock.

Further, others, including regulatory agencies, such as the FDA, may not accept or agree with our assumptions,
estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which
could impact the value of the particular program, the approvability or commercialization of the particular product
candidate or product and our company in general. In addition, the information we choose to publicly disclose
regarding a particular clinical study is based on what is typically extensive information, and you or others may not
agree with what we determine is material or otherwise appropriate information to include in our disclosure and any
information we determine not to disclose may ultimately be deemed significant with respect to future decisions,
conclusions, views, activities or otherwise regarding a particular product, product candidate or our business.

If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory
authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product
candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Our “research use only” and “investigational use only” products could become subject to more onerous
regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay our
commercialization efforts, thereby materially and adversely affecting our business and results of operations.

In the United States, some of our products, including our GuardantOMNI test, are currently available for research
use only, or RUO, or for investigational use only, or IUO, depending on the proposed application. We make our
RUO and IUO products available to a variety of parties, including biopharmaceutical companies and research
institutes. Because RUO and IUO products are not intended for use in clinical practice and cannot be advertised or
promoted for clinical or diagnostic claims, they are exempt from many regulatory requirements otherwise applicable
to medical devices. In particular, while the FDA regulations require that RUO products be labeled “For Research
Use Only. Not for use in diagnostic procedures,” and that IUO products be labeled “For Investigational Use Only.
The performance characteristics of this product have not been established,” such products are not subject to the
FDA’s pre- and post-market controls for medical devices.

A significant change in the laws or policies governing RUO or IUO products or how they are enforced may require
us to change our business model in order to maintain compliance. For instance, in November 2013 the FDA issued a
guidance document entitled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or
Investigational Use Only,” or the RUO/IUO Guidance, which highlights the FDA’s interpretation that distribution of
RUO or IUO products with any labeling, advertising or promotion that suggests that clinical laboratories can
validate the test through their own procedures and subsequently offer it for clinical diagnostic use as an LDT is in
conflict with the RUO or IUO status. The RUO/IUO Guidance further articulates the FDA’s position that any
assistance offered in performing clinical validation or verification, or similar specialized technical support, to
clinical laboratories, is in conflict with RUO or IUO status. If we engage in any activities that the FDA deems to be
in conflict with the RUO or IUO status held by any of our products so labeled, we may be subject to immediate,
severe and broad FDA enforcement action that would adversely affect our ability to continue operations.
Accordingly, if the FDA finds that we are distributing our RUO or IUO products in a manner that is inconsistent
with its RUO/IUO Guidance, we may be forced to stop distribution of our RUO/IUO tests until we are in
compliance, which would reduce our revenue, increase our costs and adversely affect our business, and results of
operations.

Even if we receive regulatory approval or certification of our products, we will continue to be subject to extensive
regulatory oversight.

Medical devices are subject to extensive regulation by the FDA in the United States, the MHLW in Japan, the
European authorities, EEA competent authorities, and comparable regulatory agencies in other territories where we
do business. If any of our products are approved by the FDA, the MHLW, or other comparable foreign regulatory
agencies or certified by notified bodies in foreign jurisdictions, we will be required to timely file various reports. If
these reports are not filed timely, regulators may impose sanctions and sales of our products may suffer, and we may
be subject to product liability or regulatory enforcement actions, all of which could harm our business. In addition,
as a condition of approving a PMA, the FDA may also require some form of post-approval study or post-market
surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of
years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the
public health or to provide additional safety and effectiveness data for the device. The product labeling must be
updated and submitted in a PMA supplement as results, including any adverse event data from the post-approval
study, become available. Failure to conduct or timely complete post-approval studies in compliance with applicable
regulations, update the product labeling, or comply with other post-approval requirements could result in withdrawal
of approval of the PMA, which would harm our business and revenue.

The FDA and the Federal Trade Commission, or FTC, also regulate the advertising and promotion of medical
devices to ensure that their promotional claims made are consistent with the applicable marketing authorizations,
that there are adequate and reasonable data to substantiate the claims, and that the promotional labeling and
advertising is neither false nor misleading in any respect. If the FDA or FTC determines that any of our promotional
claims are false, misleading, not substantiated or not permissible, we may be subject to enforcement actions and we
may be required to revise our promotional claims and make other corrections or restitutions. Similar requirements
apply in foreign jurisdictions.

The FDA, state and foreign authorities have broad enforcement powers. Our failure to comply with applicable
regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory agencies, which
may include any of the following sanctions:

•

adverse publicity, warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

•

repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizures of our
products;

operating restrictions, partial suspension or total shutdown of production;

customer notifications or repair, replacement or refunds;

refusing our requests for clearances or approvals of new products, new intended uses or modifications to
existing products;

withdrawals of current clearances, approvals or certifications, resulting in prohibitions on sales of our products;

refusal to issue certificates needed to export products for sale in other countries; and

criminal prosecution.

Any of these sanctions could also result in higher than anticipated costs or lower than anticipated sales of our
products and have a material adverse effect on our reputation, business, results of operations and financial condition.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing
regulations, or take other actions which may prevent or delay approval or clearance of our current or future products
under development. For example, on February 23, 2022, the FDA issued a proposed rule to amend the Quality
System Regulation, or QSR, which establishes current good manufacturing practice requirements for medical device
manufacturers, to align more closely with the International Organization for Standardization, or ISO, standards. This
proposal has not yet been finalized or adopted. Accordingly, it is unclear the extent to which any proposals, if
adopted, could impose increased costs of compliance, or otherwise negatively affect our business. Additionally, in
September 2019, the FDA issued revised final guidance describing an optional “safety and performance based”
premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial
equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and
performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety
and performance of their medical devices to specific predicate devices in the clearance process. The FDA maintains
a list device types appropriate for the “safety and performance based” pathway and continues to develop product-
specific guidance documents that identify the performance criteria for each such device type, as well as
recommended testing methods, where feasible. The FDA may establish performance criteria for classes of devices
similar to ours, and it is unclear the extent to which such performance standards, if established, could impact our
ability to obtain marketing authorization or otherwise create competition that may negatively affect our business.

In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may
significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of
existing regulations may impose additional costs or lengthen review times of any product candidates or make it more
difficult to obtain marketing authorizations for, manufacture, market or distribute any product candidate we are
developing. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when
and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other
things, require: additional testing prior to seeking marketing authorization, changes to manufacturing methods
recalls, replacement or discontinuance of our products or additional record keeping.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be
promulgated that could prevent, limit or delay marketing authorization of any product candidates we develop. If we
are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if
we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not
achieve or sustain profitability.

The EU regulatory landscape concerning medical devices (including in vitro diagnostic medical devices) is
evolving. On April 5, 2017 Regulation (EU) 2017/746 of the European Parliament and of the Council on in vitro
diagnostic medical devices and repealing Directive 98/79/EC and Commission Decision 2010/227/EU, or the IVDR,
was adopted to establish a modernized and more robust EU legislative framework, with the aim of ensuring better
protection of public health and patient safety. Unlike directives, the IVDR does not need to be transposed into
national law and therefore reduces the risk of discrepancies in interpretation across the different European markets.

The IVDR will become applicable five years after publication (on May 26, 2022). However, on October 14, 2021,
the European Commission proposed a “progressive” roll-out of the IVDR to prevent disruption in the supply of in
vitro diagnostic medical devices. Consequently, if the European Parliament and Council adopt the proposed
regulation, the IVDR will fully apply on May 26, 2022 but there will be a tiered system extending the grace period
for many devices (depending on their risk classification) before they have to be fully compliant with the regulation.

These modifications may have an effect on the way we conduct our business in the EU and the EEA.

Changes in funding for, or disruptions caused by global health concerns impacting, the FDA and other
government agencies or notified bodies could hinder their ability to hire and retain key leadership and other
personnel, or otherwise prevent new medical device products from being developed, authorized or commercialized
in a timely manner, which could negatively impact our business.

The ability of the FDA, foreign regulatory authorities and notified bodies to review and authorize the sale or certify
new products can be affected by a variety of factors, including government budget and funding levels; its ability to
hire and retain key personnel and accept the payment of user fees; statutory, regulatory, and policy changes; and
other events that may otherwise affect the FDA’s foreign regulatory authorities’ and notified bodies’ ability to
perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition,
government funding of other government agencies that fund research and development activities is subject to the
political process, which is inherently fluid and unpredictable. Disruptions at the FDA, other agencies and notified
bodies may also slow the time necessary for new devices, including in vitro diagnostics to be reviewed and/or
authorized or certified for marketing by necessary government agencies or notified bodies, which would adversely
affect our business. For example, over the last several years, the U.S. government has shut down several times and
certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical
activities.

Separately, in response to the global COVID-19 pandemic, the FDA postponed most inspections of domestic and
foreign manufacturing facilities at various points. Even though the FDA has since resumed standard inspection
operations of domestic facilities where feasible, the FDA has continued to monitor and implement changes to its
inspectional activities to ensure the safety of its employees and those of the firms it regulates as it adapts to the
evolving COVID-19 pandemic, and any resurgence of the virus or emergence of new variants may lead to further
inspectional delays. Other regulatory authorities may adopt similar restrictions or other policy measures in response
to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to
prevent the FDA or other regulatory authorities from conducting business as usual or conducting inspections,
reviews or other regulatory activities, it could significantly impact the ability of the FDA to timely review and
process our regulatory submissions, which could have a material adverse effect on our business.

In the EU, notified bodies must be officially designated to certify products and services in accordance with the
IVDR. Only a few notified bodies have been designated so far and the COVID-19 pandemic has significantly
slowed down their designation process. Without IVDR designation, notified bodies may not yet start certifying
devices in accordance with the new Regulation. As only a few notified bodies has been IVDR-designated they are
facing a heavy workload and their review times have lengthened. This situation could impact the way we are
conducting or intend to conduct our business in the EU and the EEA.

Failure to comply with federal, state and foreign laboratory licensing requirements and the applicable
requirements of the FDA or any other regulatory authority, could cause us to lose the ability to perform our tests,
experience disruptions to our business, or become subject to administrative or judicial sanctions.

We are subject to the Clinical Laboratory Improvement Amendments, or CLIA, a federal law that regulates clinical
laboratories that perform testing on specimens derived from humans for the purpose of providing information for the
diagnosis, prevention or treatment of disease. CLIA regulations establish specific standards with respect to personnel
qualifications, facility administration, proficiency testing, quality control, quality assurance and inspections. Any
testing subject to CLIA regulation must be performed in a CLIA certified laboratory. CLIA certification is also
required in order for us to be eligible to bill state and federal healthcare programs, as well as commercial payers, for
our tests. We have a current CLIA certification to perform our tests at our laboratory in Redwood City, California.
To maintain this certificate, we are subject to survey and inspection every two years. Moreover, CLIA inspectors
may make random inspections of our laboratory from time to time.

We are also required to maintain a California clinical laboratory license to perform testing in California. California
laboratory laws establish standards for day-to-day operation of our clinical laboratory in Redwood City, California,
including the training and skills required of personnel and quality control. In addition, some other states require our
California laboratory to be licensed in the state in order to test specimens from those states. In addition to California,
our laboratory is licensed in Florida, Maryland, Pennsylvania, Rhode Island and New York. Although we have
obtained licenses from states where we believe we are required to be licensed, it is possible that other states we are
not aware of currently require out-of-state laboratories to obtain licensure in order to test specimens from the state,
and that other states may adopt similar requirements in the future.

We may also be subject to regulations in foreign jurisdictions as we seek to expand international utilization of our
tests or as such jurisdictions adopt new licensure requirements, which may require review of our tests in order to
offer them or may have other limitations such as restrictions on the transport of specimens necessary for us to
perform our tests that may limit our ability to make our tests available outside of the United States. Complying with
licensure requirements in new jurisdictions may be expensive, time-consuming and subject us to significant and
unanticipated delays.

Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement
actions, including suspension, limitation or revocation of our CLIA certification and/or state licenses, imposition of
a directed plan of action, on-site monitoring, civil monetary penalties, criminal sanctions, inability to receive
reimbursement from Medicare, Medicaid and commercial payers, as well as significant adverse publicity. Any
sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing
clinical laboratory licensure or our failure to renew our CLIA certification, a state or foreign license or accreditation,
could have a material adverse effect on our business, financial condition and results of operations. Even if we were
able to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue
in doing so.

In order to test specimens from New York, LDTs must be approved by the New York State Department of Health, or
NYSDOH, on a product-by-product basis before they are offered, and our Guardant360 test has been approved by
NYSDOH. We will need to seek NYSDOH approval of any future LDTs we develop and want to offer for clinical
testing to New York residents, and there can be no assurance that we will be able to obtain such approval. As a
result, we are subject to periodic inspection by the NYSDOH and are required to demonstrate ongoing compliance
with NYSDOH regulations and standards. To the extent NYSDOH identified any non-compliance and we are unable
to implement satisfactory corrective actions to remedy such non-compliance, the State of New York could withdraw
approval for our tests.

The College of American Pathologists, or CAP, maintains a clinical laboratory accreditation program. While not
required to operate a CLIA-certified laboratory, many private insurers require CAP accreditation as a condition to
contracting with clinical laboratories to cover their tests. In addition, some countries outside the United States
require CAP accreditation as a condition to permitting clinical laboratories to test samples taken from their citizens.
In 2014, we obtained CAP accreditation for our Redwood City, California laboratory, and in order to maintain such
accreditation, we are subject to survey for compliance with CAP standards every two years. Failure to maintain CAP
accreditation could have a material adverse effect on the sales of our tests and the results of our operations.

We are subject to numerous federal and state healthcare statutes and regulations; complying with such laws
pertaining to our business is an expensive and time-consuming process, and any failure to comply could result in
substantial penalties and a material adverse effect to our business and results of operations.

Our operations are subject to other extensive federal, state, local and foreign laws and regulations, all of which are
subject to change. These laws and regulations may include, among others:

•

the AKS, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration,
directly or indirectly, overtly or covertly, in cash or in kind (e.g. provision of free or discounted goods, services
or items), in return for or to induce such person to refer an individual, or to purchase, lease, order, arrange for or
recommend purchasing, leasing or ordering, any good, facility, item or service that is reimbursable, in whole or
in part, under a federal healthcare program. The term ‘‘remuneration’’ has been broadly interpreted to include
anything of value, such as phlebotomy kits. Although there are a number of statutory exceptions and regulatory
safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions
and safe harbors are drawn narrowly, and practices that involve remuneration that are alleged to be intended to
induce referrals, purchases or recommendations of covered items or services may be subject to scrutiny if they
do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable
statutory exception or regulatory safe harbor does not make the conduct per se illegal under the AKS. Instead,
the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its
facts and circumstances. Several courts have held that if any one purpose of an arrangement involving
remuneration is to induce referrals of federal healthcare covered business, the AKS has been violated.
Moreover, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it
in order to have committed a violation;

•

the EKRA, which prohibits knowingly and willfully soliciting or receiving any remuneration (including any
kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a
patient or patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a
laboratory or in exchange for an individual using the services of that laboratory. The EKRA applies to all payers
including commercial payers and government payers;

the Stark Law, which prohibits a physician from making a referral for certain designated health services covered
by the Medicare or Medicaid program, including laboratory and pathology services, if the physician or an
immediate family member of the physician has a financial relationship with the entity providing the designated
health services and prohibits that entity from billing, presenting or causing to be presented a claim for the
designated health services furnished pursuant to the prohibited referral, unless an exception applies;

the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of
remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is
likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services
reimbursable by Medicare or a state healthcare program, unless an exception applies;

federal and state “Anti-Markup” rules, which, among other things, typically prohibit a physician or supplier
billing for clinical or diagnostic tests (with certain exceptions) from marking up the price of a purchased test
performed by another physician or supplier that does not “share a practice” with the billing physician or
supplier;

the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and
kits, medical devices or supplies that require premarket approval by or notification to the FDA, and for which
payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually
to CMS, information related to (i) payments and other transfers of value to physicians (as defined by statute),
certain other health care professionals such as physician assistants and nurse practitioners, and teaching
hospitals, and (ii) ownership and investment interests in such manufacturers held by physicians and their
immediate family members. Failure to submit required information may result in significant civil monetary
penalties for any payments, transfers of value or ownership or investment interests that are not timely,
accurately, and completely reported in an annual submission, and may result in liability under other federal laws
or regulations;

the federal government may bring a lawsuit under the False Claims Act, or the FCA, against any party whom it
believes has knowingly or recklessly presented, or caused to be presented, a false or fraudulent request for
payment from the federal government, or who has made a false statement or used a false record to get a claim
for payment approved. The federal government and a number of courts have taken the position that claims
presented in violation of certain other statutes, including the AKS or the Stark Law, can also be considered a
violation of the FCA based on the theory that a provider impliedly certifies compliance with all applicable laws,
regulations, and other rules when submitting claims for reimbursement. An FCA violation may provide the
basis for the imposition of administrative penalties as well as exclusion from participation in governmental
healthcare programs, including Medicare and Medicaid. A number of states including California have enacted
laws that are similar to the federal FCA. Private individuals can bring FCA “qui tam” actions, on behalf of the
government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the
entity to the government in fines or settlement. When an entity is determined to have violated the FCA, the
government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the
entity from participation in federal healthcare programs. In January 2022, we received a civil investigative
demand, or CID, from the United States Attorney for the Northern District of California in connection with an
investigation under the False Claims Act. The CID requests information and documents regarding billing
government-funded programs for the Company’s panel of genetic tests known as Guardant360. We are fully
cooperating with the investigation. At this time, we are unable to predict the outcome of this investigation. See
“Commitments and Contingencies – Legal Proceedings” in this Annual Report on Form 10-K for more
information;

•

the HIPAA fraud and abuse provisions, which created federal criminal statutes that prohibit, among other
things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit
program, including private insurers, knowingly and willfully embezzling or stealing from a healthcare benefit
program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully
falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent
statement in connection with the delivery of or payment for healthcare benefits, items or services. A person or
entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have
committed a violation;

federal and state laws related to, among other things, unlawful schemes to defraud, excessive fees for services,
unlawful trade practices, insurance fraud, kickbacks, patient inducement and statutory or common law fraud
restrict the provision of products, services or items for free or at reduced charge to government or non-
government healthcare program beneficiaries. These laws and regulations relating to the provision of items or
services for free are complex and are subject to interpretation by the courts and by government agencies;

other federal and state fraud and abuse laws, such as state anti-kickback, self-referrals, false claims and anti-
markup laws, any of which may extend to services reimbursable by any payer, including private insurers;

state laws that prohibit other specified practices, such as billing physicians for tests that they order; providing
tests at no or discounted cost to induce adoption; waiving co-insurance, co-payments, deductibles or other
amounts owed by patients; billing a state healthcare program at a price that is higher than what is charged to
other payers; or employing, exercising control over or splitting fees with licensed medical professionals; and

•

similar foreign laws and regulations in the countries in which we operate or may operate in the future.

As a clinical laboratory, our business practices may face additional scrutiny from various government agencies such
as the Department of Justice, the U.S. Department of Health and Human Services Office of Inspector General, or
OIG, and CMS. Certain arrangements between clinical laboratories and referring physicians have been identified in
fraud alerts issued by the OIG as implicating the AKS. The OIG has stated that it is particularly concerned about
these types of arrangements because the choice of laboratory and the decision to order laboratory tests typically are
made or strongly influenced by the physician, with little or no patient input. Moreover, the provision of payments or
other items of value by a clinical laboratory to a referral source could be prohibited under the Stark Law unless the
arrangement meets all criteria of an exception. The government has been active in enforcement of these laws against
clinical laboratories.

Numerous states have enacted laws prohibiting business corporations, such as us, from practicing medicine and from
employing or engaging physicians and other medical professionals (generally referred to as the prohibition against
the corporate practice of medicine), which could include physician laboratory directors. These laws are designed to
prevent interference in the medical decision-making process by anyone who is not a licensed medical professional.
For example, California’s Medical Board has indicated that determining the appropriate diagnostic tests for a
particular condition and taking responsibility for the ultimate overall care of a patient, including making treatment
options available to the patient, would constitute the unlicensed practice of medicine if performed by an unlicensed
person. Violation of these laws may result in sanctions and civil or criminal penalties. It is possible that
governmental authorities may conclude that our business practices, including our consulting and advisory board
arrangements with physicians and other healthcare providers, some of whom receive stock or stock options as
compensation for services provided, do not comply with current or future corporate practice of medicine or
healthcare fraud and abuse statutes, regulations, agency guidance or case law.

The growth and international expansion of our business may increase the potential of violating applicable laws and
regulations. The risk is further increased by the fact that many such laws and regulations have not been fully
interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.
Efforts to ensure that our internal operations and business arrangements with third parties comply with applicable
laws and regulations will involve substantial costs. Any action brought against us for violation of these or other laws
or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert
our management’s attention from the operation of our business. Any of the foregoing consequences could seriously
harm our business and our financial results. To the extent our business operations are found to be in violation of any
of these laws or regulations, we may be subject to significant civil, criminal and administrative penalties, including,
without limitation, damages, monetary fines, individual imprisonment, disgorgement of profits, possible exclusion
from participation in Medicare, Medicaid and other healthcare programs, contractual damages, reputational harm,
diminished profits and future earnings, additional reporting or oversight obligations if we become subject to a
corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and
curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business
and pursue our strategy. If any of the healthcare providers or other parties with whom we interact or may interact in
the future, are found not to be in compliance with applicable laws and regulations, they may be subject to criminal,
civil or administrative sanctions, including exclusions from participation in various healthcare programs, which
could also negatively affect our business or revenue.

If the validity of an informed consent from patients regarding our test was challenged, we could be forced to stop
offering our products or using our resources, our business and results of operations will be negatively affected.

We offer our tests to physicians and to biopharmaceutical companies in connection with clinical studies. We have
implemented measures to ensure that data and biological samples that we receive have been collected from subjects
who have provided appropriate informed consent. We also act as a sponsor of clinical studies in connection with the
development of our tests, which are frequently conducted in collaboration with different parties. We seek to receive
approval from an ethical review board, or institutional review board, or IRB, or other reviewing bodies for projects
that meet the definition of “human subjects research,” which includes review and approval of processes for subject
informed consent and authorization for use of personal information or waivers thereof. We and our
biopharmaceutical partners could conduct clinical studies in a number of different countries. When we are acting as
a vendor in connection with a clinical study sponsored by our biopharmaceutical partners, we rely upon them to
comply with the requirements to obtain the subject’s informed consent and to comply with applicable laws and
regulations. The collection of data and samples in many different countries results in complex legal questions
regarding the adequacy of informed consent and the status of genetic material under a large number of different legal
systems. Those informed consents could be challenged and prove invalid, unlawful, or otherwise inadequate for our
purposes. Any such findings against us, or our biopharmaceutical partners, could force us to stop accessing or using
data and samples or servicing or conducting clinical studies, which would hinder our product offerings or
development. We could also become involved in legal actions, which could consume our management and financial
resources.

We may be subject to fines, penalties, licensure requirements, or legal liability, if it is determined that through
our test reports we are practicing medicine without a license.

Our test reports delivered to physicians provide information regarding FDA or foreign regulatory authorities-
approved therapies and clinical studies that oncologists may use in making treatment decisions for their patients. We
make members of our organization available to discuss the information provided in the reports. Certain state laws
prohibit the practice of medicine without a license. Our customer service representatives and medical affairs team
provide support to our customers, including assistance in interpreting the test report results. A governmental
authority or other parties could allege that the identification of available therapies and clinical studies in our reports
and the related customer service we provide constitute the practice of medicine. A state may seek to have us
discontinue the inclusion of certain aspects of our test reports or the related services we provide, or subject us to
fines, penalties, or licensure requirements. Any determination that we are practicing medicine without a license may
result in significant liability to us, and our business and reputation would be harmed.

Our billing and claim processing are complex and time-consuming, and any delay in submitting claims or failure
to comply with applicable billing requirements could hinder collection and have an adverse effect on our revenue.

Billing for our tests is complex, time-consuming and expensive. Depending on the billing arrangement and
applicable law, we bill various payers, such as Medicare, Medicaid, health plans, insurance companies and patients,
all of which may have different billing requirements. Several factors make the billing process complex, including:

•

differences between the list prices for our tests and the reimbursement rates of payers;

•

compliance with complex federal and state regulations related to billing government healthcare programs,
including Medicare and Medicaid, to the extent our tests are covered by such programs;

differences in coverage among payers and the effect of patient co-payments or co-insurance;

differences in information, pre-authorization and other billing requirements among payers;

changes to codes and coding instructions governing our tests;

incorrect or missing billing information; and

the resources required to manage the billing and claim appeals process.

These billing complexities and the related uncertainty in obtaining payment for our tests could negatively affect our
revenue and cash flow, our ability to achieve profitability and the consistency and comparability of our results of
operations. In addition, if claims for our tests are not submitted to payers on a timely basis, or if we fail to comply
with applicable billing requirements, it could have an adverse effect on our revenue and our business.

In addition, the coding procedure used by third-party payers to identify various procedures, including our test,
during the billing process is complex, does not adapt well to our tests and may not enable coverage and adequate
reimbursement rates. Third-party payers usually require us to identify the test for which we are seeking
reimbursement using a Current Procedural Terminology, or the CPT code. CPT coding plays a significant role in
how our Guardant360 test is reimbursed both from commercial and governmental payers. The CPT code set is
maintained by the American Medical Association, or AMA. In cases where there is not a specific CPT code to
describe a test, such as Guardant360 test, the test may be billed under an unlisted molecular pathology procedure
code or through the use of a combination of single gene CPT codes, depending on the payer. The Protecting Access
to Medicare Act, or PAMA authorized the adoption of new, temporary billing codes and unique test identifiers for
FDA-cleared or approved tests as well as advanced diagnostic laboratory tests. The AMA has created a new section
of CPT codes, Proprietary Laboratory Analyses codes or PLA, to facilitate implementation of this section of PAMA.
In addition, CMS maintains the Healthcare Common Procedure Coding System, or HCPCS, and may assign unique
level II HCPCS code to tests that are not already described by a unique CPT code. New CPT codes are issued
annually and new HCPCS codes are issued as frequently as quarterly. Payers’ acceptance of the new code could be
delayed, and transition to the new code could result in a decrease in reimbursement for our tests, both of which could
potentially reduce revenue from commercial and government payers. In addition, Z-Code Identifiers are used by
certain payers, including under Medicare's Molecular Diagnostic Services Program, or MolDx, to supplement CPT
codes for molecular diagnostics tests such as our Guardant360 test. Following the FDA approval of our Guardant360
CDx test, a new Z-Code Identifier was issued in August 2020. In January 2021, a proprietary laboratory analyses, or
PLA code was issued for our Guardant360 CDx with an effective date in April 2021. Additionally, based on this
new PLA code, we applied to the CMS for our Guardant360 CDx test to become an advanced diagnostic laboratory
test, or ADLT. In March 2021, CMS approved ADLT status to the Guardant360 CDx test, based on which,
Medicare paid us at the lowest available commercial rate from April 1, 2021 to December 31, 2021. Effective
January 1, 2022, Medicare has started to reimburse Guardant360 CDx services at the median rate of claims paid by
commercial payers and this rate will apply until December 2023. In March 2022, Palmetto GBA, the Medicare
administrative contractor for MolDX, or MAC, responsible for administering Medicare’s Molecular Diagnostic
Services Program, or MolDX, conveyed coverage for our Guardant360 TissueNext test under the existing local
coverage determination. The policy covers our Guardant360 TissueNext test for Medicare fee-for-service patients
with advanced solid tumor cancers. In July 2022, Palmetto GBA conveyed coverage for our Guardant Reveal test for
fee-for-service Medicare patients in the United States with stage II or III colorectal cancer whose testing is initiated
within three months following curative intent therapy, with an effective date of December 2021. Due to the inherent
variability and unpredictability of the reimbursement landscape, including related to the amount that payers
reimburse us for any of our tests, we estimate the amount of revenue to be recognized at the time a test is provided
and record revenue adjustments if and when the cash subsequently received for a test differs from the revenue
recorded for the test. Due to this variability and unpredictability, previously recorded revenue adjustments are not
indicative of future revenue adjustments from actual cash collections, which may fluctuate significantly.
Additionally, if coding changes were to occur, payments for certain uses of our tests could be reduced, put on hold,
or eliminated.

Use of coding for billing our products that does not describe a specific test, requires the claim to be examined to
determine what test was provided, whether the test was appropriate and medically necessary, and whether payment
should be rendered, which may require a letter of medical necessity from the ordering physician. This process can
result in a delay in processing the claim, a lower reimbursement amount or denial of the claim. Because billing third-
party payers for our tests is an unpredictable, challenging, time-consuming and costly process, we may face long
collection cycles and the risk that we may never collect at all, either of which could adversely affect our business,
results of operations and financial condition, and we may have to increase collection efforts and incur additional
costs.

Changes in healthcare laws, regulations and policies could increase our costs, decrease our sales and revenues
and negatively impact reimbursement for our tests.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Affordability Reconciliation Act, or the ACA, became law. This law substantially changed the way health care is
financed by both commercial payers and government payers, and significantly impacted our industry. The ACA
contains a number of provisions expected to impact existing state and federal health care programs or result in the
development of new programs, including those governing enrollments in state and federal health care programs,
reimbursement changes and fraud and abuse. Our business and operations could be affected by the ACA, including
in ways we cannot currently predict.

Since its enactment, there have been efforts to repeal all or part of the ACA. On June 17, 2021 the U.S. Supreme
Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling
on the constitutionality of the ACA. Thus, the ACA will remain in effect in its current form. Further, prior to the
U.S. Supreme Court ruling, President Biden issued an executive order to initiate a special enrollment period from
February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA
marketplace. The executive order also instructed certain governmental agencies to review and reconsider their
existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid
demonstration projects and waiver programs that include work requirements, and policies that create unnecessary
barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

We anticipate there will continue to be proposals by legislators at both the federal and state levels and in foreign
jurisdictions, regulators and commercial and government payers to reduce healthcare costs while expanding
individual healthcare benefits. Certain of these changes could impose additional limitations on the prices we will be
able to charge for our tests, the coverage of or the amounts of reimbursement available for our tests from
commercial and government payers.

Because of the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that our
current practices are challenged under one or more of such laws. The scope and enforcement of each of these laws is
uncertain and subject to rapid change in the current environment of healthcare reform. Federal, state and foreign
enforcement bodies have increased their scrutiny of interactions between healthcare companies and healthcare
providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare
industry.

Our collection, use and disclosure of personal information, including patient and employee information, is
subject to privacy and security laws and regulations, and our actual or perceived failure to comply with those
laws and regulations or to adequately secure the information in our possession could result in significant liability
or reputational harm.

The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state,
federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and
security of personal information. We collect, process, maintain, retain, evaluate, utilize and distribute large amounts
of personal health and financial information and other confidential and sensitive data about our customers and others
in the ordinary course of our business. Concerns about and claims challenging our practices with regard to the
collection, use, retention, disclosure or security of personally identifiable information or other privacy-related
matters, even if unfounded and even if we are in compliance with applicable laws, could damage our reputation and
harm our business.

Numerous federal, state and foreign laws and regulations govern collection, dissemination, use and confidentiality of
personally identifiable information and protected health information, or PHI, including HIPAA, as amended by the
Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated
thereunder, or collectively, HIPAA; state privacy and confidentiality laws (including state laws requiring disclosure
of breaches); federal and state consumer protection and employment laws; and European and other foreign data
protection laws. Implementation standards and enforcement practices are likely to remain uncertain for the
foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their
requirements may have on our business. This evolution may create uncertainty in our business, affect our ability to
operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the
acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. The cost
of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or
perceived failure by us to comply with federal, state or foreign laws or regulation, our internal policies and
procedures or our contracts governing our processing of personal information could result in negative publicity,
government investigations and enforcement actions, claims by third parties and damage to our reputation, any of
which could have a material adverse effect on our operations, financial performance and business.

HIPAA establishes a set of national privacy and security standards for the protection of PHI, by health plans, certain
healthcare providers that submit certain covered transactions electronically and healthcare clearinghouses, or
‘‘covered entities,’’ and their ‘‘business associates,’’ which are persons or entities that perform certain services for,
or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting PHI. We are a covered
entity under HIPAA and therefore must comply with its requirements to protect the privacy and security of health
information and must provide individuals with certain rights with respect to their health information. If we engage
a business associate to help us carry out healthcare activities and functions, we must have a written business
associate contract or other arrangement with the business associate that establishes specifically what the business
associate has been engaged to do and requires the business associate to comply with certain safeguards and other
requirements under HIPAA.

Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about
privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and
penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and
corrective action plan with HHS to settle allegations of HIPAA non-compliance. HIPAA also authorizes state
Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees
related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing
individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care
in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI. A person who
knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face
additional fines and up to one-year imprisonment. The criminal penalties increase if the wrongful conduct involves
false pretenses or the intent to sell, transfer, or use identifiable health information for commercial advantage,
personal gain, or malicious harm. In addition, responding to government investigations regarding alleged violations
of these and other laws and regulations, even if ultimately concluded with no findings of violations or no penalties
imposed, can consume company resources and impact our business and, if public, harm our reputation.

Further, various states, such as California and Massachusetts, have implemented similar privacy laws and
regulations, such as the California Confidentiality of Medical Information Act, that impose restrictive requirements
regulating the use and disclosure of health information and other personally identifiable information. Laws in all 50
states require businesses to provide notice to individuals whose personally identifiable information has been
disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data
breach is costly. States are also constantly amending existing laws, and creating new data privacy and security laws,
requiring attention to frequently changing regulatory requirements. For example, the California Consumer Privacy
Act, or CCPA went into effect on January 1, 2020, and creates certain data privacy rights for California residents.
The CCPA increases the privacy and security obligations of entities handling certain personal information, and
provides for civil penalties for violations, as well as a private right of action for data breaches that has increased the
likelihood of, and risks associated with data breach litigation. Further, the California Privacy Rights Act, or CPRA,
generally went into effect in January 2023, and imposes additional data protection obligations on covered
businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for
higher risk data, and opt outs for certain uses of sensitive data. It has also created a new California data protection
agency authorized to issue substantive regulations and could result in increased privacy and information security
enforcement. Additional compliance investment and potential business process changes may be required. Similar
laws have passed in Virginia, Colorado, Connecticut, and Utah and have been proposed in other states and at the
federal level, reflecting a trend toward more stringent privacy legislation in the United States. These laws and
regulations are not necessarily preempted by HIPAA, particularly if a state affords greater protection to individuals
than HIPAA. Where state laws are more protective, we may have to comply with the stricter provisions. In addition
to fines and penalties imposed upon violators, some of these state laws also afford private rights of action to
individuals who believe their personal information has been misused. The interplay of federal and state laws may be
subject to varying interpretations by courts and government agencies, creating complex compliance issues for us and
our clients, and potentially exposing us to additional expense, adverse publicity and liability. Further, as regulatory
focus on privacy issues continues to increase and laws and regulations concerning the protection of personal
information expand and become more complex, these potential risks to our business could intensify. Changes in
laws or regulations associated with the enhanced protection of certain types of sensitive data, such as PHI, or
personally identifiable information along with increased demands for enhanced data security infrastructure, could
greatly increase our costs of providing our services, decrease demand for our services, reduce our revenue and/or
subject us to additional risks.

Furthermore, the Federal Trade Commission, or the FTC, and many state Attorneys General continue to enforce
federal and state consumer protection laws against companies for online collection, use, dissemination and security
practices that appear to be unfair or deceptive. For example, according to the FTC, failing to take appropriate steps
to keep consumers’ personal information secure can constitute unfair acts or practices in or affecting commerce in
violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security
measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds,
the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

In addition, the interpretation and application of consumer, health-related, and data protection laws, especially with
respect to genetic samples and data, in the United States, European Economic Area, or EEA, and elsewhere are often
uncertain, contradictory, and in flux. We operate or may operate in a number of countries outside of the United
States whose laws may in some cases be more stringent than the requirements in the United States. For example,
EEA member states have specific requirements relating to cross-border transfers of personal data to certain
jurisdictions, including to the United States where our laboratory resides. In addition, some countries have stricter
consumer notice and/or consent requirements relating to personal data collection, use or sharing, more stringent
requirements relating to organizations’ privacy programs and provide stronger individual rights. Moreover,
international privacy and data security regulations may become more complex and have greater consequences. For
instance, the General Data Protection Regulation, or GDPR, went into effect in May 2018 and imposes stringent data
protection requirements for the processing of personal data of persons within the EEA. The GDPR applies to any
company established in the EEA as well as to those outside the EEA if they collect and use personal data in
connection with the offering of goods or services to individuals in the EEA or the monitoring of their behavior. The
GDPR imposes strict data protection compliance requirements including: providing detailed disclosures about how
personal data is collected and processed; demonstrating that an appropriate legal basis is in place or otherwise exists
to justify data processing activities; granting rights for data subjects in regard to their personal data; introducing the
obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals)
of significant data breaches; defining pseudonymized (i.e., key-coded) data; imposing limitations on retention of
personal data; maintaining a record of data processing; and complying with the principal of accountability and the
obligation to demonstrate compliance through policies, procedures, training and audit. The GDPR provides that
EEA member states may make their own further laws and regulations limiting the processing of personal data,
including genetic, biometric or health data, which could limit our ability to use and share personal data or could
cause our costs could increase, and harm our business and financial condition. Failure to comply with the
requirements of GDPR and the applicable national data protection laws of the EEA member states may result in
fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year,
whichever is higher, and other administrative penalties. Failure to comply with the GDPR and other applicable
privacy or data security-related laws, rules or regulations could result in material penalties imposed by regulators,
affect our compliance with client contracts and have an adverse effect on our business, financial condition and
results of operations.

European data protection law also imposes strict rules on the transfer of personal data out of the EU to the United
States. These obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to
another and may conflict with other requirements or our practices. In addition, these rules are constantly under
scrutiny. For example, in July 2020, the Court of Justice of the EU, or the CJEU, limited how organizations could
lawfully transfer personal data from the EEA to the United States by invalidating the Privacy Shield for purposes of
international transfers and imposing further restrictions on use of the standard contractual clauses, or SCCs. In
March 2022, the United States and EU announced a new regulatory regime intended to replace the invalidated
regulations; however, this new EU-US Data Privacy Framework has not been implemented beyond an executive
order signed by President Biden on October 7, 2022 on Enhancing Safeguards for United States Signals Intelligence
Activities. European court and regulatory decisions subsequent to the CJEU decision of July 16, 2020 have taken a
restrictive approach to international data transfers. As supervisory authorities issue further guidance on personal data
export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action,
we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise
unable to transfer personal data between and among countries and regions in which we operate, it could affect the
manner in which we provide our services, the geographical location or segregation of our relevant systems and
operations, and could adversely affect our financial results.

Further, from January 1, 2021, companies have had to comply with the GDPR and also the United Kingdom GDPR,
or the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK
national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5
million) or 4% of global turnover.

We are also subject to evolving EU privacy laws on cookies and e-marketing. In the EEA, informed consent is
required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing.
The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a
requirement to ensure separate consents are sought for each type of cookie or similar technology. Any of these
changes to EU data protection law or its interpretation could disrupt and harm our business. We rely on a mixture of
safeguards to transfer personal data from our EU business to the U.S., and could be impacted by changes in law as a
result of a future review of these transfer mechanisms by European regulators or current challenges to these
mechanisms in the European courts.

In addition to government regulation, privacy advocates and industry groups have and may in the future propose
self-regulatory standards from time to time. These and other industry standards may legally or contractually apply to
us, or we may elect to comply with such standards. We expect that there will continue to be new proposed laws and
regulations concerning data privacy and security, and we cannot yet determine the impact such future laws,
regulations and standards may have on our business. New laws, amendments to or reinterpretations of existing laws,
regulations, standards and other obligations may require us to incur additional costs and restrict our business
operations. Because the interpretation and application of laws, regulations, standards and other obligations relating
to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other
obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and
policies or the features of our products. If so, in addition to the possibility of fines, lawsuits, regulatory
investigations, public censure, other claims and penalties, and significant costs for remediation and damage to our
reputation, we could be materially and adversely affected if legislation or regulations are expanded to require
changes in our data processing practices and policies or if governing jurisdictions interpret or implement their
legislation or regulations in ways that negatively impact our business, financial condition and results of operations.
We may be unable to make such changes and modifications in a commercially reasonable manner, or at all. Any
inability to adequately address data privacy or security-related concerns, even if unfounded, or to comply with
applicable laws, regulations, standards and other obligations relating to data privacy and security, could result in
additional cost and liability to us, harm our reputation and brand, damage our relationships with consumers and
harm our business, financial condition and results of operations.

We make public statements about our use and disclosure of personal information through our privacy policies,
information provided on our website and press statements. Although we endeavor to comply with our public
statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of
our privacy policies and other statements that provide promises and assurances about data privacy and security can
subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of
our actual practices. Any concerns about our data privacy and security practices, even if unfounded, could damage
the reputation of our business and harm our business, financial condition and results of operations.

Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other
legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent
manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we
must comply. Any failure or perceived failure by us or our employees, representatives, contractors, consultants,
collaborators, or other third parties to comply with such requirements or adequately address privacy and security
concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely
affect our business and results of operations.

Risks related to our intellectual property

If we are unable to obtain and maintain sufficient intellectual property protection for our technology, or if the
scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop,
manufacture and commercialize products, services or technology similar or identical to ours, and our ability to
successfully develop, manufacture or commercialize our products, services or technology may be impaired.

We rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights
protection and contractual restrictions to protect our proprietary technologies, all of which provide limited protection
and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to
obtain, maintain and/or protect our intellectual property rights, third parties may be able to compete more effectively
against us. In addition, we have incurred and may continue to incur substantial litigation costs in our attempts to
enforce or restrict the use of our intellectual property rights against third parties or defend ourselves against third
parties claiming that we are infringing upon such third parties’ intellectual property rights.

To the extent our intellectual property rights offers inadequate protection, or is found to be invalid or unenforceable,
we would be exposed to a greater risk of direct competition. If our intellectual property rights do not provide
adequate coverage of our products, services or technology, our competitive position could be adversely affected, as
could our business.

As is the case with other biotechnology companies, our success depends in large part on our ability to obtain,
maintain and protect the intellectual property we own or we have licensed from others. We apply for patents
covering our products, services and technologies and uses thereof, as we deem appropriate. However, obtaining,
maintaining and enforcing biotechnology patents is costly, time-consuming and complex. We may fail to apply for
patents on important products, services or technologies in a timely fashion or at all, or we may fail to apply for
patents in potentially relevant jurisdictions. We may not be able to file and prosecute all necessary or desirable
patent applications, or maintain or enforce patents that may issue from such patent applications, at a reasonable cost
or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and
development output before it is too late to obtain patent protection. Patent prosecution process can be time-
consuming and expensive. We may not have the right to control the preparation, filing and prosecution of patent
applications, or to maintain the rights to patents licensed to us by third parties. Therefore, these patents and
applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

We own or license numerous U.S. patents and pending U.S. patent applications, with international counterparts in
certain countries. It is possible that our or our licensors’ pending patent applications will not result in issued patents
in a timely fashion or at all, and even if patents are granted, they may not provide a basis for intellectual property
protection of commercially viable products, services or technologies, may not provide us with any competitive
advantages, or may be challenged by third parties and be invalidated or found unenforceable. It is possible that
others will design around our current or future patented products, services or technologies. Some of such patent
rights are being challenged, including at the United States Patent and Trademark Office, or USPTO, in post-grant
proceedings, at the European Patent Office, or EPO, in opposition proceedings, and some of such patent rights may
be challenged in the future. We may not be successful in defending any such challenges made against our owned or
licensed patents or patent applications. Any successful third-party challenge to such patent rights could result in their
unenforceability or invalidity and increased competition to our business. We have challenged and may choose to
challenge the patents or patent applications of third parties. The outcome of patent disputes or other proceeding can
be uncertain, and any attempt by us to enforce our patent rights against others or to challenge the patent rights of
others may not be successful, or, if successful, may take substantial time and result in substantial cost, and may
divert our efforts and attention from other aspects of our business.

The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual
questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of
claims allowed in such companies’ patents has emerged to date in the United States or elsewhere. Courts frequently
render opinions in the biotechnology field that may affect the patentability of certain inventions or discoveries,
including opinions that may affect the patentability of methods for analyzing or comparing DNA sequences.

In particular, the patent positions of companies engaged in the development and commercialization of genomic
diagnostic tests, like our current products and tests, and our future products, are particularly uncertain. Various
courts, including the U.S. Supreme Court, have rendered decisions that affect the scope of patentability of certain
inventions or discoveries relating to certain diagnostic tests and related methods. These decisions state, among other
things, that a patent claim that recites an abstract idea, natural phenomenon or law of nature (for example, the
relationship between particular genetic variants and cancer) are not themselves patentable. Precisely what constitutes
a law of nature is uncertain, and it is possible that certain aspects of genetic diagnostics tests would be considered
natural laws. Accordingly, the evolving legal and administrative standards around the world, including in the United
States may adversely affect our ability to obtain patents and may facilitate third-party challenges to any owned or
licensed patents. The laws of some foreign jurisdictions do not protect intellectual property rights to the same extent
as the laws of the United States, and we may encounter difficulties in protecting and defending such rights in foreign
jurisdictions. The legal systems of many foreign jurisdictions do not favor the enforcement of patent rights and other
intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to
stop the infringement of our patent rights and other intellectual property rights thereunder. Proceedings to enforce
our patent rights and other intellectual property protection in foreign jurisdictions could result in substantial cost and
divert our efforts and attention from other aspects of our business.

Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general,
thereby impairing our ability to protect our products.

Changes in either the patent laws or in interpretations of patent laws in the United States or other countries or
regions may diminish the value of our intellectual property rights. We cannot predict the breadth of claims that may
be allowed or enforced in our patents or in third-party patents. We may not develop additional proprietary products,
services, methods and technologies that are patentable.

Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to
invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent
application was entitled to the patent. On or after March 16, 2013, under the Leahy-Smith America Invents Act, or
the America Invents Act, enacted in September 16, 2011, the United States transitioned to a first inventor to file
system in which, assuming that other requirements for patentability are met, the first inventor to file a patent
application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the
claimed invention. A third party that files a patent application in the USPTO on or after March 16, 2013, but before
us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it
was made by such third party. This will require us to be cognizant of the time from invention to filing of a patent
application. Since patent applications in the United States and most other countries are confidential for a period of
time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any
patent application related to our product candidates or (ii) invent any of the inventions claimed in our or our
licensor’s patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will
be prosecuted and also affect patent litigation. These include allowing third-party submission of prior art to the
USPTO during patent prosecution or post-grant proceedings, including post-grant review, inter partes review and
derivation proceedings, to attack the validity of a patent. Because of a lower evidentiary standard in USPTO
proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent
claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a
claim invalid even though the same evidence might not be sufficient to invalidate the claim if presented in a district
court action. Accordingly, third parties have used and may continue to use the USPTO proceedings to invalidate our
patent claims that would not have been invalidated if first challenged by the third party in a district court action.
Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding
our or our licensors' prosecution of patent applications and enforcement or defense of issued patents, all of which
could have a material adverse effect on our business, financial condition, results of operations and prospects.

Issued patents covering our products, services or technology could be found invalid or unenforceable if
challenged.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability. Some of our owned
or licensed patent rights have been, are being or may be challenged at a future point in time in opposition,
derivation, re-examination, inter partes review, post-grant review or interference. Any successful third-party
challenge to our patent rights in this or any other proceeding could result in the unenforceability or invalidity of such
patent rights, which may lead to increased competition to our business, which could harm our business. In addition,
if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of
the outcome, it could dissuade companies from collaborating with us to license, develop, manufacture or
commercialize our current or future products, services or technology.

We may not be aware of all third-party intellectual property rights potentially relating to our products, services or
technology. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are typically not published until approximately 18 months
after filing or, in some cases, not until such patent applications issue as patents. We, or our licensors, might not have
been the first to make the inventions covered by each of our or our licensors’ pending patent applications and we, or
our licensors, might not have been the first to file patent applications for these inventions. To determine the priority
of our inventions, we have participated and may continue to participate in interference proceedings, derivation
proceedings or other post-grant proceedings declared by the USPTO that could result in substantial cost to us. The
outcome of such proceedings is uncertain. No assurance can be given that other patent applications will not have
priority over our or our licensors’ patent applications. In addition, changes to the patent laws of the United States
allow for various post-grant opposition proceedings that have not been extensively tested, and their outcome is
therefore uncertain. Our licensors may also license patent rights to others, and we may not be aware of such licenses
before they are granted or such licenses may be subject to disputes or uncertainties that affect patent rights licensed
by us or could limit our ability to enforce such patent rights. If third parties bring actions against our owned or
licensed patent rights, we could experience significant costs and management distraction.

In patent litigation in the United States or abroad, defendant counterclaims alleging invalidity or unenforceability of
plaintiff’s patents are common. Grounds for a validity challenge for invalidity could be an alleged failure to meet
any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an
unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld
relevant information from the patent office or made a misleading statement during prosecution. Similar claims may
also be raised before patent offices in the United States or abroad, even outside the context of litigation, through
mechanisms including re-examination, post-grant review and equivalent proceedings in foreign jurisdictions (e.g.,
opposition proceedings). Such proceedings could result in revocation or amendment to our patent rights in such a
way that they no longer cover our products. The outcome of patent litigation or patent office proceedings following
assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we
cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during
prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose
at least part, and perhaps all, of the relevant patent that protects our products, service or technology. Such a loss of
patent protection could have a material adverse impact on our business.

We and some of our licensors have initiated, are currently involved in, and may in the future initiate or become
involved in legal proceedings against a third party to enforce a patent covering one of our products, services or
technology.

Defendants in such proceedings could counterclaim that the patents covering our products, services or technology
are invalid or unenforceable and could institute legal proceedings to challenge such patents both in court and before
patent offices. Any assertion of invalidity and/or unenforceability against the patents covering our products, services
or technology, even if not successful, could be time-consuming and expensive to defend, damage our reputation in
the marketplace and the prospects for our business, and divert our management’s attention.

We rely on licenses from third parties, and if we lose these licenses then we may be subjected to future litigation.
If we cannot license and maintain rights to use third-party intellectual property rights on reasonable terms, we
may not be able to successfully develop, manufacture and/or commercialize our products, services or technology.
Our licensed intellectual property rights may lose value or utility over time.

From time to time, we may identify third-party technology we may need, including those related to develop,
manufacture or commercialize new products, services or technology. We may also need to negotiate agreements to
in-license patents or other intellectual property rights from third parties before or after introducing a commercial
products, service of technology, and we may not be able to obtain necessary licenses to such patents or other
intellectual property rights. We are a party to various license agreements, including royalty-bearing agreements, that
grant us rights to use and practice certain intellectual property of third parties, including claims included in issued
patents, typically in certain specified fields of use. We may need to obtain additional licenses from others to advance
our research, development, manufacture and commercialization activities. We may be unable to enter into the
necessary license agreements on acceptable terms or at all, which could have a material adverse effect on our
competitive position, business, financial condition, results of operations and prospects. In return for the use of a third
party’s intellectual property rights, we may agree to pay the licensor royalties based on sales of our products,
services or technology. Royalties are a component of cost of products, services or technology and affect the margins
on our products, services or technology. If we are unable to negotiate reasonable royalties or if we have to pay
royalties on technology that becomes less useful for us or ceases to provide value to us, our profit margin will be
reduced and we may suffer losses.

Our license agreements impose, and we expect that future license agreements will impose, various development,
diligence, commercialization and other obligations on us, including obligations to making payments to our licensors
upon achievement of milestones.

In spite of our efforts, our licensors have asserted and may in the future assert that we have materially breached our
obligations under such license agreements and could therefore seek or threaten to terminate the license agreements.
If these licenses are terminated, or if the underlying patent rights fail to provide the intended exclusivity, our ability
to develop, manufacture and commercialize products, services and technology covered by these license agreements
would be limited or lost, and our competitors or other third parties might have the freedom to develop, produce,
manufacture, seek regulatory approval of, or to market, products, services or technology identical or similar to ours
and we may be required to cease our development, manufacture and/or commercialization activities in connection
with our products, services and/or technology. Our actual or potential licensors could take action with respect to our
licensed intellectual property that may decrease the value of such licensed intellectual property. Any of the foregoing
could have a material adverse effect on our competitive position, business, financial condition, results of operations
and prospects. Moreover, disputes could arise with respect to any aspect of our license agreements, including:

•

the scope of rights granted under the license agreement and other interpretation-related issues;

the extent to which our products or product candidates, services, technology and processes infringe on
intellectual property of the licensor that is not subject to the licensing agreement;

the licensing of patent and other rights controlled by our licensors or developed under our collaborative
development relationships to others;

our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

the inventorship and ownership of inventions and know-how licensed to us or resulting from the joint creation
or use of intellectual property by our licensors, us and/or our partners;

the validity, enforceability or priority of licensed patent rights; and

the amount of royalties and other payments we are obligated to pay under the license agreement.

If we do not prevail in such disputes, we may lose the rights under any of such license agreements, the license
agreements may not be meaningful for our business and operations, and we may be subject to unnecessary or
additional payment obligations.

In addition, the agreements under which we currently license intellectual property or technology from third parties
are complex, and certain provisions in such agreements could be susceptible to multiple interpretations. The
resolution of any such contract interpretation disagreement could narrow what we believe to be the scope of our
rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other
obligations under the relevant agreement, either of which could have a material adverse effect on our business,
financial condition, results of operations and prospects. Moreover, if disputes over licensed intellectual property
impair our ability to enforce licensed intellectual property against third parties or use it to defend ourselves in
litigation, the value of such licensed intellectual property may be diminished.

If we fail to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to
successfully develop, manufacture and commercialize the affected product, product candidate, service or
technology, which could have a material adverse effect on our business, financial condition, results of operations
and prospects. If any of these license agreements is terminated, if the licensor fails to abide by the terms of the
license agreement, if the licensor fails to enforce its intellectual property rights licensed to us against third parties
that infringe upon such intellectual property rights, or if the licensed patent or other rights are found to be invalid or
unenforceable, we may be unable to achieve our business goals and our results of operations and financial condition
could be adversely affected. Absent the license agreements, we could infringe patents and other intellectual property
rights of the licensors subject to those agreements, and if the license agreements are terminated, we may be subject
to litigation by the licensor. Litigation could result in substantial costs and be a distraction to management. If we do
not prevail, we may be required to pay damages, including treble damages, attorneys’ fees, costs and expenses,
royalties or, be enjoined from selling our products, services or technology, including our tests, which could
adversely affect our ability to offer products, services or technology, our ability to continue operations and our
financial condition.

Any intellectual property rights licensed by us may lose value or utility, including as a result of a change of in the
industry, in our business objectives, others' technology, our dispute with the licensor, and other circumstances
outside our control.

We may not be able to protect or enforce our intellectual property rights adequately throughout the world.

Filing, prosecuting and defending patents and other intellectual property rights covering our products, services and
technology in all countries throughout the world would be prohibitively expensive, and our intellectual property
rights in some territories outside the United States can be less extensive than those in the United States. In addition,
the laws of some foreign countries and regions do not protect intellectual property rights to the same extent as the
laws of the United States, and we may encounter difficulties in protecting and defending such rights in foreign
jurisdictions. Consequently, we may not be able to prevent third parties from practicing our inventions in all
jurisdictions, or from selling, making or importing products, services or technology by practicing our intellectual
property rights. Competitors may practice our intellectual property rights in jurisdictions where we have not
obtained patent protection to develop, manufacture, sell or import their own products, services or technology and
may also export products, services or technology that infringe upon our intellectual property rights to territories
where we have patent protection that do not provide strong intellectual property or enforcement rights as strong as
that in the United States. These products, services or technology may compete with our products, services or
technology. Our patents or other intellectual property rights existing outside the United States may not be effective
or sufficient to prevent third parties from competing with us. Similarly, intellectual property rights may be exhausted
in certain situations, and others could import our products sold abroad and compete with us domestically.

Many companies have encountered significant problems in protecting and defending intellectual property rights in
foreign jurisdictions. The legal systems of many other countries and regions do not favor the enforcement of patents
and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult
for us to stop the infringement of our patents and other intellectual property rights in such jurisdictions. Proceedings
to enforce our patent rights and other intellectual property rights in foreign jurisdictions could result in substantial
cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being
invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties
to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies
awarded to us, if any, may not be commercially meaningful. Accordingly, our efforts to enforce intellectual property
rights around the world may be inadequate to obtain a significant commercial advantage.

If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially
adversely affected and our business could be harmed.

In addition to pursuing patents covering our products, services and technology, we take steps to protect our
intellectual property and proprietary technology by entering into agreements, including confidentiality and non-
disclosure agreements with those that have access to our confidential and proprietary information including
employees, independent contractors, academic institutions, corporate partners and our advisers, and invention
assignment agreements with our employees and independent contractors, and when needed, our advisers. However,
we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain
that our trade secrets and other proprietary information will not be disclosed or that competitors will not otherwise
gain access to our trade secrets or independently develop substantially equivalent information and techniques. For
example, any of these parties may breach the agreements and disclose our proprietary information, including our
trade secrets, and we may not be able to obtain adequate remedies for such breaches. Such agreements may not be
enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the
event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such
unauthorized use or disclosure. If we are required to assert our rights against such party, it could result in significant
cost and distraction.

Monitoring unauthorized use or disclosure is difficult, and we do not know whether the steps we have taken to
prevent such use or disclosure are, or will be, adequate. If we were to enforce a claim that a third party had illegally
obtained and was using our trade secrets, it would be expensive and time-consuming, and the outcome would be
unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets.

We also seek to preserve the integrity and confidentiality of our proprietary information by maintaining physical
security of our premises and physical and electronic security of our information technology systems, but it is
possible that these security measures could be breached. If any of our confidential proprietary information were to
be lawfully obtained or independently developed by a competitor, absent patent protection, we would have no right
to prevent such competitor from using that technology or information to compete with us, which could harm our
competitive position.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or
disclosed confidential information of third parties or that our employees have wrongfully used or disclosed trade
secrets of their former employers.

We have employed or engaged and expect to employ or engage individuals who were previously employed at or
associated with universities or other companies, including our competitors or potential competitors. Although we try
to ensure that our employees and independent contractors do not use the proprietary information or know-how of
others in their work for us, we may be subject to claims that our employees or independent contractors have
inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers
or other third parties, or to claims that we have improperly used or obtained such trade secrets. Litigation may be
necessary to defend against these claims. If we lose, in addition to paying monetary damages, we may be deprived of
valuable intellectual property and face increased competition. A loss of key research personnel or work product
could hamper or prevent our ability to develop, manufacture and/or commercialize products, services or technology,
which could materially adversely affect our business. Even if we are successful in defending against these claims,
litigation could result in damage to our reputation and substantial costs and be a distraction to management and
affected individuals.

We may not be able to protect and enforce our trademarks and we could infringe others’ trademarks.

We have not yet registered trademarks in all of our potential markets, although we have registered Guardant Health,
Guardant360 and GuardantOMNI in the United States. If we apply to register additional trademarks in the United
States and other countries, our applications may not be allowed for registration in a timely fashion or at all, and our
registered trademarks may not be maintained or enforced. In addition, opposition or cancellation proceedings may
be filed against our trademark applications and registrations, and our trademarks may not survive such proceedings.
If we do not timely register and enforce marks used in connection with our products, services or technology, we may
encounter difficulty in enforcing them against third parties, and if these marks are registered by others, we could
infringe such trademarks and may have to defend ourselves to continue the use of our trademarks, which may be
time consuming and costly, and we may be unsuccessful.

We may be subject to claims challenging the inventorship or ownership of our owned or licensed intellectual
property.

We or our licensors may be subject to claims that former employees, independent contractors, collaborators or other
third parties have an interest in or right to our owned or licensed patents, trade secrets or other intellectual property.
For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees,
independent contractors or others who are involved in developing such intellectual property. Litigation may be
necessary to defend against these and other claims challenging inventorship or ownership of our owned or licensed
patents, trade secrets or other intellectual property. If we or our licensors fail in defending against any such claims,
we may lose exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful in
defending against such claims, litigation could result in damage to our reputation and substantial costs and be a
distraction to management and other employees. Any of the foregoing could have a material adverse effect on our
business, financial condition, results of operations and prospects.

We are and may continue to be involved in litigation and other legal proceedings related to intellectual property,
which could be time-intensive and costly and may adversely affect our business, operating results or financial
condition.

We have been, are currently in, and may also in the future be, involved with litigation or USPTO actions with
various third parties. We expect that the number of such claims may increase as the number of our products or
services grows, and the level of competition in our industry segments increases. Any infringement claim, regardless
of its validity, could harm our business by, among other things, resulting in time-consuming and costly litigation,
diverting management’s time and attention from the development of our business, or requiring the payment of
monetary damages (including treble damages, attorneys’ fees, costs and expenses if we are found to have willfully
infringed) and ongoing royalties.

Litigation may be necessary for us to enforce our intellectual property and proprietary rights or to determine the
scope, coverage and validity of the intellectual property and proprietary rights of others. We are currently engaged in
lawsuits and in proceedings before the USPTO in relation to certain such patents. The outcome of such lawsuits, as
well as any other litigation or proceeding, is inherently uncertain and might not be favorable to us. Further, we could
encounter delays in introductions or interruptions in the development, manufacture or sale of products, services or
technologies, as we develop alternative products, services or technologies. In addition, if we resort to legal
proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of the
intellectual property or other proprietary rights of others, the proceedings could be burdensome and expensive, even
if we were to prevail. If we do not prevail in such legal proceedings, we may be required to pay damages, and we
may lose significant intellectual property protection for our products, services or technologies, such that competitors
could copy our products, services or technologies. Any litigation that may be necessary in the future could result in
substantial costs and diversion of resources and could have a material adverse effect on our business, operating
results or financial condition.

As we move into new markets and applications for our products, services or technologies, incumbent participants in
such markets may assert their patents and other intellectual property or proprietary rights against us as a means of
slowing our entry into such markets or as a means to extract substantial license and royalty payments from us. As
our business matures and our public profile grows, we may also be subject to an increased number of allegations of
patent or other intellectual property infringement, whether by our competitors or other third parties, both in the
United States and throughout the world wherever we seek to manufacture, commercialize or import our products,
services or technologies. Our competitors and others may have significantly larger and more mature patent portfolios
than we have. In addition, while we can assert our own patents or other intellectual property rights during litigation,
our own patents or other intellectual property rights may provide little or no deterrence or protection against third
parties. Therefore, our commercial success may depend in part on our non-infringement of the patents or other
intellectual property rights of third parties and on our success in defending ourselves in litigation.

However, our research, development, manufacture and commercialization activities are currently and may in the
future be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or
controlled by third parties. There is a substantial amount of litigation and other patent challenges, both within and
outside the United States, involving patent and other intellectual property rights in the biotechnology industry,
including patent infringement lawsuits, interferences, oppositions and inter partes review proceedings before the
USPTO, and corresponding proceedings before foreign patent offices. Numerous U.S. and foreign issued patents and
pending patent applications, which are owned by third parties, exist in the fields in which we are developing,
manufacturing and/or commercializing products, services or technologies. As the precision oncology industry
expands and more patents are issued, the risk increases that our products, services or technologies may be subject to
claims of infringement of the patent rights of third parties. Numerous significant intellectual property issues have
been litigated, are being litigated and will likely continue to be litigated, between existing and new participants in
our existing and targeted markets, and our competitors have asserted and may in the future assert that our products
or services infringe their intellectual property rights as part of a business strategy to impede our successful entry into
or growth in those markets, and we may enforce our owned or licensed intellectual property rights against our
competitors and other parties.

Third parties have asserted and may in the future assert that we are employing their proprietary technology or trade
secrets without authorization. For instance, Foundation Medicine, Inc. filed a lawsuit for patent infringement against
us in May 2016, which we settled in July 2018. We are also aware of issued U.S. patents and patent applications
with claims related to our products and services, and there may be other related third-party patents or patent
applications of which we are not aware. By interacting with us, our licensors may learn more about our business or
technology and could assert additional patent rights against us, such as patent rights that are not currently licensed to
us or patent rights that may be obtained by any such licensors in the future, which may occur if such patent rights are
not available for licensing or if they are not offered on acceptable or commercially reasonable terms. Because patent
applications can take many years to issue and are not publicly available until a certain period of time passes from
filing, there may be currently pending patent applications which may later result in issued patents that our current or
future products, services or technologies may infringe. In addition, similar to what other companies in our industry
have experienced, we expect our competitors and others may develop or obtain patents with our products, services
or technologies in mind and claim that making, having made, using, selling, offering to sell or importing our
products, services or technologies infringes these patents.

We could incur substantial costs and divert the attention of our management and technical personnel in defending
against any of these claims. Parties making claims against us may be able to sustain the costs of complex patent
litigation more effectively than we can, for example, because they have substantially greater resources.

Parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to
develop, manufacture, commercialize, sell and import certain products, services or technologies, and could result in
the award of substantial damages against us, including treble damages, attorney’s fees, costs and expenses if we are
found to have willfully infringed. In the event of a successful claim of infringement against us, we may be required
to pay damages and ongoing royalties, and obtain one or more licenses from third parties, or be prohibited from
developing, manufacturing, commercializing, selling and importing certain products, services or technologies. We
may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all, or these licenses
may be non-exclusive, which could result in our competitors gaining access to the same intellectual property. In
addition, we could encounter delays in product, service or technologies introductions while we attempt to develop
alternative products, services or technologies to avoid infringing third-party patents or proprietary rights. Defense of
any lawsuit or failure to obtain any of these licenses could prevent us from developing, manufacturing or
commercializing products, services or technologies and the prohibition of developing, manufacturing or
commercializing of any of our products, services or technologies could materially affect our business and our ability
to gain market acceptance for our products, services or technologies.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property
litigation, there is a risk that some of our confidential information could be compromised by disclosure during this
type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the
results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive
these results to be negative, it could have a substantial adverse effect on the price of our common stock.

In addition, our agreements with some of our customers, suppliers, vendors or other entities with whom we do
business require us to defend or indemnify these parties to the extent they become involved in infringement claims,
including the types of claims described above. We could also voluntarily agree to defend or indemnify third parties
in instances where we are not obligated to do so if we determine it would be important to our business relationships.
If we are required or agree to defend or indemnify third parties in connection with any infringement claims, we
could incur significant costs and expenses that could adversely affect our business, operating results or financial
condition.

Obtaining and maintaining our patent protection depends on compliance with various required procedures,
document submissions, fee payments and other requirements imposed by governmental patent agencies, and our
patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or
applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United
States at several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to
pay these fees, and we rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The USPTO
and various foreign governmental patent agencies require compliance with a number of procedural, documentary,
fee payment and other similar requirements during the patent application process. We employ reputable law firms
and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late
fee or by other means in accordance with the applicable rules. However, there are situations in which non-
compliance can result in abandonment or forfeiture of the patent or patent application and thus loss of patent rights
in the relevant jurisdiction. Such an event would allow our competitors to enter the unprotected market and have a
material adverse effect on our business.

Patent terms may be inadequate to protect our competitive position for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of
a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available,
but the life of a patent, and the protection it affords, is limited. Even if patents covering our products or services are
obtained, once the patent life has expired, we may be open to competition. Given the amount of time required for the
development, testing and regulatory review of our new products, services or technologies, patents protecting them
might expire before or shortly after they are commercialized. As a result, our owned and licensed patent portfolio
may not provide us with a sufficient exclusivity period to exclude others from commercializing products or services
similar or identical to ours.

Risks related to our common stock and indebtedness

The price of our common stock has fluctuated substantially and may do so in the future, and you may not be able
to resell shares of our common stock at or above the price at which you purchased them.

The market price of our common stock has been volatile and may fluctuate substantially in the future due to many
factors, including:

•

volume and customer mix for our precision oncology testing;

the introduction of new products or product enhancements by us or others in our industry;

disputes or other developments with respect to our or others’ intellectual property rights;

our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a
timely basis;

product liability claims or other litigation;

quarterly or annual variations in our results of operations or those of others in our industry;

• media exposure of our products or of those of others in our industry;

•

changes in governmental regulations or in the status of our regulatory approvals or applications;

changes in earnings estimates or recommendations by securities analysts; and

the effects of high inflation or other general market conditions and other factors, including factors unrelated to
our operating performance or the operating performance of our competitors.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These
sales, or the perception in the market that the holders of a large number of shares intend to sell their shares, could
result in a decrease in the market price of our common stock.

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of those companies. Broad market and industry
factors may significantly affect the market price of our common stock, regardless of our actual operating
performance. In addition, in the past, class action litigation has often been instituted against companies whose
securities have experienced periods of volatility in market price. Securities litigation brought against us following
volatility in our stock price, regardless of the merit or ultimate results of such litigation, could result in substantial
costs, which would hurt our financial condition and operating results and divert management’s attention and
resources from our business.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital
appreciation, if any, will be our stockholders’ sole source of gain.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future
earnings, if any, to finance the growth and development of our business. In addition, future debt or other agreements
we may enter into may preclude us from paying dividends. As a result, capital appreciation, if any, of our common
stock will be your sole source of gain for the foreseeable future.

Our indebtedness could expose us to risks that could adversely affect our business, financial condition and results
of operations.

In 2020, we sold $1,150,000,000 aggregate principal amount of 0% convertible senior notes due 2027, or the 2027
Notes. We may also incur additional indebtedness to meet future needs. Our indebtedness could have significant
negative consequences for our security holders, business, results of operations and financial condition by, among
other things:

•

increasing our vulnerability to adverse economic and industry conditions;

limiting our ability to obtain additional financing;

in the event interest accrues on the 2027 Notes or additional indebtedness, requiring the dedication of a
substantial portion of our cash flow from operations to service our indebtedness, which will reduce the
amount of cash available for other purposes;

•

limiting our flexibility to plan for, or react to, changes in our business;

diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion
of the Notes or additional indebtedness; and

placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have
better access to capital.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash
reserves, to pay amounts due under the 2027 Notes or any additional indebtedness that we may incur. In addition,
the 2027 Notes contain, and any future indebtedness that we may incur may contain, financial and other restrictive
covenants that limit our ability to operate our business, raise capital or make payments under our indebtedness. If we
fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in
default under that indebtedness, which could, in turn, result in that indebtedness becoming immediately payable in
full.

The conditional conversion features of the 2027 Notes, if triggered, may adversely affect our financial condition.
Conversion of the 2027 Notes, to the extent the 2027 Notes are not redeemed or repurchased, will dilute the
ownership interest of existing stockholders, and even if anticipated, may otherwise depress the price of our
common stock.

In the event the conditional conversion feature of the 2027 Notes is triggered, holders of the 2027 Notes will be
entitled to convert their 2027 Notes into shares of our common stock upon the occurrence of certain events. If one or
more holders of the 2027 Notes elect to convert their 2027 Notes, unless we satisfy our conversion obligation by
delivering only shares of our common stock, we would be required to settle all or a portion of our conversion
obligation through the payment of cash, which could adversely affect our financial condition. In the event the
conditional conversion feature of the 2027 Notes is triggered, the conversion of some or all of the 2027 Notes will
dilute the ownership interests of our existing stockholders to the extent we deliver shares of our common stock upon
such conversion. The 2027 Notes may become in the future convertible at the option of the holders of the 2027
Notes prior to August 15, 2027 under certain circumstances as provided in the indenture governing the 2027 Notes.
Any sales in the public market of shares of our common stock issuable upon such conversion could adversely affect
the price of our common stock. In addition, the existence of the 2027 Notes may encourage short selling by market
participants because the conversion of the 2027 Notes could be used to satisfy short positions, and even anticipated
conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock.

The convertible note hedge may affect the value of the 2027 Notes and our common stock.

In connection with the sale of the 2027 Notes, we entered into convertible note hedge, the 2027 Note Hedge,
transactions with certain financial institutions, or option counterparties. The 2027 Note Hedge transactions are
expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash
payments we are required to make in excess of the principal amount of converted 2027 Notes.

The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in
secondary market transactions prior to the maturity of the 2027 Notes (and are likely to do so during any observation
period related to a conversion of the Notes, or following any repurchase of the 2027 Notes by us on any fundamental
change repurchase date (as provided in the indenture governing the 2027 Notes) or otherwise). This activity could
also cause or avoid an increase or a decrease in the market price of our common stock or the 2027 Notes, which
could affect note holders’ ability to convert the 2027 Notes and, to the extent the activity occurs during any
observation period related to a conversion of the 2027 Notes, it could affect the amount and value of the
consideration that note holders will receive upon conversion of the 2027 Notes.

The potential effect, if any, of these transactions and activities on the market price of our common stock or the 2027
Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could
adversely affect the value of our common stock and the value of the 2027 Notes (and as a result, the value of the
consideration, the amount of cash and/or the number of shares, if any, that note holders would receive upon the
conversion of the 2027 Notes) and, under certain circumstances, the ability of the note holders to convert the 2027
Notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the
transactions described above may have on the price of the 2027 Notes or our common stock. In addition, we do not
make any representation that the option counterparties will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.

We are subject to counterparty risk with respect to the 2027 Note Hedge transactions.

The option counterparties are financial institutions, and we will be subject to the risk that any or all of them may
default under the 2027 Note Hedge transactions. Our exposure to the credit risk of the option counterparties will not
be secured by any collateral. If an option counterparty becomes subject to insolvency proceedings, we will become
an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transactions
with that option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure
will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a
default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently
anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability
of the option counterparties.

Provisions in our corporate charter documents and under Delaware law could make a change in control of us
more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may
discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider
favorable, including transactions in which our stockholders might otherwise receive a premium for their shares.
These provisions could also limit the price that investors might be willing to pay in the future for shares of our
common stock, thereby depressing the market price of our common stock. In addition, these provisions may make it
more difficult for our stockholders to replace current members of our board of directors or add new members
thereto. Because our board of directors is responsible for appointing the members of our management team, these
provisions could in turn affect any attempts by our stockholders to change our management team. Among others,
these provisions include that:

•

our board of directors has the exclusive right to expand its size and to elect directors to fill a vacancy created by
the expansion of the board or the resignation, death or removal of a director, which prevents stockholders from
being able to fill vacancies on our board of directors;

our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving
staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority
of our board of directors;

our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or
special meeting of our stockholders;

a special meeting of stockholders may be called only by our board of directors, its chairman, or our co-chief
executive officers, which may delay the ability of our stockholders to force consideration of a proposal or to
take action, including the removal of directors;

our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors,
which limits the ability of minority stockholders to elect their director candidates;

our board of directors may alter our bylaws without obtaining stockholder approval;

approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required
to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of
incorporation regarding the election and removal of directors;

stockholders must provide advance notice and additional disclosures in order to nominate candidates for
election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which
may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s
own slate of directors or otherwise attempting to obtain control of our company; and

our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares,
including preferences and voting rights, without stockholder approval, which could be used to significantly
dilute the ownership of a hostile acquiror.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the
Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting
stock from merging or combining with us for a period of three years after the date of the transaction in which the
person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a
prescribed manner. Furthermore, our amended and restated certificate of incorporation specifies that, unless we
consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of
Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions
brought against us by stockholders; provided that, the exclusive forum provision will not apply to suits brought to
enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware
dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or
federal court sitting in the State of Delaware. We believe these provisions may benefit us by providing increased
consistency in the application of Delaware law by Delaware courts, particularly experienced in resolving corporate
disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection
against the burdens of multi-forum litigation. However, these provisions may have the effect of discouraging
lawsuits brought against us and our directors and officers by our stockholders. The enforceability of similar choice
of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and
it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum
provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in
such action.

Our amended and restated certificate of incorporation also provides that the federal district courts of the United
States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action against
us or any of our directors, officers, employees or agents and arising under the Securities Act. However, a Delaware
court held that such an exclusive forum provision relating to federal courts was unenforceable under Delaware law,
and unless and until the Delaware court decision is reversed on appeal or otherwise abrogated, we do not intend to
enforce such a provision in the event of a complaint asserting a cause of action arising under the Securities Act
against us or any of our directors, officers, employees or agents.

General Risk Factors

We may acquire businesses, form joint ventures or make investments in companies or technologies that could
negatively affect our operating results, distract management’s attention from other business concerns, dilute our
stockholders’ ownership, and significantly increase our debt, costs, expenses, liabilities and risks.

We have made acquisitions of businesses, technologies and assets and may pursue additional acquisitions in the
future. We also may pursue strategic alliances and additional joint ventures that leverage our industry experience to
expand our product offerings or distribution. We have limited experience with acquisitions and forming strategic
partnerships. We compete for those opportunities with others including our competitors, some of which have greater
financial or operational resources than we do. We may not be able to identify suitable acquisition candidates or
strategic partners, we may have inadequate access to information or insufficient time to complete due diligence, and
we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may
not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or
contingent liabilities. Difficulties in assimilating acquired businesses include redeployment or loss of key employees
and their severance, combination of teams and processes in various functional areas, reorganization or closures of
facilities, relocation or disposition of excess equipment, and increased litigation, regulatory and compliance risks,
any of which could be expensive and time consuming and adversely affect us. Integration of an acquired business
also may disrupt our ongoing operations and require management resources that we would otherwise focus on
developing our existing business. In addition, any acquisition could result in the incurrence of debt, contingent
liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on
our financial condition, results of operations and cash flows. We may also experience losses related to investments
in other companies, which could have a material negative effect on our results of operations and financial condition.
We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.

To finance any acquisitions, joint ventures or investments, we may choose to issue shares of our common stock as
consideration, which would dilute the ownership of our stockholders. Additional funds may not be available on
terms that are favorable to us, or at all. If the price of our common stock is low or volatile, we may not be able to
acquire other companies or fund a joint venture project using our stock as consideration.

We may need to raise additional capital to fund our existing operations, develop our platform, commercialize new
products or expand our operations.

We may consider raising additional capital in the future to expand our business, to meet existing obligations, to
pursue acquisitions or strategic investments, to take advantage of financing opportunities or for other reasons,
including to:

•

increase our sales and marketing efforts to drive market adoption of our current products and tests, and
address competitive developments;

fund development and marketing efforts of our products under development or any other future products
we may develop;

expand our technologies into other types of cancer management and detection products;

acquire, license or invest in technologies;

acquire or invest in complementary businesses or assets; and

finance capital expenditures and general and administrative expenses.

Our present and future funding requirements will depend on many factors, including:

•

our ability to achieve revenue growth;

our rate of progress in establishing payer coverage and reimbursement arrangements with domestic and
international commercial payers and government payers;

the cost of expanding our laboratory operations and product offerings, including our sales and marketing
efforts;

our rate of progress in, and costs of our sales and marketing activities associated with, establishing adoption
of and reimbursement for our current products, including our tests;

our rate of progress in, and costs of our research and development activities associated with, products in
research and early development;

the effect of competing technological and market developments;

costs related to our international expansion; and

the potential costs of and delays in product development as a result of any existing or new regulatory
oversight applicable to our products.

We may seek to sell equity or convertible securities, enter into a credit facility or another form of third-party
funding, or seek other debt financing. The various ways we could raise additional capital carry potential risks. If we
raise funds by issuing equity or convertible securities, dilution to our stockholders could result. Any preferred equity
securities issued also could provide for rights, preferences or privileges senior to those of holders of our common
stock. If we raise funds by issuing debt securities, those debt securities would have rights, preferences and privileges
senior to those of holders 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. These alternatives of raising additional capital may
not be available to us on acceptable or commercially reasonable terms, if at all, or in amounts sufficient to meet our
needs. The failure to obtain any required future financing may require us to reduce or curtail existing operations and
could contribute to negative market perceptions about us or our securities.

As a result of adverse geopolitical and macroeconomic developments, including economic inflation and the
responses by central banking authorities to control such inflation, the global credit and financial markets have
experienced extreme volatility and disruptions and there has been increasing uncertainty about economic stability. If
the equity and credit markets remain depressed or further deteriorate as a result of this global uncertainty, it may
make any necessary debt or equity financing more difficult, more costly and more dilutive. Any of the above events
could significantly harm our business, prospects, financial condition and results of operations and cause the price of
our common stock to decline.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred net losses since our inception and we may never achieve or sustain profitability. Under the Tax
Cuts and Jobs Act, federal net operating loss, or NOL, carryforwards we generated in tax years through December
31, 2017 may be carried forward for 20 years and may fully offset taxable income in the year utilized, and federal
NOLs we generated in tax years beginning after December 31, 2017 may be carried forward indefinitely but may
only be used to offset 80% of our taxable income annually. Under Sections 382 and 383 of the Internal Revenue
Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50
percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the
corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research
tax credits) to offset its post-change income or taxes may be limited. We have not completed a study to assess
whether an ownership change for purposes of Section 382 or 383 has occurred, or whether there have been multiple
ownership changes since our inception. For purposes of Section 382 or 383, we may have experienced ownership
changes in the past and may experience ownership changes in the future as a result of shifts in our stock ownership
(some of which shifts are outside our control). As a result, if we earn net taxable income, our ability to use our pre-
change NOL carryforwards to offset such taxable income will be subject to limitations. Similar provisions of state
tax law may also apply to limit our use of accumulated state tax attributes. Therefore, if we attain profitability, we
may be unable to use a material portion of our NOL carryforwards and other tax attributes, which could adversely
affect our future cash flows.

Changes in tax laws or regulations could harm our financial condition and results of operations.

Changes in tax laws or regulations, or changes in interpretations of existing laws and regulations, could materially
affect our financial condition and results of operations. For example, the Biden administration and members of
Congress have proposed, and future U.S. presidential administrations may propose, various U.S. federal tax law
changes, which if enacted could have a material impact on our business operations and financial performance. In
addition, many countries in Europe, as well as a number of other countries and organizations, have recently
proposed or recommended changes to existing tax laws or have enacted new laws, including as a result of the base
erosion and profit shifting, or BEPS, project that is being led by the Organization for Economic Co-operation and
Development, or OECD, and other initiatives led by the OECD or the European Commission. Due to the expanding
scale of our international business activities, these types of changes to the taxation of our activities could increase
the amount of taxes imposed on our business. Any of these outcomes could harm our financial position and results
of operations.

We expect to incur significant additional costs as a result of being a public company, which may adversely affect
our business, financial condition and results of operations.

We expect to incur costs associated with corporate governance requirements that are applicable to us as a public
company, including rules and regulations of the SEC, under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, and the Securities Exchange Act of 1934, as amended, or the
Exchange Act, as well as the rules of Nasdaq. These rules and regulations, including those applicable to a large
accelerated filer such as us, significantly increase our accounting, legal and financial compliance costs and make
some activities more time-consuming. These rules and regulations also make it more expensive for us to maintain
directors’ and officers’ liability insurance. Accordingly, increases in costs incurred as a result of being a publicly
traded company may adversely affect our business, financial condition and results of operations.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or
prove to be incorrect, our operating results could fall below our publicly announced guidance or the expectations
of securities analysts and investors, resulting in a decline in the market price of our common stock.

The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America, or GAAP, requires management to make estimates and assumptions that affect the amounts
reported in our financial statements and accompanying notes. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not
readily apparent from other sources. Actual results could therefore differ materially from these estimates under
different assumptions or conditions. In connection with adopting and implementing a new revenue recognition
standard, FASB ASC Topic 606, Revenue from Contracts with Customers, management has made and will continue
to make judgments and assumptions based on our interpretation of the new standard. The new revenue recognition
standard is principle-based and interpretation of those principles may vary from company to company based on their
unique circumstances. We also adopted a new lease accounting standard, FASB ASC Topic 842, Leases, which
involved significant judgment and assumptions, including the estimation of incremental borrowing rate used to
discount our lease liabilities and the assessment of risks associated with the specific economic environment of our
leased assets. It is possible that interpretation, industry practice and guidance may evolve as we work toward
implementing these new accounting standards. If our assumptions change or if actual circumstances differ from our
assumptions, our operating results may be adversely affected and could fall below our publicly announced guidance
or the expectations of analysts and investors, resulting in a decline in the market price of our common stock.

The loss of any member of our senior management team or our inability to attract and retain highly skilled
scientists, clinicians, sales representatives and business development managers could adversely affect our
business.

Our success depends on the skills, experience and performance of key members of our senior management team,
including Helmy Eltoukhy and AmirAli Talasaz, our Co-Chief Executive Officers. The individual and collective
efforts of these employees will be important as we continue to develop our platform and additional products, and as
we expand our commercial activities. The loss or incapacity of existing members of our executive management team
could adversely affect our operations if we experience difficulties in hiring qualified successors. Our executive
officers signed offer letters when first joining our company, but do not have employment agreements, and we cannot
guarantee their retention for any period of time. We do not maintain “key person” insurance on any of our
employees.

Our research and development programs and laboratory operations depend on our ability to attract and retain highly
skilled scientists and technicians. We may not be able to attract or retain qualified scientists and technicians in the
future due to the competition for qualified personnel among life science businesses, particularly near our
headquarters in Palo Alto, California. We also face competition from universities and public and private research
institutions in recruiting and retaining highly qualified scientific personnel. In addition, we may have difficulties
locating, recruiting or retaining qualified sales representatives and business development managers. Recruiting and
retention difficulties can limit our ability to support our research and development and sales programs. All of our
employees are at-will, which means that either we or the employee may terminate their employment at any time.

If we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal
controls in the future, we may not be able to accurately report our financial condition or results of operations
which may adversely affect investor confidence in us and, as a result, the value of our common stock.

As a result of becoming a public company, we are required, under Section 404 of the Sarbanes-Oxley Act, to furnish
annual reports by management on, among other things, the effectiveness of our internal control over financial
reporting. This assessment needs to include disclosure of any material weaknesses identified by our management in
our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in
internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a
company’s annual and interim financial statements will not be detected or prevented on a timely basis.

If we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to
assert that our internal controls are effective. The effectiveness of our controls and procedures may be limited by a
variety of factors, including:

•

faulty human judgment and simple errors, omissions or mistakes;

fraudulent action of an individual or collusion of two or more people;

•

inappropriate management override of procedures; and

the possibility that any enhancements to controls and procedures may still not be adequate to assure timely
and accurate financial control.

Pursuant to the Sarbanes-Oxley Act and the rules and regulations promulgated by the SEC, we are required to
furnish in this Annual Report on Form 10-K a report by our management regarding the effectiveness of our internal
control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our
internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not
our internal control over financial reporting is effective. This assessment must include disclosure of any material
weaknesses in our internal control over financial reporting identified by management. While we believe our internal
control over financial reporting is currently effective, the effectiveness of our internal controls in future periods is
subject to the risk that our controls may become inadequate because of changes in conditions. Establishing, testing
and maintaining an effective system of internal control over financial reporting requires significant resources and
time commitments on the part of our management and our finance staff, may require additional staffing and
infrastructure investments and would increase our costs of doing business.

In addition, under the federal securities laws, our auditors are required to express an opinion on the effectiveness of
our internal controls. If we are unable to confirm that our internal control over financial reporting is effective, or if
our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal
controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could
cause the price of our common stock to decline.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We are subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and
procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the
Exchange Act is accumulated, communicated to management, recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures,
no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly,
because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be
detected.

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other
improper activities, including non-compliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and
commercial partners. Misconduct by these parties could include intentional failures to comply with the regulations
of the FDA, CMS and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the
United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In
particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws
and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales
commission, customer incentive programs and other business arrangements. Such misconduct could also involve the
improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and
cause serious harm to our reputation. We currently have a code of conduct applicable to all of our employees, but it
is not always possible to identify and deter employee misconduct, and our code of conduct and the other precautions
we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses,
or in protecting us from governmental investigations, lawsuits or other actions stemming from a failure to comply
with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending
ourselves or asserting our rights, those actions could result in the imposition of significant civil, criminal and
administrative penalties, including, without limitation, damages, monetary fines, individual imprisonment,
disgorgement of profits, possible exclusion from participation in Medicare, Medicaid and other federal healthcare
programs or from coverage of commercial payers, contractual damages, reputational harm, diminished profits and
future earnings, additional reporting or oversight obligations if we become subject to a corporate integrity agreement
or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring of our
operations, which could have a significantly adverse impact on our business. Whether or not we are successful in
defending against such actions, we could incur substantial costs and expenses, including legal fees, and divert the
attention of management from the operation of our business.

If we were to be sued for product liability or professional liability, we could face substantial liabilities that exceed
our resources.

The marketing, sale and use of our products could lead to the filing of product liability claims were someone to
allege that our products identified inaccurate or incomplete information regarding the genomic alterations of the
tumor or malignancy analyzed, reported inaccurate or incomplete information concerning the available therapies for
a certain type of cancer, or otherwise failed to perform as designed. We may also be subject to professional liability
for errors in, a misunderstanding of, or inappropriate reliance upon, the information we provide in the ordinary
course of our business activities. A product liability or professional liability claim could result in substantial
damages and be costly and time-consuming for us to defend.

We maintain product and professional liability insurance, but this insurance may not fully protect us from the
financial impact of defending against product liability or professional liability claims. Any product liability or
professional liability claim brought against us, with or without merit, could increase our insurance rates or prevent
us from securing insurance coverage in the future. Additionally, any product liability or professional liability lawsuit
could damage our reputation or cause current clinical customers to terminate existing agreements with us and
potential clinical customers to seek other partners, any of which could adversely impact our results of operations.

Cyberattacks, security breaches, loss of data and other disruptions in relation to our information technology
systems, as well as those of our third-party service providers, could compromise sensitive information related to
our business, prevent us from accessing it and expose us to substantial liability, which could adversely affect our
business and reputation.

In the ordinary course of our business, we collect and store sensitive data, including PHI and other personal
information, credit card and other financial information, intellectual property and proprietary business information
owned or controlled by us or other parties such as customers and payers. We manage and maintain our applications
and data utilizing a combination of on-site systems and cloud-based data centers. We utilize external security and
infrastructure vendors to manage parts of our data centers. We also communicate sensitive data, including patient
data, through phone, Internet, facsimile, multiple third-party vendors and their subcontractors. We depend on
information technology systems for significant elements of our operations, including our laboratory information
management system, our computational biology system, our knowledge management system, our customer reporting
and our GuardantConnect software platform. Our information technology systems support a variety of functions,
including laboratory operations, test validation, sample tracking, quality control, customer service support, billing
and reimbursement, research and development activities, scientific and medical curation and general administrative
activities. Our information technology systems store a wide variety of information critical to our business, including
research and development information, patient data, commercial information and business and financial information.
We face a number of risks related to protecting this critical information, including loss of access, inappropriate use
or disclosure, unauthorized access, inappropriate modification and our being unable to adequately monitor, audit or
modify our controls over such critical information. This risk extends to the third-party vendors and subcontractors
we use to manage this sensitive data or otherwise process it on our behalf.

Cyberattacks, security breaches, computer viruses, malware and other incidents could cause misappropriation, loss
or other unauthorized disclosure of confidential data, materials or information, including those concerning our
customers and employees. Increasingly complex methods have been used in cyberattacks, including ransomware,
phishing, structured query language injections, social engineering schemes, and distributed denial-of-service attacks.
A cyberattack can also be in the form of unauthorized access or a blocking of authorized access. The risk of a
security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers,
foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of
attempted attacks and intrusions from around the world have increased. Our information technology systems and
those of our third-party providers, strategic partners and other contractors, subcontractors or consultants are also
vulnerable to attack and damage or interruption from telecommunications or network failures, natural disasters.
employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and
nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with
access to systems inside our organization. As a result of the COVID-19 pandemic, and continued hybrid working
environment, we and our third party service providers and partners may face increased cybersecurity risks due to our
reliance on internet technology and the number of our employees who are working remotely, which may create
additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to
obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched
against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We
may experience security breaches that may remain undetected for an extended period. Even if identified, we may be
unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and
techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic
evidence. We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects
of such attacks or other information security risks or threats in the future.

The costs of attempting to protect against the foregoing risks and the costs of responding to a cyberattack are
significant. Large scale data breaches at other entities increase the challenge we and our vendors face in maintaining
the security of our information technology systems and of our customers’ sensitive information. Following a
cyberattack, our and/or our vendors’ remediation efforts may not be successful, and a cyberattack could result in
interruptions, delays or cessation of service, and loss of existing or potential customers. In addition, breaches of our
and/or our vendors’ security measures and the unauthorized dissemination of sensitive personal information or
proprietary information or confidential information about us, our customers or other third-parties, could expose our
customers' private information and our customers to the risk of financial or medical identity theft, or expose us or
other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement
actions, material fines and penalties, loss of customers, litigation or other actions which could have a material
adverse effect on our business, prospects, reputation, results of operations and financial condition. In addition, if we
fail to adhere to our privacy policy and other published statements or applicable laws concerning our processing,
use, transmission and disclosure of protected information, or if our statements or practices are found to be deceptive
or misrepresentative, we could face regulatory actions, fines and other liability.

The secure processing, storage, maintenance and transmission of this critical information are vital to our operations
and business strategy, and we devote significant resources to protecting such information. Although we take
reasonable measures to protect sensitive data from unauthorized access, use, modification or disclosure, no security
measures can be perfect. We and certain of our service providers are from time to time subject to cyberattacks and
security incidents. For example, in the past year, we identified security incidents involving an unauthorized actor
obtaining access to our email system and sending phishing messages. Despite the precautionary measures we have
taken in response to such incidents and to prevent other unanticipated problems that could affect our information
technology and telecommunications systems, failures or significant downtime of our information technology or
telecommunications systems or those used by our third-party service providers could prevent us from performing
our comprehensive genomic analysis, preparing and providing reports to pathologists and oncologists, billing payers,
processing reimbursement appeals, handling patient or physician inquiries, conducting research and development
activities and managing the administrative aspects of our business. While we do not believe that we have
experienced any significant system failure, accident or security breach to date, if such an event were to occur, the
information stored on our information technology systems could be accessed by unauthorized parties, publicly
disclosed, lost or stolen. Any such access, breach, or other loss of information could result in legal claims or
proceedings, and liability under federal, state or foreign laws that protect the privacy of personal information, such
as HIPAA, and regulatory penalties. Notice of breaches is required to be made to affected individuals, the Secretary
of the HHS or other state, federal or foreign regulators, and for extensive breaches, notice may need to be made to
the media or State Attorneys General. Such a notice could harm our reputation and our ability to compete. Although
we have implemented security measures and an enterprise security program to prevent unauthorized access to patient
data, such data is currently accessible through multiple channels, and there is no guarantee we can protect all data
from breach. We continue to prioritize security and the development of practices and controls to protect our systems.
As cyber threats evolve, we may be required to expend significant additional resources to continue to modify or
enhance our protective measures or to investigate and remediate any information security vulnerabilities, and these
efforts may not be successful.

We have contingency plans and insurance coverage for certain potential claims, liabilities, and costs relating to
security incidents that may arise from our business or operations; however, the coverage may not be sufficient to
cover all claims, liabilities, and costs arising from the incidents, including fines and penalties. It could be difficult to
predict the ultimate resolution of any such incidents or to estimate the amounts or ranges of potential loss, if any,
that could result therefrom. If we cannot successfully resolve a security incident or contain any potential loss, it
could materially impact our ability to operate our business as well as our results of operations and financial position.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal,
business or reputational losses that may result from an interruption or breach of our systems.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our headquarters are located in Palo Alto, California, where we lease approximately 249,500 square feet of office
space. The lease for the Palo Alto office was entered into in July 2020 and has a term of 12 years with an option to
renew the lease term for an additional 10 years. We also have approximately 200,000 combined square feet of
additional office space in Redwood City, California, and San Diego, California, and these leases currently have
expiration dates ranging from 2025 to 2029. Our CAP-accredited and CLIA-certified laboratories are located in
these two facilities, where testing for both clinical and biopharmaceutical customers is performed. We also maintain
domestic leased office spaces in Spring, Texas, and Seattle, Washington, and international leased office spaces in
Japan and Singapore. While we believe our existing facilities are adequate to meet our current requirements, we
expect to expand our facilities as our operations grow over time. We believe we will be able to obtain such
additional space on acceptable and commercially reasonable terms.

Item 3. Legal Proceedings

The information under the caption “Commitments and Contingencies - Legal Proceedings” in Note 10 to the
consolidated financial statements included elsewhere in this Annual Report on Form 10-K, concerning certain legal
proceedings in which we are involved, is hereby incorporated by reference. The resolution of any such legal
proceeding is subject to inherent uncertainty and could have a material adverse effect on our financial condition,
cash flows or results of operations.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Market information for common stock

Our common stock is traded on the Nasdaq Global Select Market, or Nasdaq, under the symbol “GH.”

Holders of record

As of February 17, 2023, there were 37 holders of record of our common stock. Because many of our shares of
common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the
total number of stockholders represented by these record holders.

Dividend policy

We have never declared or paid any dividends on our common stock. We currently intend to retain all available
funds and any future earnings for the operation and expansion of our business. Accordingly, we do not anticipate
declaring or paying dividends in the foreseeable future. The payment of any future dividends will be at the discretion
of our board of directors and will depend on our results of operations, capital requirements, financial condition,
prospects, contractual arrangements, including any limitations on payment of dividends, and other factors that the
board may deem relevant.

Unregistered sales of equity securities

None.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Securities authorized for issuance under equity compensation plans

The information required by this item with respect to our equity compensation plans is incorporated by reference to
our definitive proxy statement relating to our 2023 Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates, or the 2023 Proxy
Statement.

Item 6. [Reserved]

Item 7. 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 consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-
K. This discussion and other parts of this Annual Report on Form 10-K 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
Factors,” of this Annual Report on Form 10-K.

The following generally compares our results of operations for the years ended December 31, 2022 and 2021. A
detailed discussion comparing our results of operations for the years ended December 31, 2021 and 2020 can be
found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021.

Overview

We are a leading precision oncology company focused on helping conquer cancer globally through the use of our
proprietary tests, vast data sets and advanced analytics. We believe our tests can transform cancer care by unlocking
insights that will help patients at all stages of the disease, including at its earliest stages, when it’s most treatable. For
patients with advanced-stage cancer, we have commercially launched Guardant360 LDT and Guardant360 CDx, the
first comprehensive liquid biopsy test approved by the U.S. Food and Drug Administration, or the FDA, to provide
tumor mutation profiling with solid tumors and to be used as a companion diagnostic in connection with non-small
cell lung cancer, or NSCLC, and breast cancer. We have also launched the Guardant360 TissueNext tissue test for
advanced-stage cancer, Guardant Reveal blood test to detect residual and recurring disease in early-stage colorectal,
breast and lung cancer patients, and Guardant360 Response blood test to predict patient response to immunotherapy
or targeted therapy eight weeks earlier than current standard-of-care imaging.

We currently perform our tests in our laboratories located in Redwood City, California, and San Diego, California.
Our Redwood City laboratory is certified pursuant to the Clinical Laboratory Improvement Amendments of 1988, or
CLIA, accredited by the College of American Pathologists, or CAP, permitted by the New York State Department of
Health, or NYSDOH, and licensed in California and four other states. Our San Diego laboratory is CAP-accredited
and CLIA-certified. In addition, our Palo Alto, California laboratory is currently operated as a center for our
research and technology development. In February 2022, we received CAP accreditation for our laboratory in Japan
where we expect to commence processing samples following receipt of additional certification for processing In
Vitro Diagnostic, or IVD, samples and reimbursement approval.

We generated total revenue of $449.5 million, $373.7 million and $286.7 million for the years ended December 31,
2022, 2021 and 2020, respectively. We also incurred net losses of $654.6 million, $384.8 million and $246.3 million
in the years ended December 31, 2022, 2021 and 2020, respectively. We have funded our operations to date
principally from the sale of our stock, convertible senior notes, and revenue from our precision oncology testing and
development services and other. In June 2020, we completed an underwritten public offering of a total of
4,312,500 shares of our common stock, through which we received net proceeds of $354.6 million after deducting
underwriting discounts and commissions and offering expenses payable by us. In November 2020, we issued our
convertible senior notes with an aggregate principal amount of $1.15 billion. As of December 31, 2022, we had
cash, cash equivalents and marketable debt securities of approximately $1.0 billion.

Factors affecting our performance

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

•

Testing volume, pricing and customer mix. Our revenue and costs are affected by the volume of testing and
mix of customers from period to period. We evaluate both the volume of tests that we perform for patients on
behalf of clinicians and the number of tests we perform for biopharmaceutical companies. Our performance
depends on our ability to retain and broaden adoption with existing customers, as well as attract new customers.
We believe that the test volume we receive from clinicians and biopharmaceutical companies are indicators of
growth in each of these customer verticals. Customer mix for our tests has the potential to significantly affect
our results of operations, as the average selling price for biopharmaceutical sample testing is currently higher
than our average reimbursement for clinical tests because we are not a contracted provider for, or our tests are
not covered by clinical patients’ insurance for, the majority of the tests that we perform for patients on behalf of
clinicians. Revenue from clinical tests for patients covered by Medicare represented approximately 45%, 45%
and 42% of our precision oncology revenue from clinical customers for the years ended December 31, 2022,
2021 and 2020, respectively.

•

Payer coverage and reimbursement. Our revenue depends on achieving broad coverage and reimbursement for
our tests from third-party payers, including both commercial and government payers. Precision oncology
revenue from tests for clinical customers is calculated based on our expected cash collections, using the
estimated variable consideration. The variable consideration is estimated based on historical collection patterns
as well as the potential for changes in future reimbursement behavior by one or more payers. Estimation of the
impact of the potential for changes in reimbursement requires significant judgment and considers payers' past
patterns of changes in reimbursement as well as any stated plans to implement changes. Any cash collections
over the expected reimbursement period exceeding the estimated variable consideration are recorded in future
periods based on actual cash received. 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. Because we are not contracted with these payers, they determine the
amount that they are willing to reimburse us for any of our tests and they can prospectively and retrospectively
adjust the amount of reimbursement, adding to the complexity in estimating the variable consideration. 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 tests 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 tests are reimbursed both from
commercial and governmental payers. In addition, Z-Code Identifiers are used by certain payers, including
under Medicare's Molecular Diagnostic Services Program, or MolDx, to supplement CPT codes for our
molecular diagnostics tests. Changes to the codes used to report to payers may result in significant changes in its
reimbursement. If their policies were to change in the future to cover additional cancer indications, we
anticipate that our total reimbursement would increase. In January 2021, a proprietary laboratory analyses, or
PLA code was issued for our Guardant360 CDx with an effective date in April 2021. Additionally, based on this
new PLA code, we applied to the CMS for our Guardant360 CDx test to become an advanced diagnostic
laboratory test, or ADLT. In March 2021, CMS approved ADLT status to the Guardant360 CDx test, based on
which Medicare paid us at the lowest available commercial rate per test, from April 1, 2021 to December 31,
2021. Effective January 1, 2022, Medicare has started to reimburse Guardant360 CDx services at the median
rate of claims paid by commercial payers and this rate will apply until December 2023. In March 2022,
Palmetto GBA, the Medicare administrative contractor for MolDX, has conveyed coverage for our Guardant360
TissueNext test under the existing local coverage determination. The policy covers our Guardant360 TissueNext
test for Medicare fee-for-service patients with advanced solid tumor cancers. In July 2022, Palmetto GBA
conveyed coverage for our Guardant Reveal test for fee-for-service Medicare patients in the United States with
stage II or III colorectal cancer whose testing is initiated within three months following curative intent therapy,
with an effective date of December 2021. Due to the inherent variability and unpredictability of the
reimbursement landscape, including related to the amount that payers reimburse us for any of our tests, we
estimate the amount of revenue to be recognized at the time a test is provided and record revenue adjustments if
and when the cash subsequently received differs from the revenue recorded. Due to this variability and
unpredictability, previously recorded revenue adjustments are not indicative of future revenue adjustments from
actual cash collections, which may fluctuate significantly. Additionally, if coding changes were to occur,
payments for certain uses of our tests could be reduced, put on hold, or eliminated. This variability and
unpredictability could increase the risk of future revenue reversal and result in our failing to meet any
previously publicly stated guidance we may provide.

•

Biopharmaceutical customers. Our revenue also depends on our ability to attract, maintain and expand
relationships with biopharmaceutical customers. As we continue to develop these relationships, we expect to
support a growing number of clinical studies globally and continue to have opportunities to offer our platform to
such customers for development services, including companion diagnostic development, novel target discovery
and validation, as well as clinical study enrollment. For example, our tests are being developed as companion
diagnostics under collaborations with biopharmaceutical companies.

•

Research and development. A significant aspect of our business is our investment in research and development,
including the development of new products. In particular, we have invested heavily in clinical studies as we
believe these studies are critical to gaining physician adoption and driving favorable coverage decisions by
payers. With respect to Guardant Reveal, in October 2021, we initiated a 1,000-patient prospective,
observational, multi-center study, which we refer to as the ORACLE study, designed to evaluate the
performance of our Guardant Reveal liquid biopsy test to predict cancer recurrence after curative intent
treatment, across 11 solid tumor types. In addition, with respect to Guardant Reveal, in December 2022, we
entered into a partnership with Susan G. Komen®, the world’s leading breast cancer organization, to bring the
patient perspective to the development of clinical studies that help identify early-stage breast cancer patients
who are at high risk of disease recurrence and may benefit from additional monitoring or therapy. With respect
to Shield, in December 2022, we announced positive results from ECLIPSE, an over 20,000 patient
registrational study evaluating the performance of our Shield blood test for detecting colorectal cancer in
average-risk adults. The test demonstrated 83% sensitivity in detecting individuals with colorectal cancer.
Specificity was 90% in both individuals without advanced neoplasia and in those who had a negative
colonoscopy result. These results exceed the performance criteria set forth by the CMS for reimbursement. This
test also demonstrated 13% sensitivity in detecting advanced adenomas. Based on these study results, we plan to
complete our premarket approval submission to the FDA in the first quarter of 2023. In addition, to evaluate the
performance of our investigational, next-generation Shield assay in detecting lung cancer in high-risk
individuals ages 50-80, in January 2022, we enrolled the first patient in a nearly 10,000-patient prospective,
registrational study, which we refer to as the SHIELD LUNG study. The study is anticipated to run in
approximately 100 centers in the United States and Europe. We are continuing to enroll more patients for these
on-going studies, and have expended considerable resources, and expect to increase such expenditures over the
next few years, to support our research and development programs with the goal of fueling further innovation.

International expansion. A component of our long-term growth strategy is to expand our commercial footprint
internationally, and we expect to increase our sales and marketing expense to execute on this strategy. We
currently offer our tests in countries outside the United States primarily through distributor relationships, direct
contracts with hospitals or partnerships with research organizations. In May 2018, we formed and capitalized a
joint venture, Guardant Health AMEA, Inc., with SoftBank, which we refer to as the Joint Venture or Guardant
AMEA, relating to the sale, marketing and distribution of our tests generally outside the Americas and Europe,
and to accelerate commercialization of our products in Asia, the Middle East and Africa. In November 2021, we
exercised our call right contained in the joint venture agreement with SoftBank to purchase all of the shares held
by SoftBank and its affiliates in consideration for the payment of the aggregate purchase price to be determined
based on an independent third-party valuation. Upon our exercise of the call right in November 2021, SoftBank
no longer had the option to exercise its put right. In June 2022, we purchased all of the shares held by SoftBank
and its affiliates in consideration for a cash payment of the aggregate purchase price of $177.8 million, as
determined by an independent valuation firm, which resulted in $99.8 million of fair value adjustments to the
noncontrolling interest liability for the year ended December 31, 2022. Upon completion of the transaction, we
obtained full control over operations throughout the Asia, Middle East and Africa region.

In December 2020, we signed our first public private partnership agreement with Vall D'Hebron Institute of
Oncology, or VHIO, one of Europe’s leading cancer research institutions, and in May 2022, the first blood-
based cancer testing services in Europe based on our industry-leading digital sequencing platform became
available at the VHIO testing facility in Spain. In October 2021, we signed a partnership agreement with The
Royal Marsden NHS Foundation Trust, a premier cancer center within the United Kingdom for patient care,
research and teaching of all types of cancer. We expect these partnerships will lead to the establishment of our
testing services at the partner laboratories, using our digital sequencing technology, as well as generation of
clinical and economic evidence to support commissioning in other areas of Europe.

In June 2022, we signed a strategic partnership agreement with Adicon Holdings Limited, a leading independent
clinical laboratory company based in China, to offer our industry-leading comprehensive genomic profiling
tests to biopharmaceutical companies conducting clinical studies in China. We expect the partnership to help
biopharmaceutical companies bring the next generation of cancer therapies to patients in the region.

•

The success of our international expansion strategy depends on a number of factors, including the internal and
external constraints placed on our international laboratory partners and biopharmaceutical companies in the
context of broader global, regional and U.S. economic and geopolitical conditions. For example, deterioration in
the bilateral relationship between the United States and China may impact international trade, government
spending, regional stability and macroeconomic conditions. The impact of these potential developments,
including any resulting sanctions, export controls or other restrictive actions that may be imposed against
governmental or other entities in, for example, China, may contribute to disruption of our international
partnerships and instability and volatility in the global markets, which in turn could adversely impact our
operations and weaken our financial results.

Sales and marketing expense. Our financial results have historically, and will likely continue to, fluctuate
significantly based upon the impact of our sales and marketing expense, increase in headcount, and in particular,
our various marketing programs around existing and new product introductions.

General and administrative expense. Our financial results have historically, and will likely continue to,
fluctuate significantly based upon the impact of our general and administrative expense, and in particular, our
stock-based compensation expense. Our equity awards, including market-based and performance-based
restricted stock units, are intended to retain and incentivize employees to lead us to sustained, long-term
superior financial and operational performance.

COVID-19 Global Pandemic. The global coronavirus 2019, or COVID-19, pandemic has negatively affected,
and we expect will continue to negatively affect, our revenue and our clinical studies. For example, our
biopharmaceutical customers are facing challenges in recruiting patients and in conducting clinical studies to
advance their pipelines, for which our tests could be utilized. In addition, disruptions caused by the pandemic
have adversely affected the quantity and quality of certain sequencers, reagents, blood tubes and other similar
materials that are critical to our commercial and research and development programs. We currently have a
limited amount of stock of these components. Failure in the future to secure sufficient supply of critical
components could materially and adversely affect our ability to manufacture or supply marketed products and
product candidates or complete our ongoing research and development programs on the timelines previously
established, which could materially and adversely affect our business and future prospects. The severity of the
impact on our business will depend on a number of factors, including the duration and severity of the pandemic
and the impact of any variants of the virus on us, our customers, and our suppliers. In August 2020, we
launched our Guardant-19 test and received the FDA’s emergency use authorization for use in the detection of
the novel coronavirus. The test was being offered to our employees and to select partner organizations via our
CLIA-certified clinical laboratory. Effective August 2021, we have discontinued offering the test to third
parties.

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 this Annual Report on Form 10-K for more
information.

Components of results of operations

Revenue

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

Precision oncology testing. Precision oncology testing revenue is generated from sales of our tests to clinical and
biopharmaceutical customers. In the United States, through December 31, 2022, we generally performed tests as an
out-of-network service provider without contracts with health insurance companies. We submit claims for payment
for tests performed for patients covered by U.S. private payers. We also submit claims to Medicare for
reimbursement for our Guardant360 CDx, Guardant360 LDT, Guardant360 TissueNext and Guardant Reveal
clinical testing performed for qualifying patients. Revenue from clinical tests for patients covered by Medicare
represented approximately 45%, 45% and 42% of our precision oncology revenue from clinical customers for the
years ended December 31, 2022, 2021 and 2020, respectively.

Development services and other. Development services revenue primarily represents services that we provide to
biopharmaceutical companies, large medical institutions and international laboratory partners. We collaborate with
biopharmaceutical companies in the development and clinical studies of new drugs. As part of these collaborations,
we provide services related to regulatory filings to support companion diagnostic device submissions for our test
panels. Under these arrangements, we generate revenue from progression of our collaboration efforts, as well as
from provision of on-going support. In addition to companion diagnostic development and regulatory approval
services, we also provide other development services, including clinical study setup, monitoring and maintenance,
testing development and support, GuardantConnect and GuardantINFORM. Other revenue includes amounts derived
from licensing our technologies, and kit fulfillment.

Costs and operating expenses

Cost of precision oncology testing. Cost of precision oncology testing generally consists of cost of materials,
including inventory write-downs; cost of labor, including employee benefits, bonus, and stock-based compensation;
equipment and infrastructure expenses associated with processing test samples, such as sample accessioning, library
preparation, sequencing, and quality control analyses; freight; curation of test results for physicians; phlebotomy;
and license fees due to third parties. Infrastructure expenses include depreciation of laboratory equipment, rent costs,
depreciation 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.
While we do not believe the technologies underlying the third-party licenses are necessary to permit us to provide
our tests, we do believe these technologies are potentially valuable and of possible strategic importance to us or our
competitors.

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

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

Research and development expense. Research and development expenses consist of costs incurred to develop
technology and include salaries and benefits including stock-based compensation, 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 studies.

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, sales incentives, 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 tests.

General and administrative expense. Our general and administrative expenses include costs for our executive,
accounting and finance, information technology, 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 as we incur
additional costs to support the growth of our business. 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 being incurred.

Interest income

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

Interest expense

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

Other income (expense), net

Other income (expense), net consists of foreign currency exchange gains and losses, fair value adjustments of
marketable equity securities, impairment of other assets, non-recurring payments due and received in relation to the
settlement of license and patent disputes, net of credit losses, and the relief fund grant from the Department of
Health and Human Services, or HHS, under the U.S. Coronavirus Aid, Relief, and Economic Security Act, or the
CARES Act. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in
foreign currency exchange rates.

Provision for income tax

Income taxes are recorded using an asset and liability approach. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. Tax benefits are recognized when it is more likely than not that a
tax position will be sustained during an audit. Deferred tax assets are reduced by a valuation allowance if current
evidence indicates that it is considered more likely than not that these benefits will not be realized.

Our tax positions are subject to income tax audits. We recognize the tax benefit of an uncertain tax position only if it
is more likely than not that the position is sustainable upon examination by the taxing authority, based on the
technical merits. The tax benefit recognized is measured as the largest amount of benefit which is more likely than
not to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to
unrecognized tax benefits in its tax provision. We evaluate uncertain tax positions on a regular basis. The
evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law,
correspondence with tax authorities during the course of the audit, and effective settlement of audit issues. The
provision for income taxes includes the effects of any accruals that we believe are appropriate, as well as the related
net interest and penalties.

Results of operations

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

Revenue:

Precision oncology testing

Development services and other

Total revenue

Costs and operating expenses:

Cost of precision oncology testing(1)
Cost of development services and other
Research and development expense(1)
Sales and marketing expense(1)
General and administrative expense(1)

Total costs and operating expenses

Loss from operations

Interest income

Interest expense

Other income (expense), net

Fair value adjustments of noncontrolling interest liability

Loss before provision for income taxes

Provision for income taxes

Net loss

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

Year Ended December 31,

2022

2021

(in thousands)

392,049 $

304,312

57,489

449,538

148,199

8,126

373,807

299,828

163,956

993,916

69,341

373,653

110,396

12,516

263,221

191,881

206,640

784,654

(544,378)

(411,001)

6,069

(2,577)

(12,778)

(99,785)

3,930

(2,577)

25,178

—

(653,449)

(384,470)

1,139

300

(654,588) $

(384,770)

Year Ended December 31,

2022

2021

(in thousands)

Cost of precision oncology testing

Research and development expense

Sales and marketing expense

General and administrative expense

5,498 $

26,630

25,442

37,115

Total stock-based compensation expense

94,685 $

3,468

18,907

15,479

113,595

151,449

Comparison of the Years Ended December 31, 2022 and 2021

Revenue

Year Ended December 31,

2022

2021

Change

(in thousands)

Precision oncology testing

Development services and other

Total revenue

392,049 $

304,312 $

87,737

57,489

69,341

(11,852)

449,538 $

373,653 $

75,885

29 %

(17) %

20 %

Total revenue was $449.5 million for the year ended December 31, 2022, compared to $373.7 million for the year
ended December 31, 2021, an increase of $75.9 million, or 20%.

Precision oncology testing revenue increased to $392.0 million for the year ended December 31, 2022, from $304.3
million for the year ended December 31, 2021, an increase of $87.7 million, or 29%.

Precision oncology revenue from tests for clinical customers was $298.1 million for the year ended December 31,
2022, up 26% from $236.4 million for the year ended December 31, 2021. This increase in clinical testing revenue
was driven primarily by an increase in sample volume related to our Guardant360 CDx and Guardant360 LDT tests,
and revenue from products launched in 2021, including Guardant Reveal, Guardant360 Response and Guardant 360
TissueNext. Total tests for clinical customers increased to approximately 124,800 for year ended December 31,
2022, from approximately 87,600 for the year ended December 31, 2021.

Precision oncology revenue from tests for biopharmaceutical customers was $94.0 million for the year ended
December 31, 2022, and $67.9 million for the year ended December 31, 2021, respectively. This increase in revenue
was primarily due to an increase in sample volume, including our GuardantINFINITY test launched in 2022. Total
tests for biopharmaceutical customers increased to approximately 26,000 for the year ended December 31, 2022,
from approximately 18,600 for the year ended December 31, 2021, primarily due to an increase in the number of
biopharmaceutical customers and their contracted projects.

Development services and other revenue decreased to $57.5 million for the year ended December 31, 2022, from
$69.3 million for the year ended December 31, 2021, a decrease of $11.9 million, or 17%. This decrease in
development services and other revenue was primarily due to the change in collaboration projects with
biopharmaceutical customers for companion diagnostic development and regulatory approval services, and
discontinuation of our Guardant-19 tests in August 2021, partially offset by revenues earned from licensing our
technologies, and providing data services during the year ended December 31, 2022.

Cost of Revenue

Year Ended December 31,

2022

2021

Change

(in thousands)

Cost of precision oncology testing

Cost of development services and other

Total cost of revenue

148,199 $

110,396 $

8,126

12,516

156,325 $

122,912 $

37,803

(4,390)

33,413

34 %

(35) %

27 %

Total cost of revenue was $156.3 million for the year ended December 31, 2022, compared to $122.9 million for the
year ended December 31, 2021, an increase of $33.4 million, or 27%.

Cost of precision oncology testing was $148.2 million for the year ended December 31, 2022, compared to $110.4
million for the year ended December 31, 2021, an increase of $37.8 million, or 34%. This increase in cost of
precision oncology testing was primarily attributable to an increase in sample volumes, resulting in a $16.7 million
increase in material costs, a $11.2 million increase in production labor and overhead costs, and a $10.0 million
increase in other costs, including costs related to kits, freight and curation of test results for physicians.

Cost of development services and other was $8.1 million for the year ended December 31, 2022, compared to $12.5
million for the year ended December 31, 2021, a decrease of $4.4 million, or 35%. This decrease in cost of
development services and other was primarily due to a decrease in labor and material costs, related to the
discontinuation of our Guardant-19 tests in August 2021, and the change in companion diagnostic development and
regulatory approval service contracts, partially offset by costs associated with providing screening testing services
and licensing our technologies.

Operating Expenses

Research and development expense

Year Ended December 31,

2022

2021

Change

(in thousands)

Research and development

373,807 $

263,221 $

110,586

42 %

Research and development expenses were $373.8 million for the year ended December 31, 2022, compared to
$263.2 million for the year ended December 31, 2021, an increase of $110.6 million, or 42%. This increase in
research and development expense was primarily related to continued investment in the development of our
technologies and products, and our clinical studies, resulting in an increase of $48.8 million in outside service fees,
an increase of $36.4 million in personnel-related costs for employees in our research and development group,
including a $7.7 million increase in stock-based compensation, an increase of $25.3 million related to allocated
facilities and information technology infrastructure costs, an increase of $5.2 million in post-acquisition related
contingent consideration, and an increase of $4.1 million in depreciation and amortization, partially offset by a
decrease of $11.5 million in material costs.

Sales and marketing expense

Year Ended December 31,

2022

2021

Change

(in thousands)

Sales and marketing

299,828 $

191,881 $

107,947

56 %

Selling and marketing expenses were $299.8 million for the year ended December 31, 2022, compared to $191.9
million for the year ended December 31, 2021, an increase of $107.9 million, or 56%. This increase was primarily
related to commercial infrastructure buildout and marketing activities to support existing products and new product
launch, resulting in an increase of $74.0 million in personnel-related costs, including a $10.0 million increase in
stock-based compensation, an increase of $14.2 million related to marketing activities, an increase of $9.8 million in
office administrative costs, and an increase of $9.4 million related to allocated facilities and information technology
infrastructure costs.

General and administrative expense

Year Ended December 31,

2022

2021

Change

(in thousands)

General and administrative

163,956 $

206,640 $

(42,684)

(21) %

General and administrative expenses were $164.0 million for the year ended December 31, 2022, compared to
$206.6 million for the year ended December 31, 2021, a decrease of $42.7 million, or 21%. This decrease was
primarily due to a decrease of $76.5 million in stock-based compensation, as the market-based restricted stock units
issued to our Co-Chief Executive Officers were fully expensed as of June 2022, partially offset by an increase
of $17.6 million in professional service expenses related to outside legal, accounting, consulting and IT services, an
increase of $7.1 million in personnel costs, in line with our business expansion, and an increase of $5.5 million
related to allocated facilities and information technology infrastructure costs.

Interest income

Year Ended December 31,

2022

2021

Change

(in thousands)

Interest income

6,069 $

3,930 $

2,139

54 %

Interest income was $6.1 million for the year ended December 31, 2022, compared to $3.9 million for the year
ended December 31, 2021, an increase of $2.1 million, or 54%, primarily due to higher U.S. treasury interest rates,
partially offset by a decrease in cash and cash equivalents and marketable debt securities balances.

Interest expense

Year Ended December 31,

2022

2021

Change

(in thousands)

Interest expense

(2,577) $

—

— %

Interest expense was primarily attributable to the amortization of debt issuance costs related to our convertible senior
notes issued in November 2020, for the years ended December 31, 2022, and 2021.

Other income (expense), net

Year Ended December 31,

2022

2021

Change

(in thousands)

Other income (expense), net

(12,778) $

25,178 $

(37,956)

Not meaningful

For the year ended December 31, 2022, other income (expense), net was primarily related to $7.8 million of
unrealized loss recorded for our marketable equity securities, and $5.3 million of impairment for the rights to
purchase one of our non-marketable security investees. For the year ended December 31, 2021, other income
(expense), net primarily included $25.0 million related to the one-time payment pursuant to a settlement and license
agreement entered into in December 2021.

Fair value adjustments of noncontrolling interest liability

Fair value adjustments of noncontrolling

interest liability

Not meaningful

Year Ended December 31,

2022

2021

Change

(in thousands)

(99,785) $

— $

(99,785)

Fair value adjustments of noncontrolling interest liability for the year ended December 31, 2022 was made as a
result of the Joint Venture Acquisition completed in June 2022.

Provision for income taxes

Year Ended December 31,

2022

2021

Change

(in thousands)

Provision for income taxes

1,139 $

300 $

839

280 %

The change in the provision for income taxes between the years ended December 31, 2022 and 2021 was
insignificant.

Quarterly results of operations

The following tables set forth our unaudited quarterly consolidated statements of operations data for each of the
eight quarters in the 24-month period ended December 31, 2022. The information for each of these quarters has
been prepared in accordance with generally accepted accounting principles in the United States of America and on
the same basis as our audited consolidated financial statements included elsewhere in this Annual Report on Form
10-K. In the opinion of management, reflect all adjustments, which include only normal recurring adjustments,
necessary for the fair presentation of our results of operations. This data should be read in conjunction with our
audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. These
quarterly operating results are not necessarily indicative of our operating results for the full year or any future
period.

December 31,
2022

September 30,
2022

June 30, 2022

March 31,
2022

December 31,
2021

September 30,
2021

June 30, 2021

March 31,
2021

Three Months Ended

(unaudited)

(in thousands)

Revenue:

Precision oncology testing ....

$ 113,797 $ 102,054 $

92,062 $

84,136 $

88,707 $

79,272 $

72,604 $

63,729

Development services and

other ....................................

13,094

15,350

17,082

Total revenue ...................

126,891

117,404

109,144

11,963

96,099

19,401

108,108

15,507

94,779

19,497

92,101

14,936

78,665

Costs and operating expenses:

Cost of precision oncology

testing .................................

Cost of development

43,706

39,434

34,375

30,684

32,254

29,665

24,887

23,590

services and other ...............

3,415

1,062

2,352

1,297

1,168

1,151

5,040

5,157

Research and development

expense ...............................

Sales and marketing expense

General and administrative

expense ...............................

Total costs and
operating
expenses ......................

106,578

81,423

100,017

80,370

85,455

73,603

81,757

64,432

73,021

59,599

70,968

50,228

63,724

47,716

55,508

34,338

37,888

41,121

43,680

41,267

40,274

50,055

48,376

67,935

273,010

262,004

239,465

219,437

206,316

202,067

189,743

186,528

Loss from operations ...............

(146,119)

(144,600)

(130,321)

(123,338)

(98,208)

(107,288)

(97,642)

(107,863)

Interest income ........................

Interest expense .......................

Other income (expense), net ....
Fair value adjustments of
noncontrolling interest
liability ................................

Loss before provision for

income taxes .......................

Provision for (benefit

from) income taxes .............

2,150

(644)

5,281

1,754

(644)

(18,389)

1,387

(645)

378

778

(644)

(48)

653

(643)

25,898

689

(644)

(187)

1,037

(644)

(243)

1,551

(646)

(290)

—

(99,785)

—

(139,332)

(161,879)

(228,986)

(123,252)

(72,300)

(107,430)

(97,492)

(107,248)

602

115

446

(24)

110

Net loss ....................................

(139,934)

(161,994)

(229,432)

(123,228)

(72,311)

(107,526)

(97,575)

(107,358)

Adjustment of
redeemable
noncontrolling interest ........

Net loss attributable to

Guardant Health, Inc.
common stockholders .........

Net loss per share
attributable to
Guardant Health, Inc.
common stockholders,
basic and diluted .................

Weighted-average shares
used in computing net
loss per share
attributable to
Guardant Health, Inc.
common stockholders,
basic and diluted .................

—

(18,600)

—

(2,300)

$ (139,934) $ (161,994) $ (229,432) $ (123,228) $

(90,911) $ (107,526) $

(97,575) $ (109,658)

(1.36) $

(1.58) $

(2.25) $

(1.21) $

(0.89) $

(1.06) $

(0.96) $

(1.09)

102,516

102,289

102,047

101,853

101,697

101,420

101,172

100,955

Liquidity and capital resources

We have incurred losses and negative cash flows from operations since our inception, and as of December 31, 2022,
we had an accumulated deficit of $1.7 billion. We expect to incur additional operating losses in the near future and
our operating expenses will increase as we continue to invest in clinical studies and develop new products, expand
our sales organization, and increase our marketing efforts to drive market adoption of our tests. As demand for our
tests are expected to continue to increase from physicians and biopharmaceutical companies, we anticipate that our
capital expenditure requirements could also increase if we require additional laboratory capacity.

We have funded our operations to date principally from the sale of stock, convertible debt and through revenue from
precision oncology testing and development services and other. As of December 31, 2022, we had cash and cash
equivalents of $141.6 million and marketable debt securities of $869.6 million. Cash in excess of immediate
requirements is invested in accordance with our investment policy, primarily with a view to provide liquidity while
ensuring capital preservation. Additionally, we have investments held in marketable debt securities consisting of
United States treasury securities that can be immediately liquid.

Based on our current business plan, we believe our current cash, cash equivalents and marketable debt securities and
anticipated cash flows from operations, will be sufficient to meet our anticipated cash requirements for more than 12
months from the date of this Annual Report on Form 10-K. We may consider raising additional capital to expand our
business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons. As
revenue from precision oncology testing and development services and other is expected to grow long-term, we
expect our accounts receivable and inventory balances to increase. Any increase in accounts receivable and
inventory may not be completely offset by increases in accounts payable and accrued liabilities, which could impact
our working capital balances.

If our available cash, cash equivalents and marketable debt securities and anticipated cash 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 Annual
Report on Form 10-K, we may seek to sell additional common or preferred equity or convertible debt securities,
enter into a credit facility or another form of third-party funding or seek other debt financing. The 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:

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Year Ended December 31,

2022

2021

(in thousands)

(309,463) $

(209,017)

149,816

(189,093)

(63,155)

(66,824)

Operating activities

Cash used in operating activities during the year ended December 31, 2022 was $309.5 million, which resulted from
a net loss of $654.6 million, partially offset by non-cash charges of $283.6 million and net change in our operating
assets and liabilities of $61.6 million. Non-cash charges primarily consisted of $99.8 million of fair value
adjustments of noncontrolling interest liability in connection with the Joint Venture Acquisition, $94.7 million of
stock-based compensation, $36.0 million of depreciation and amortization, $28.6 million of non-cash operating lease
costs, $7.8 million of unrealized losses on marketable equity securities, $5.3 million of impairment on the rights to
purchase one of our non-marketable security investees, $4.6 million of amortization of premium on marketable debt
security investments, $4.3 million of revaluation adjustments to contingent consideration, and $2.6 million of
amortization of debt issuance costs. The net change in our operating assets and liabilities was primarily the result of
a $60.3 million increase in accounts payable and accrued liabilities, primarily due to increase in purchases of goods
and services, increased personnel and increase in accrued and other liabilities, a $20.4 million decrease in prepaid
expenses and other current assets, primarily driven by a $25.0 million one-time payment pursuant to a settlement
and license agreement entered into in December 2021, a $11.7 million decrease in other assets, and a $9.9 million
increase in deferred revenue primarily due to upfront payments from international laboratory partners, partially
offset by a $20.9 million increase in inventory, net due to forecasted higher testing volumes, and increased inventory
level to offset potential disruption in supply chain, and a $20.2 million payment of operating lease liabilities net of
receipt of tenant improvement allowance.

Cash used in operating activities during the year ended December 31, 2021 was $209.0 million, which resulted from
a net loss of $384.8 million and net change in our operating assets and liabilities of $40.5 million, partially offset by
non-cash charges of $216.2 million. Non-cash charges primarily consisted of $151.4 million of stock-based
compensation, $24.7 million of non-cash operating lease costs, $22.3 million of depreciation and amortization,
$12.8 million of amortization of premium on investment, $2.6 million of amortization of debt issuance costs, and
$2.4 million of revaluation adjustments to contingent consideration. The net change in our operating assets and
liabilities was primarily the result of a $44.4 million increase in accounts receivables driven by increased sales to
clinical and biopharmaceutical customers, and royalty revenues earned pursuant to a settlement and license
agreement entered into in December 2021, a $35.8 million increase in prepaid expenses and other current assets,
primarily driven by a $25.0 million one-time payment pursuant the above-mentioned settlement and license
agreement, a $8.0 million increase in inventory, net due to higher testing volumes, and a $4.2 million increase in
other assets, partially offset by a $34.8 million increase in accounts payable and accrued liabilities, primarily due to
increase in purchases of goods and services, increased personnel and increase in accrued and other liabilities, a $14.2
million payment of operating lease liabilities net of receipt of tenant improvement allowance, and a $2.8 million
increase in deferred revenue.

Investing activities

Cash provided by investing activities during the year ended December 31, 2022 was $149.8 million, which resulted
primarily from maturities of marketable debt securities of $555.0 million, partially offset by purchases of marketable
debt securities of $303.8 million, purchases of property and equipment of $77.5 million, and purchases of non-
marketable equity and other related assets of $24.0 million.

Cash used in investing activities during the year ended December 31, 2021 was $63.2 million, which resulted
primarily from purchases of marketable debt securities of $900.8 million, purchases of property and equipment of
$75.0 million, and purchases of non-marketable equity and other related investments of $39.4 million, partially
offset by maturities of marketable debt securities of $952.1 million.

Financing activities

Cash used in financing activities during the year ended December 31, 2022 was $189.1 million, which was primarily
due to consideration payment for the Joint Venture Acquisition of $177.8 million, payment for the tender offer in
connection with the Joint Venture Acquisition and acquisition related costs of $14.2 million, and taxes paid related
to net share settlement of restricted stock units of $7.9 million, partially offset by proceeds of $9.3 million from
issuances of common stock under our employee stock purchase plan, and proceeds of $2.6 million from exercise of
stock options.

Cash used in financing activities during the year ended December 31, 2021 was $66.8 million, which was primarily
due to taxes paid related to net share settlement of restricted stock units of $83.8 million, partially offset by proceeds
of $9.8 million from issuances of common stock under our employee stock purchase plan, and proceeds of $8.1
million from exercise of stock options.

Critical accounting policies and estimates

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted
in the United States of America, or GAAP. Our preparation of these consolidated financial statements requires us to
make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, expenses and
related disclosures at the date of the consolidated financial statements, as well as revenue and expenses recorded
during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates
on historical experience and on various other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results could therefore differ materially from these estimates under
different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial
statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to
be critical to the judgments and estimates used in the preparation of our financial statements.

Revenue recognition

We derive revenue from the provision of precision oncology testing services, as well as from development services
and other. Precision oncology testing services include genomic profiling and the delivery of other genomic
information derived from our platform. Development services include companion diagnostic development and
regulatory approval, clinical study setup, monitoring and maintenance, testing development and support,
GuardantConnect and GuardantINFORM. Other revenue includes amounts derived from licensing our technologies,
and kit fulfillment. We currently receive payments from third-party commercial and governmental payers, certain
hospitals and oncology centers and individual patients, as well as biopharmaceutical companies, research institutes,
international laboratory partners and distributors.

Revenues are recognized when control of services is transferred to customers, in an amount that reflects the
consideration we expect to be entitled to in exchange for those services. FASB ASC Topic 606, Revenue from
Contracts with Customers, provides for a five-step model that includes identifying the contract with a customer,
identifying the performance obligations in the contract, determining the transaction price, allocating the transaction
price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance
obligation.

Precision oncology testing

We recognize revenue from the sale of our precision oncology tests for clinical customers, including certain
hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to physicians.
Most precision oncology tests requested by clinical customers are sold without a written agreement; however, we
determine an implied contract exists with our clinical customers. We identify each sale of our test to a clinical
customer as a single performance obligation. With the exception of certain limited contracted arrangements with
insurance carriers and other institutions where the transaction price is fixed, a stated contract price does not exist and
the transaction price for each implied contract with our clinical customers represents variable consideration. We
estimate the variable consideration under the portfolio approach and consider the historical reimbursement data from
third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends
not reflected in the historical data. We monitor the estimated amount to be collected in the portfolio at each reporting
period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the
estimate and any subsequent revision contain uncertainty and require the use of significant judgment in the
estimation of the variable consideration and application of the constraint for such variable consideration. We analyze
actual cash collections over the expected reimbursement period and compare it with the estimated variable
consideration for each portfolio and any difference is recognized as an adjustment to estimated revenue after the
expected reimbursement period, subject to assessment of the risk of future revenue reversal.

Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per
test or on the basis of an agreement to provide certain testing volume over a defined period. We identify our promise
to transfer a series of distinct tests to biopharmaceutical customers as a single performance obligation. Precision
oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed. For
agreements involving testing volume to be satisfied over a defined period, revenue is recognized over time based on
the number of tests performed as the performance obligation is satisfied over time.

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

Development services and other

We perform development services for our biopharmaceutical customers utilizing our precision oncology information
platform. Development services typically represent a single performance obligation as we perform a significant
integration service, such as analytical validation and regulatory submissions. The individual promises are not
separately identifiable from other promises in the contracts and, therefore, are not distinct. However, under certain
contracts, a biopharmaceutical customer may engage us for multiple distinct development services which are both
capable of being distinct and separately identifiable from other promises in the contracts and, therefore, distinct
performance obligations.

We collaborate with biopharmaceutical companies in the development of new drugs. As part of these collaborations,
we provide services related to regulatory filings to support companion diagnostic device submissions for our testing
panels. Under these collaborations, we generate revenue from achievement of milestones, as well as provision of on-
going support. For the companion diagnostic development and regulatory approval services performed, we are
compensated through a combination of an upfront fee and performance-based, non-refundable regulatory and other
developmental milestone payments. The transaction price of these contracts typically represents variable
consideration. Application of the constraint for variable consideration to milestone payments is an area that requires
significant judgment. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that
must be managed to achieve the respective milestone and the level of effort and investment required to achieve the
respective milestone. In making this assessment, we consider our historical experience with similar milestones, the
degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is
dependent on parties other than us. The constraint for variable consideration is applied such that it is probable a
significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved.
Application of the constraint for variable consideration is assessed and updated at each reporting period as a revision
to the estimated transaction price.

We recognize companion diagnostic development and regulatory approval services revenue over the period in which
biopharmaceutical research and development services are provided. Specifically, we recognize revenue using an
input method to measure progress, utilizing costs incurred to-date relative to total expected costs as its measure of
progress. We assess the changes to the total expected cost estimates as well as any incremental fees negotiated
resulting from changes to the scope of the original contract in determining the revenue recognition at each reporting
period. For development of new products or services under these arrangements, costs incurred before technological
feasibility is reached are included as research and development expenses in our consolidated statements of
operations, while costs incurred thereafter are recorded as cost of development services and other.

We also recognize revenue from other development services, in addition to companion diagnostic development and
regulatory approval services noted above, such as clinical study setup, monitoring and maintenance, testing
development and support, GuardantConnect, and GuardantINFORM. These revenues are generally recognized over
time based on an input method to measure progress in the period when the associated services have been performed.

In addition, other revenue includes amounts derived from licensing our digital sequencing technologies to our
domestic customers and international laboratory partners, and kit fulfillment. For the licensed technology, we are
compensated through royalty-based payments, non-refundable upfront payments, guaranteed minimum payments,
and/or sample milestone payments. Depending on the nature of the technology licensing arrangements, and
considering factors including but not limited to enforceable right to payment and payment terms, and if an asset with
alternative use is created, these revenues are recognized in the period when royalty-bearing sales occur, when the
technology transfer is complete, or during the technology transfer period. Kit fulfillment related revenues are
recognized when such products are delivered.

Contracts with multiple performance obligations

Contracts with biopharmaceutical customers and international laboratory partners may include multiple distinct
performance obligations, such as provision of precision oncology testing, the above-mentioned development
services, and digital sequencing technology licensing, among others. We evaluate the terms and conditions included
within our contracts with biopharmaceutical customers and international laboratory partners to ensure appropriate
revenue recognition, including whether services are considered distinct performance obligations that should be
accounted for separately versus together. We first identify material promises, in contrast to immaterial promises or
administrative tasks, under the contract, and then evaluate whether these promises are both capable of being distinct
and distinct within the context of the contract. In assessing whether a promised service is capable of being distinct,
we consider whether the customer could benefit from the service either on its own or together with other resources
that are readily available to the customer, including factors such as the research, development, and
commercialization capabilities of a third party as well as the availability of the associated expertise in the general
marketplace. In assessing whether a promised service is distinct within the context of the contract, we consider
whether we provide a significant integration of the services, whether the services significantly modify or customize
one another, or whether the services are highly interdependent or interrelated.

For contracts with multiple performance obligations, the transaction price is allocated to the separate performance
obligations on a relative standalone selling price basis. We determine standalone selling price by considering the
historical selling price of these performance obligations in similar transactions as well as other factors, including, but
not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors,
industry publications and current pricing practices, and expected costs of satisfying each performance obligation
plus appropriate margin; or by using the residual approach if standalone selling price is not observable, by reference
to the total transaction price less the sum of the observable standalone selling prices of other performance
obligations promised in the contract.

Variable interest entity

We review agreements we enter into with third party entities, pursuant to which we may have a variable interest in
the entity, in order to determine if the entity is a variable interest entity, or VIE. If the entity is a VIE, we assess
whether or not we are the primary beneficiary of that entity. In determining whether we are the primary beneficiary
of an entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the
economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive
benefits from, the entity that could potentially be significant to that entity. If we determine we are the primary
beneficiary of a VIE, we consolidate the statements of operations and financial condition of the VIE into our
consolidated financial statements. Accounting for the consolidation is based on our determination if the VIE meets
the definition of a business or and asset. Assets, liabilities and noncontrolling interests, excluding goodwill, of VIEs
that are not determined to be businesses are recorded at fair value in our financial statements upon consolidation.
Assets and liabilities that we have transferred to a VIE, after, or shortly before the date we became the primary
beneficiary are recorded at the same amount at which the assets and liabilities would have been measured if they had
not been transferred. Our determination about whether we should consolidate such VIEs is made continuously as
changes to existing relationships or future transactions may result in a consolidation or deconsolidation event.

In May 2018, we and an affiliate of SoftBank formed and capitalized the Joint Venture for the sale, marketing and
distribution of our tests generally outside the Americas and Europe. The Joint Venture was deemed to be a VIE and
we were identified as the primary beneficiary of the VIE. Consequently, we had consolidated the financial position,
results of operations and cash flows of the Joint Venture in our financial statements and all intercompany balances
had been eliminated in consolidation.

Prior to November 2021, the noncontrolling interest held by SoftBank contained embedded put-call redemption
features that were not solely within our control and had been classified outside of permanent equity in the
consolidated balance sheets. The noncontrolling interest was considered probable of becoming redeemable as
SoftBank had the option to exercise its put right to sell its equity ownership in the Joint Venture to us on or after the
seventh anniversary of the formation of the Joint Venture, on each subsequent anniversary of the IPO and under
certain other circumstances. We elected to recognize the changes in redemption value immediately as they occur as
if the put-call redemption feature were exercisable at the end of the reporting period. In November 2021, we
exercised our call right contained in the joint venture agreement with SoftBank to purchase all of the shares held by
SoftBank and its affiliates in consideration for the payment of the aggregate purchase price to be determined based
on an independent third-party valuation. Upon our exercise of the call right in November 2021, SoftBank no longer
had the option to exercise its put right. In connection with exercising the call right, we reclassified $78.0 million
from redeemable noncontrolling interest to noncontrolling interest liability. In June 2022, we purchased all of the
shares held by SoftBank and its affiliates in consideration for a cash payment of the aggregate purchase price of
$177.8 million, which resulted in $99.8 million of fair value adjustments to the noncontrolling interest liability for
the year ended December 31, 2022.

Stock-based compensation

We measure stock-based compensation expense for stock options granted to our employees, directors, and
nonemployee consultants on the date of grant based on the fair value of the awards and recognize the corresponding
compensation expense of those awards over the requisite service period, which is generally the vesting period of the
respective awards. Compensation expense for stock options with performance metrics is calculated based upon
expected achievement of the metrics specified in the grant.

We estimate the fair value of stock options granted under the 2012 Stock Plan, the 2018 Incentive Award Plan, and
under the former Guardant Health AMEA, Inc.'s 2020 Equity Incentive Plan for the Joint Venture (see Note 12,
Stock-Based Compensation), and stock purchase rights granted under our 2018 Employee Stock Purchase Plan on
the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the
use of assumptions regarding a number of variables that are complex, subjective and generally require significant
judgment to determine. The assumptions used to calculate the fair value of our stock options were:

Fair Value of Common Stock

The fair value of our common stock is determined by the closing price, on the date of grant, of its common stock,
which is traded on the Nasdaq Global Select Market. The board of directors of the Joint Venture determined the fair
value of common stock of the Joint Venture. The grant date fair value of the Joint Venture’s common stock was
determined using valuation methodologies which utilizes certain assumptions including probability weighting of
events, volatility, time to liquidation, a risk-free interest rate and an assumption for a discount for lack of
marketability. In determining the fair value of the Joint Venture’s common stock, the methodologies used to
estimate the enterprise value of the Joint Venture were performed using methodologies, approaches, and
assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation
Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Expected Term

Our expected term represents the period that our stock options are expected to be outstanding. The expected term of
stock options issued to employees, directors and nonemployee consultants is determined using the simplified method
(based on the mid-point between the vesting date and the end of the contractual term), as we do not have sufficient
historical data to use any other method to estimate expected term.

Expected Volatility

Prior to the commencement of trading of our common stock on the Nasdaq Global Select Market on October 4, 2018
in connection with the IPO, there was no active trading market for our common stock. Due to limited historical data
for the trading of our common stock, expected volatility is estimated based on the average volatility for comparable
publicly traded peer group companies in the same industry plus our expected volatility for the available periods. The
comparable companies are chosen based on their similar size, stage in the life cycle or area of specialty.

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

Risk-Free Interest Rate

The risk-free interest rate is based on the U.S. treasury zero coupon issues in effect at the time of grant for periods
corresponding with the expected term of the stock option grants.

Expected Dividend Yield

We have never paid dividends on our common stock and have no plans to pay dividends on our common stock.
Therefore, we use an expected dividend yield of zero.

Black-Scholes Assumptions

The weighted-average assumptions used in our Black-Scholes option-pricing model, including the Joint Venture,
were as follows for stock option granted to our employees, directors and nonemployees for the periods presented:

Expected term (in years)

Expected volatility

Risk-free interest rate

Expected dividend yield

Year Ended December 31,

2022

2021

2020

5.50 – 6.10

5.49 – 6.06

5.50 – 6.10

63.3% – 67.6%

63.6% – 66.7%

63.6% – 73.3%

1.9% – 4.4%

0.3% – 1.3%

0.3% – 1.6%

—%

For market-based restricted stock units, we derive the requisite service period using the Monte Carlo simulation
model. The estimated fair value of the market-based restricted stock units was determined using a Monte Carlo
simulation model which requires the use of assumptions regarding a number of variables that are complex,
subjective and generally require significant judgment to determine. Stock-based compensation expense will be
recorded regardless of achieving the market conditions or not. If the related market condition is achieved earlier than
its expected derived service period, the stock-based compensation expense will be recognized as a cumulative catch-
up expense from the grant date to that point in time in achieving the share price goal.

The assumptions used to calculate the fair value of our market-based restricted stock units were as follows:

Fair Value of Common Stock

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

Expected Volatility

Due to limited historical data for the trading of our common stock, expected volatility is estimated based on the
average volatility for comparable publicly traded peer group companies and implied volatility of publicly traded
options in the same industry plus our expected volatility for the available periods. The comparable companies are
chosen based on their similar size, stage in the life cycle or area of specialty.

Expected Term

The expected term represents the derived service period for the respective tranches which has been estimated using
the Monte Carlo simulation model.

Risk-Free Interest Rate

The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the
market-based restricted stock units.

Risky Rate

The risky rate represents our cost of equity.

Expected Dividend Yield

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

Discount for Lack of Marketability

The discount for lack of marketability represents the discount applied for post vest term restrictions and has been
derived using the Monte Carlo simulation model.

The following assumptions were used to calculate the stock-based compensation for market-based restricted stock
units: a weighted-average expected term of 0.83 – 2.07 years; expected volatility of 65.5%; a risk-free interest rate
of 0.53%; a zero dividend yield; a risky rate (cost of equity) of 16%; and a discount for post-vesting restrictions of
10.4% – 14.5%.

We recognize stock-based compensation expense net of forfeitures as they occur.

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a
prospective basis. As we continue to accumulate additional data related to our common stock, we may have
refinements to our estimates, which could materially impact our future stock-based compensation expense.

Recent accounting pronouncements

Not applicable.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may
impact our financial position due to adverse changes in financial market prices and rates.

Interest rate risk

We are exposed to market risk for changes in interest rates related primarily to our cash and cash equivalents,
marketable debt securities and our indebtedness. As of December 31, 2022, we had cash and cash equivalents of
$141.6 million held primarily in cash deposits and money market funds. Our marketable debt securities are held in
U.S. government debt securities. As of December 31, 2022, we had short-term marketable debt securities of $869.6
million. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the
general level of the interest rates in the United States. As of December 31, 2022, a hypothetical 100 basis point
increase in interest rates would have resulted in an approximate $4.2 million decline of the fair value of our
available-for-sale securities and a hypothetical 100 basis point decrease in interest rates would have resulted in an
approximate $4.2 million increase of the fair value of our available-for-sale securities. This estimate is based on a
sensitivity model that measures market value changes when changes in interest rates occur.

Foreign currency risk

The majority of our revenue is generated in the United States. Through December 31, 2022, we have generated an
insignificant amount of revenues denominated in foreign currencies. As we expand our presence in the international
market, our results of operations and cash flows are expected to increasingly be subject to fluctuations due to
changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign
exchange rates. As of December 31, 2022, the effect of a hypothetical 10% change in foreign currency exchange
rates would not be material to our financial condition or results of operations. To date, we have not entered into any
hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue
to reassess our approach to manage our risk relating to fluctuations in currency rates.

Item 8. Financial Statements and Supplementary Data

Guardant Health, Inc.

Index to Consolidated Financial Statements

As of December 31, 2022 and 2021, and

For the Years Ended December 31, 2022, 2021 and 2020

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) ....................................

Consolidated Balance Sheets ................................................................................................................

Consolidated Statements of Operations ................................................................................................

Consolidated Statements of Comprehensive Loss ................................................................................
Consolidated Statements of Redeemable Noncontrolling Interest and Stockholders' Equity ..............

Consolidated Statements of Cash Flows ...............................................................................................

Notes to Consolidated Financial Statements .........................................................................................

Page

101

103

105

106
107

108

110

The supplementary financial information required by this Item 8 is included in Part II, Item 7 under the
caption “Quarterly Results of Operations”, which is incorporated herein by reference.

100

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Guardant Health, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Guardant Health, Inc. (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, redeemable
noncontrolling interest and stockholders’ equity and cash flows for each of the three years in the period ended
December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) and our report dated February 23, 2023 expressed an unqualified
opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which
it relates.

101

Precision Oncology Revenue (testing services provided to ordering physicians)

Description of the Matter

How We Addressed the
Matter in Our Audit

For the year ended December 31, 2022, revenue recognized from Precision
Oncology was $392.0 million. As described in Note 2 to the consolidated financial
statements, the Company recognizes revenue from the performance of precision
oncology tests for clinical customers upon delivery of test results to the ordering
physician. As most precision oncology tests requested by customers are sold based
on a physician requisition form without further written terms and conditions, the
Company determined an implied contract exists with its patients and estimates
variable consideration to be received for these services. Management estimates
variable consideration based on historical payment data from third-party payers and
patients adjusted for known and forecasted changes in payment patterns and subject
to a constraint such that revenue recognized is not expected to be reversed.

Auditing the Company’s estimate of total consideration expected to be received for
the precision oncology tests is complex and requires significant judgement to
evaluate management’s estimate of payments to be received for the tests. This
estimate is affected by assumptions on coverage of the tests for the patient and
experience with collection from third-party payers.

We obtained an understanding, evaluated the design, and tested the operating
effectiveness of internal controls that address the risks of material misstatement
relating to the measurement of precision oncology revenues based upon estimating
variable consideration. This included testing controls relating to management’s
review of the significant assumptions described above and inputs used in the
determination of the estimated amount that would be collected for tests performed
during the period. We also tested controls over the current and historical data used
by management in determining this estimate of variable consideration, subject to a
constraint, including the completeness and accuracy of the data.

Our audit procedures over the Company’s precision oncology revenue included,
among others, assessing assumptions and inputs described above, testing the
completeness and accuracy of the underlying data used by the Company in its
analysis, including the constraint applied. We agreed the terms and conditions of the
type of test (i.e. lung, non-lung, etc.) to be performed to the requisition forms
submitted by the physician. We compared the significant assumptions and inputs
used by management to the Company’s third-party payer collection trends and other
relevant factors. This included testing inputs to the calculation by comparing
historical information to source documents and evaluating the historical accuracy of
management's estimates by comparing such estimates to actual results.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2015.

San Mateo, California
February 23, 2023

102

Guardant Health, Inc.

Consolidated Balance Sheets
(in thousands, except share and per share data)

ASSETS

Current assets:

Cash and cash equivalents

Short-term marketable debt securities

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets, net

Total current assets

Long-term marketable debt securities

Property and equipment, net

Right-of-use assets, net

Intangible assets, net

Goodwill

Other assets, net
Total Assets(1)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

Noncontrolling interest liability

Deferred revenue

Total current liabilities

Convertible senior notes, net

Long-term operating lease liabilities

Other long-term liabilities
Total Liabilities(1)
Commitments and contingencies (Note 10)

As of December 31,

2022

2021

141,647 $

869,584

97,256

51,598

31,509

492,202

440,546

97,652

30,674

53,052

1,191,594

1,114,126

—

167,920

174,001

11,727

3,290

61,453

698,034

124,461

189,443

14,207

3,290

60,938

1,609,985 $

2,204,499

175,817

—

17,403

193,220

105,361

78,000

11,326

194,687

1,137,391

1,134,821

210,015

9,179
1,549,805

226,053

3,933
1,559,494

103

Stockholders’ equity:

Preferred stock, par value of $0.00001 per share; 10,000,000 shares

authorized, no shares issued and outstanding as of December 31, 2022
and 2021

Common stock, par value of $0.00001 per share; 350,000,000 shares
authorized as of December 31, 2022 and 2021; 102,619,383 and
101,767,446 shares issued and outstanding as of December 31, 2022 and
2021, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity

As of December 31,

2022

2021

—

1,742,114

1,657,593

(19,522)

(4,764)

(1,662,413)

(1,007,825)

60,180
1,609,985 $

645,005
2,204,499

(1) As of December 31, 2021, the Company's consolidated balance sheet included $20.4 million of assets, that can
be used only to settle obligations of Guardant Health AMEA, Inc., the consolidated variable interest entity, or
VIE, and VIE’s subsidiaries, and $4.3 million of liabilities of the consolidated VIE and VIE’s subsidiaries, for
which their creditors do not have recourse to the general credit of the Company. Guardant Health AMEA, Inc. is
no longer a VIE, after the completion of the Joint Venture Acquisition on June 10, 2022. See Note 3, Joint
Venture.

The accompanying notes are an integral part of these consolidated financial statements.

104

Guardant Health, Inc.

Consolidated Statements of Operations
(in thousands, except per share data)

Revenue:

Precision oncology testing
Development services and other

Total revenue

Costs and operating expenses:

Cost of precision oncology testing

Cost of development services and other

Research and development expense

Sales and marketing expense

General and administrative expense

Total costs and operating expenses

Loss from operations

Interest income

Interest expense

Other income (expense), net

Fair value adjustments of noncontrolling interest liability

Loss before provision for income taxes

Provision for income taxes

Net loss
Adjustment of redeemable noncontrolling interest
Net loss attributable to Guardant Health, Inc. common

stockholders

Net loss per share attributable to Guardant Health, Inc.

common stockholders, basic and diluted

Weighted-average shares used in computing net loss per
share attributable to Guardant Health, Inc. common
stockholders, basic and diluted

Year Ended December 31,

2022

2021

2020

392,049 $

304,312 $

236,324

57,489

449,538

148,199

8,126

373,807

299,828

163,956

993,916

69,341

373,653

110,396

12,516

263,221

191,881

206,640

784,654

50,406

286,730

74,769

17,766

149,862

106,513

192,770

541,680

(544,378)

(411,001)

(254,950)

6,069

(2,577)

(12,778)

(99,785)

3,930

(2,577)

25,178

—

10,171

(4,766)

3,641

—

(653,449)

(384,470)

(245,904)

1,139

(654,588)

—

300

(384,770)
(20,900)

379

(246,283)
(7,500)

(654,588) $

(405,670) $

(253,783)

(6.41) $

(4.00) $

(2.60)

102,178

101,314

97,504

The accompanying notes are an integral part of these consolidated financial statements.

105

Guardant Health, Inc.

Consolidated Statements of Comprehensive Loss
(in thousands)

Year Ended December 31,

2022

2021

2020

Net loss

(654,588) $

(384,770) $

(246,283)

Other comprehensive (loss) income, net of tax impact:

Unrealized (loss) gain on available-for-sale securities

Foreign currency translation adjustments

Other comprehensive (loss) income

Comprehensive loss
Comprehensive loss attributable to redeemable

noncontrolling interest

(13,158)

(1,600)

(14,758)

(5,769)

(1,692)

(7,461)

1,131

455

1,586

(669,346) $

(392,231) $

(244,697)

—

(20,900)

(7,500)

Comprehensive loss attributable to Guardant Health, Inc.

(669,346) $

(413,131) $

(252,197)

The accompanying notes are an integral part of these consolidated financial statements.

106

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107

Guardant Health, Inc.

Consolidated Statements of Cash Flows
(in thousands)

OPERATING ACTIVITIES:

Net loss
Adjustments to reconcile net loss to net cash used in operating

activities:

Depreciation and amortization

Non-cash operating lease costs
Charge of in-process research and development costs with no

alternative future use

Re-valuation of contingent consideration

Non-cash stock-based compensation

Amortization of debt discount and debt issuance costs

Amortization of premium (discount) on marketable debt securities

Unrealized losses on marketable equity securities

Impairment of other assets

Fair value adjustments of noncontrolling interest liability

Credit loss adjustment and others

Changes in operating assets and liabilities:

Accounts receivable, net

Inventory, net

Prepaid expenses and other current assets, net

Other assets, net

Accounts payable and accrued liabilities

Operating lease liabilities

Deferred revenue

Year Ended December 31,

2022

2021

2020

$ (654,588) $ (384,770) $ (246,283)

35,962

28,585

—

4,305

94,685

2,569

4,595

7,793

5,261

99,785

375

(20,926)

20,444

11,698

60,328

(20,228)

9,873

22,271

24,661

—

2,380

16,065

5,567

8,500

(120)

151,449

144,113

2,564

12,849

—

4,729

4,016

—

7,151

(44,353)

(7,957)

(35,753)

(5,463)

(7,535)

(6,077)

(4,182)

(19,326)

34,796

14,205

2,776

505

(6,042)

(3,727)

Net cash used in operating activities

(309,463)

(209,017)

(103,927)

INVESTING ACTIVITIES:

Purchase of marketable debt securities

Maturity of marketable debt securities
Purchase of non-marketable equity securities and other related assets

Purchase of property and equipment

Purchase of intangible assets and capitalized license obligations

(303,757)

(900,808)

(1,125,575)

555,000
(23,966)

(77,461)

—

952,110
(39,422)

(75,035)

—

562,548
—

(36,173)

(17,886)

Net cash provided by (used in) investing activities

149,816

(63,155)

(617,086)

FINANCING ACTIVITIES:

Payments made on finance lease obligations
Proceeds from issuance of common stock under employee stock

purchase plan

Proceeds from issuance of common stock upon exercise of stock

options

Taxes paid related to net share settlement of restricted stock units
Joint Venture Acquisition
Tender offer issued in connection with the Joint Venture Acquisition

and acquisition related costs

Payment of contingent consideration
Proceeds from public offerings of common stock
Payment of offering costs related to public offerings of common stock

(71)

(146)

(174)

9,316

9,753

7,095

2,625
(7,878)
(177,785)

8,112
(83,759)
—

(14,235)
(1,065)
—
—

—
—
—
—

9,528
(3,447)
—

—
—
355,730
(1,130)

108

Proceeds from borrowings on convertible senior notes, net
Payment of offering costs related to borrowings on convertible senior

notes

Purchase of convertible note hedges

Year Ended December 31,

2022

2021

2020

—

—
—

—

1,132,750

(784)
—

—
(90,045)

Net cash (used in) provided by financing activities

(189,093)

(66,824) 1,410,307

Net effect of foreign exchange rate changes on cash, cash equivalents

and restricted cash

(1,600)

(1,693)

455

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

(350,340)

(340,689)

689,749

Cash, cash equivalents and restricted cash – Beginning of period

492,288

832,977

143,228

Cash, cash equivalents and restricted cash – End of period

$ 141,948 $ 492,288 $ 832,977

Supplemental Disclosures of Cash Flow Information:

Operating lease liabilities arising from obtaining right-of-use assets

Cash paid for income taxes

Supplemental Disclosures of Noncash Investing and Financing

Activities:
Purchase of property and equipment included in accounts payable and

accrued liabilities

Property and equipment acquired under finance leases
Vesting of common stock exercised early
Reclassification of redeemable noncontrolling interest to

noncontrolling interest liability

Debt issuance costs included in accounts payable and accrued

liabilities

$
$
$

4,073 $ 171,382 $

13,123

1,331 $

393 $

331

8,291 $
— $
8 $

8,892 $
238 $
52 $

1,986
47
52

— $

78,000 $

—

— $

784

The accompanying notes are an integral part of these consolidated financial statements.

109

Guardant Health, Inc.
Notes to Consolidated Financial Statements

1. Description of Business

Guardant Health, Inc., or the Company, is a leading precision oncology company focused on helping conquer cancer
globally through the use of its proprietary tests, vast data sets and advanced analytics. The Company believes its
tests can transform cancer care by unlocking insights that will help patients at all stages of the disease, including at
its earliest stages, when it’s most treatable. For patients with advanced stage cancer, the Company has commercially
launched Guardant360 LDT and Guardant360 CDx, the first comprehensive liquid biopsy test approved by the U.S.
Food and Drug Administration, or the FDA, to provide tumor mutation profiling with solid tumors and to be used as
a companion diagnostic in connection with non-small cell lung cancer, or NSCLC, and breast cancer. The Company
has also launched the Guardant360 TissueNext tissue test for advanced-stage cancer, Guardant Reveal blood test to
detect residual and recurring disease in early-stage colorectal, breast and lung cancer patients, and Guardant360
Response blood test to predict patient response to immunotherapy or targeted therapy eight weeks earlier than
current standard-of-care imaging.

The Company also collaborates with biopharmaceutical companies in clinical studies by providing the above-
mentioned tests, as well as the GuardantOMNI blood test for advanced-stage cancer, and the GuardantINFINITY
blood test, launched in September 2022, which is a next-generation smart liquid biopsy that provides new, multi-
dimensional insights into the complexities of tumor molecular profiles and immune response to advance cancer
research and therapy development. Using data collected from its tests, the Company has also developed its
GuardantINFORM platform to help biopharmaceutical companies accelerate precision oncology drug development
through the use of this in-silico research platform to unlock further insights into tumor evolution and treatment
resistance across various biomarker-driven cancers.

In May 2022, the Company launched the Shield LDT test to address the needs of individuals eligible for colorectal
cancer screening. From a simple blood draw, Shield uses a novel multimodal approach to detect colorectal cancer
signals in the bloodstream, including DNA that is shed by tumors. In addition, in December 2022, the Company
announced positive results from ECLIPSE, an over 20,000 patient registrational study evaluating the performance of
its Shield blood test for detecting colorectal cancer in average-risk adults. The Company also expects to expand into
lung and multi-cancer screening with its investigational, next-generation Shield assay.

The Company was incorporated in Delaware in December 2011 and is headquartered in Palo Alto, California. In
May 2018, the Company formed and capitalized Guardant Health AMEA, Inc., or the Joint Venture, in the United
States with an affiliate of SoftBank Vision Fund (AIV M1) L.P., or SoftBank. Under the terms of the joint venture
agreement, the Company held approximately 50% ownership and controlling interest in the Joint Venture. In June
2022, the Company completed the purchase of all of the shares of the Joint Venture, or the Joint Venture
Acquisition, held by SoftBank and its affiliates, and issued a tender offer to purchase the Joint Venture's Class B
common stock issued and issuable upon exercise of vested Joint Venture's stock options held by the Joint Venture's
employees. Upon completion of the Joint Venture Acquisition and the tender offer, Guardant Health AMEA, Inc.
became the Company's wholly owned subsidiary (see Note 3, Joint Venture and Note 12, Stock-Based
Compensation).

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America, or GAAP. The accompanying consolidated financial statements
include the accounts of Guardant Health, Inc., its consolidated Joint Venture (see Note 1, Description of Business
and Note 3, Joint Venture), and its wholly owned subsidiaries. Other stockholders’ interests in the Joint Venture
were shown in the consolidated financial statements as noncontrolling interest liability before the Joint Venture
Acquisition was completed. All intercompany balances and transactions have been eliminated in consolidation.
Certain reclassifications of prior period amounts were made to conform with the current period presentation.

110

The Company believes that its existing cash and cash equivalents and marketable debt securities as of December 31,
2022 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year
after the date the accompanying consolidated financial statements are issued. As the Company continues to incur
losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost
structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company
may have to seek additional capital.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make
certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related
disclosures at the date of the consolidated financial statements, as well as the reported amounts of revenues and
expenses during the periods presented. The Company bases its estimates on historical experience and other market-
specific or other relevant assumptions that it believes to be reasonable under the circumstances. Estimates are used
in several areas including, but not limited to, estimation of variable consideration, estimation of credit losses,
standalone selling price allocation included in contracts with multiple performance obligations, goodwill and
identifiable intangible assets, stock-based compensation, incremental borrowing rate for operating leases,
contingencies, certain inputs into the provision for (benefit from) income taxes, including related reserves, valuation
of non-marketable securities, among others. These estimates generally involve complex issues and require
judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of
time to resolve and are subject to change from period to period. Actual results may differ materially from
management’s estimates.

The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of
factors, including, but not limited to, the duration and severity of the pandemic, and the impact of any variants of the
virus, the extent and severity of the impact on the Company's customers and suppliers, the continued disruption to
demand for the Company's products and services, and the impact of the global business and economic environment
on liquidity and the availability of capital, all of which are uncertain and cannot be predicted.

Segment Information

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

Cash and Cash Equivalents and Restricted Cash

Cash equivalents consist of highly liquid investments with original maturities at the time of purchase of three
months or less. Cash equivalents include bank demand deposits and money market accounts that invest primarily in
U.S. government-backed securities and treasuries. Cash equivalents are carried at cost, which approximates their fair
value.

Restricted cash consists of payroll withholding related to the Company's enrollment in certain voluntary disability
insurance plan. Restricted cash balance was $0.3 million and $0.1 million as of December 31, 2022, and 2021,
respectively, which was included in other assets in the accompanying consolidated balance sheets.

Marketable Debt Securities

Marketable debt securities consist primarily of high-grade U.S. government and agency securities and corporate
bonds. Marketable debt securities with original maturities at the time of purchase between three and twelve months
from balance sheet dates are classified as short-term marketable debt securities and those with maturities over twelve
months from balance sheet dates are classified as long-term marketable debt securities. The Company classifies all
marketable debt securities as available-for-sale, which are recorded at fair value. Unrealized gains and losses are
included in accumulated other comprehensive gain (loss) in stockholders’ equity. Any premium or discount arising
at purchase is amortized or accreted to interest income or expense.

111

The Company periodically evaluates its available-for-sale marketable debt securities for impairment. When the fair
value of a marketable debt security is below its amortized cost, the amortized cost is reduced to its fair value if it is
more likely than not that the Company is required to sell the impaired security before recovery of its amortized cost
basis, or the Company has the intention to sell the security. If neither of these conditions are met, the Company
determines whether the impairment is due to credit losses by comparing the present value of the expected cash flows
of the security with its amortized cost basis. The amount of impairment recognized is limited to the excess of the
amortized cost over the fair value of the security. An allowance for credit losses for the excess of amortized cost
over the expected cash flows is recorded in other income (expense), net on the consolidated statements of
operations. Impairment losses that are not credit-related are included in accumulated other comprehensive gain (loss)
in stockholders’ equity.

Non-Marketable Securities

The Company acquires certain equity investments in private companies to promote business and strategic objectives.
The Company's investments in non-marketable equity securities do not give the Company the ability to control or
exercise significant influence over the investees. The Company's non-marketable equity and other related
investments totaled $25.0 million and $39.4 million as of December 31, 2022, and 2021, respectively, and are
included in other assets, net on the accompanying consolidated balance sheets. Non-marketable securities are subject
to periodic impairment reviews and adjustments for observable price changes from orderly transactions. The
Company's evaluation of impairment of such non-marketable securities is based on adverse changes in market
conditions and the regulatory or economic environment, qualitative and quantitative analysis of the operating
performance of the investee; changes in operating structure or management of the investee; additional funding
requirements; and the investee’s ability to remain in business. Pursuant to one of the investments in non-marketable
securities purchased by the Company, the Company acquired rights to purchase the investee at a pre-determined
price subject to additional adjustments based on the performance of the investee, on or before December 31, 2022.
In September 2022, the Company decided not to exercise such rights to purchase the investee and recorded an
impairment of $5.3 million for the year ended December 31, 2022 based on an independent third-party valuation,
which has been included in other income (expense), net on the accompanying consolidated statements of operations.
No other impairment or downward adjustments to the carrying value of non-marketable securities have been
otherwise recorded. In addition, pursuant to another investment in non-marketable securities purchased by the
Company, the Company acquired rights to purchase the investee at a pre-determined price subject to additional
adjustments based on the performance of the Company, on or before October 1, 2023. In July 2022, one of the
investees completed its initial public offering, or IPO, subsequent to which, the Company started to account for the
investment in the investee at fair value on a recurring basis (see Note 5, Fair Value Measurements, Cash Equivalents
and Marketable Securities).

Concentration of Risk

The Company is subject to credit risk from its portfolio of cash equivalents held at one commercial bank and
investments in marketable debt securities. The Company limits its exposure to credit losses by investing in money
market funds through a U.S. bank with high credit ratings. The Company’s cash may consist of deposits held with
banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by
the financial institution is limited to the extent of amounts recorded on the consolidated balance sheets. The
Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of
credit exposure.

The Company also invests in investment-grade debt instruments and has policy limits for the amount it can invest in
any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the
Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and
diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax
rate of return. Under its investment policy, the Company limits amounts invested in such securities by credit rating,
maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of
credit risk from these financial instruments.

The Company is subject to credit risk from its accounts receivable. The majority of the Company’s accounts
receivable arises from the provision of precision oncology services and development services and other, primarily
with biopharmaceutical companies and international laboratory partners, all of which have high credit ratings. The
Company has not experienced any material losses related to receivables from individual customers, or groups of
customers. The Company does not require collateral. Accounts receivable are recorded at net amount.

112

A significant customer is any biopharmaceutical customer, clinical testing payer, or international laboratory partner
that represents 10% or more of the Company’s total revenue or accounts receivable balance. Revenue attributable to
each significant customer, including its affiliated entities, as a percentage of the Company’s total revenue, for the
respective period, and accounts receivable balance attributable to each significant customers, including its affiliated
entities, as a percentage of the Company’s total accounts receivable balance, at the respective consolidated balance
sheet date, are as follows:

Revenue

Accounts Receivable, Net

Year Ended December 31,

As of December 31,

2022

2021

2020

2022

2021

30 %

29 %

10 %

25 %

12 %

11 %

13 %

10 %

13 %

Customer A

Customer B

Customer C

Customer D

less than 10%

The Company is also subject to credit risk from its other receivables and other assets. The Company's other
receivables and other assets include payments due from a third-party in relation to the settlement of a patent dispute
reached in August 2020 for $8.0 million payable over a period of 6 years. In December 2020, 2021 and 2022, the
Company received the first, second and third installment payments of $1.0 million, $1.1 million and $1.1 million,
respectively. The Company has evaluated and recorded a credit loss for the remaining $4.8 million considering the
third-party's credit worthiness and lack of financial history.

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

Prepaid expenses and other current assets:

Gross Amount
Allowance for Credit Losses
Net Amount

Other assets:

Gross Amount
Allowance for Credit Losses
Net Amount

As of December 31,

2022

2021

(in thousands)

— $
—
— $

—
—
—

4,800 $
(4,800)

— $

5,900
(5,900)
—

The following table summarizes the allowance for credit losses activities for the years ended December 31, 2022,
2021 and 2020:

Prepaid expenses and other current assets:

Allowance for credit losses—Beginning of period
Charged to (reversed from) other income (expense), net
Reclassification
Allowance for credit losses—End of period

Other assets:

Allowance for credit losses—Beginning of period
Charged to (reversed from) other income (expense), net
Reclassification
Allowance for credit losses—End of period

113

Year Ended December 31,
2021

2020

2022

(in thousands)

— $

(1,100)
1,100

— $

5,900 $
—
(1,100)
4,800 $

7,000 $
—
(1,100)
5,900 $

—
—
—
—

—
7,000
—
7,000

Accounts Receivable, Net

Accounts receivable represent valid claims against commercial and governmental payers, biopharmaceutical
companies, research institutes, international laboratory partners and distributors, including unbilled receivables, and
royalty payments due from third parties for licensing the Company’s technologies. Unbilled receivables include
balances due from biopharmaceutical customers related to development services and other revenues that are
recognized upon the achievement of performance-based milestones but prior to the achievement of contractual
billing rights. As of December 31, 2022 and 2021, the Company had unbilled receivables of $5.4 million and
$5.7 million, respectively.

The Company evaluates the collectability of its accounts receivable based on historical collection trends, the
financial condition of payment partners, and external market factors and provides for an allowance for potential
credit losses based on management’s best estimate of the amount of probable credit losses. As of December 31, 2022
and 2021, the Company had immaterial allowance for credit losses related to its accounts receivable.

Inventory, Net

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. Inventory consisted
entirely of supplies, which are consumed when providing tests, and therefore the Company does not maintain any
finished goods inventory.

In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future
demand requirements compared to current or committed inventory levels. The Company periodically reviews its
inventories for excess or obsolescence and writes down obsolete or otherwise unmarketable inventory to its
estimated net realizable value. If the actual net realizable value is less than that estimated by the Company, or if it is
determined that inventory utilization will further diminish based on estimates of demand, additional inventory write-
downs may be required. Amounts written-down due to unmarketable inventory are recorded in cost of precision
oncology testing and cost of development services and other, as appropriate.

Property and Equipment, Net

Property and equipment are recorded at cost. Depreciation is computed over estimated useful lives of the related
assets using the straight-line method. Leasehold improvements are amortized using the straight-line method over the
estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. The Company
periodically reviews the depreciable lives assigned to property and equipment placed in service and changes the
estimates of useful lives, if necessary. Maintenance and repairs that do not improve or extend the lives of the
respective assets are expensed as incurred.

Estimated useful lives for property and equipment are as follows:

Property and Equipment

Machinery and equipment

Furniture and fixtures

Computer hardware and computer software

Estimated Useful Life

5 years

7 years

3 years

Leasehold improvements

Lesser of estimated useful life or remaining lease term

Asset Acquisition

If an acquisition of an asset or group of assets does not meet the definition of a business, the transaction is accounted
for as an asset acquisition rather than a business combination. An asset acquisition does not result in the recognition
of goodwill and transaction costs are capitalized as part of the cost of the asset or group of assets acquired.
Transaction costs allocated to in-process research and development technology with no future alternate use is
expensed as incurred. The total consideration is allocated to the various intangible assets acquired on a relative fair
value basis. Cash paid in connection of purchase of in-process research and development technology in an asset
acquisition is presented within the investing section of the consolidated statement of cash flows.

114

Goodwill and Intangible Assets, net

Intangible assets related to in-process research and development costs, or IPR&D, acquired in a business
combination are considered to be indefinite-lived until the completion or abandonment of the associated research
and development efforts. If and when development is complete, the associated assets would be deemed finite-lived
and would then be amortized based on their respective estimated useful lives at that point in time. Prior to
completion of the research and development efforts, the assets are considered indefinite-lived. During this period,
the assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if the
Company becomes aware of any events occurring or changes in circumstances that would indicate a reduction in the
fair value of the IPR&D projects below their respective carrying amounts. In connection with the launch of Shield
LDT in May 2022, the Company's IPR&D of $1.6 million was reclassified as an intangible asset with a useful life of
2 years.

Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities.
Goodwill is not amortized but is tested for impairment at least annually during the fourth fiscal quarter, or if
circumstances indicate its value may no longer be recoverable. The Company continues to operate in one segment,
which is considered to be the sole reporting unit and, therefore, goodwill is tested for impairment at the enterprise
level. As of December 31, 2022, there has been no impairment of goodwill.

Intangible assets are carried at cost, net of accumulated amortization. The Company does not have intangible assets
with indefinite useful lives other than goodwill. Amortization is recorded on a straight-line basis over the intangible
asset's useful life, which is approximately 2—12 years.

Impairment for Long-Lived Assets

The Company evaluates its long-lived assets, including property and equipment, finite-lived intangible assets, and
right-of-use assets, for impairment whenever events or changes in business circumstances indicate that the carrying
amount of the asset may not be fully recoverable. An impairment loss would be recognized when estimated
undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than
its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived
asset exceeds its fair value.

Post-acquisition Contingent Consideration

Post-acquisition contingent consideration is recognized over the service period, subject to meeting the respective
service requirements and performance metrics. For the year ended December 31, 2022, the Company recorded post-
acquisition contingent consideration expense of $5.2 million in research and development expenses on the
accompanying consolidated statement of operations. The Company did not record any post-acquisition contingent
consideration expense for the years ended December 31, 2021 and 2020.

Leases

The Company determines if an arrangement contains a lease at inception. Operating lease right-of-use, or ROU,
assets and operating leases liabilities are recognized based on the present value of the future minimum lease
payments over the lease term at the commencement date. ROU assets also include any initial direct costs incurred
and any lease payments made at or before the lease commencement date, less lease incentives received or receivable.
The Company uses its incremental borrowing rate based on the information available at the commencement date in
determining the lease liabilities, as the Company's leases generally do not provide an implicit rate. Lease terms may
include options to extend or terminate when the Company is reasonably certain the option will be exercised. Lease
expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with
lease and non-lease components. The Company elected the practical expedient not to separate non-lease components
from lease components for the Company’s facility leases. The Company also elected to apply the short-term lease
measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for leases with
terms of 12 months or less.

115

Convertible Senior Notes

In accounting for the issuance of the convertible senior notes, the Company separated the notes into liability and
equity components. The carrying amount of the liability component was calculated by measuring the fair value of a
similar liability that did not have an associated convertible feature, using a discounted cash flow model with a risk
adjusted yield. The carrying amount of the equity component representing the conversion option was determined by
deducting the fair value of the liability component from the par value of the notes as a whole. This difference
represented a debt discount that was amortized to interest expense using the effective interest method over the term
of the notes. The equity component was not remeasured as long as it continued to meet the conditions for equity
classification. In accounting for the transaction costs related to the issuance of the notes, the Company allocated the
total amount incurred to the liability and equity components based on their relative fair values. Transaction costs
attributable to the liability component were netted with the liability component and amortized to interest expense
using the effective interest method over the term of the notes. Transaction costs attributable to the equity component
were netted with the equity component of the notes in additional paid-in capital in the consolidated balance sheets.

Upon adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
on January 1, 2021, the Company reclassified the carrying amount of the equity component of the cash conversion
feature including the allocated debt issuance costs from additional paid-in capital to convertible senior notes, net.
Convertible senior notes are accounted for as a liability and measured at their amortized cost. Transaction costs
related to the issuance of the notes are netted with the liability and are amortized to interest expense over the term of
the notes, using an effective interest rate method.

Revenue Recognition

The Company derives revenue from the provision of precision oncology testing services, as well as from
development services and other. Precision oncology testing services include genomic profiling and the delivery of
other genomic information derived from the Company’s platform. Development services include companion
diagnostic development and regulatory approval, clinical study setup, monitoring and maintenance, testing
development and support, GuardantConnect and GuardantINFORM. Other revenue includes amounts derived from
licensing the Company's technologies and kit fulfillment. The Company currently receives payments from third-
party commercial and governmental payers, certain hospitals and oncology centers and individual patients, as well
as biopharmaceutical companies, research institutes, international laboratory partners and distributors.

Revenues are recognized when control of services is transferred to customers, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those services. FASB ASC Topic 606, Revenue
from Contracts with Customers, provides for a five-step model that includes identifying the contract with a
customer, identifying the performance obligations in the contract, determining the transaction price, allocating the
transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a
performance obligation.

Precision oncology testing

The Company recognizes revenue from the sale of its precision oncology tests for clinical customers, including
certain hospitals, cancer centers, other institutions and patients, at the time results of the test are reported to
physicians. Most precision oncology tests requested by clinical customers are sold without a written agreement;
however, the Company determines an implied contract exists with its clinical customers. The Company identifies
each sale of its test to a clinical customer as a single performance obligation. With the exception of certain limited
contracted arrangements with insurance carriers and other institutions where the transaction price is fixed, a stated
contract price does not exist and the transaction price for each implied contract with clinical customers represents
variable consideration. The Company estimates the variable consideration under the portfolio approach and
considers the historical reimbursement data from third-party commercial and governmental payers and patients, as
well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the
estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to
assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain
uncertainty and require the use of significant judgment in the estimation of the variable consideration and
application of the constraint for such variable consideration. The Company analyzes its actual cash collections over
the expected reimbursement period and compares it with the estimated variable consideration for each portfolio and
any difference is recognized as an adjustment to estimated revenue after the expected reimbursement period, subject
to assessment of the risk of future revenue reversal. For the year ended December 31, 2022, 2021 and 2020, the
Company recorded $8.8 million, $19.3 million and $26.0 million as revenue, respectively, resulting from cash
collections exceeding the estimated variable consideration related to samples processed in previous years, including
revenue received from successful appeals of reimbursement denials, net of recoupments.

116

Revenue from sales of precision oncology tests to biopharmaceutical customers are based on a negotiated price per
test or on the basis of an agreement to provide certain testing volume over a defined period. The Company identifies
its promise to transfer a series of distinct tests to biopharmaceutical customers as a single performance obligation.
Precision oncology tests to biopharmaceutical customers are generally billed at a fixed price for each test performed.
For agreements involving testing volume to be satisfied over a defined period, revenue is recognized over time based
on the number of tests performed as the performance obligation is satisfied over time. Results of the Company’s
precision oncology services are delivered electronically, and as such there are no shipping or handling fees incurred
by the Company or billed to customers.

Development services and other

The Company performs development services for its biopharmaceutical customers utilizing its precision oncology
information platform. Development services typically represent a single performance obligation as the Company
performs a significant integration service, such as analytical validation and regulatory submissions. The individual
promises are not separately identifiable from other promises in the contracts and, therefore, are not distinct.
However, under certain contracts, a biopharmaceutical customer may engage the Company for multiple distinct
development services which are both capable of being distinct and separately identifiable from other promises in the
contracts and, therefore, distinct performance obligations.

The Company collaborates with biopharmaceutical companies in the development of new drugs. As part of these
collaborations, the Company provides services related to regulatory filings to support companion diagnostic device
submissions for the Company’s testing panels. Under these collaborations, the Company generates revenue from
achievement of milestones, as well as provision of on-going support. For the companion diagnostic development and
regulatory approval services performed, the Company is compensated through a combination of an upfront fee and
performance-based, non-refundable regulatory and other developmental milestone payments. The transaction price
of these contracts typically represents variable consideration. Application of the constraint for variable consideration
to milestone payments is an area that requires significant judgment. The Company evaluates factors such as the
scientific, clinical, regulatory, commercial, and other risks that must be managed to achieve the respective milestone
and the level of effort and investment required to achieve the respective milestone. In making this assessment, the
Company considers its historical experience with similar milestones, the degree of complexity and uncertainty
associated with each milestone, and whether achievement of the milestone is dependent on parties other than the
Company. The constraint for variable consideration is applied such that it is probable a significant reversal of
revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the
constraint for variable consideration is assessed and updated at each reporting period as a revision to the estimated
transaction price.

The Company recognizes companion diagnostic development and regulatory approval services revenue over the
period in which biopharmaceutical research and development services are provided. Specifically, the Company
recognizes revenue using an input method to measure progress, utilizing costs incurred to-date relative to total
expected costs as its measure of progress. The Company assesses the changes to the total expected cost estimates as
well as any incremental fees negotiated resulting from changes to the scope of the original contract in determining
the revenue recognition at each reporting period. For development of new products or services under these
arrangements, costs incurred before technological feasibility is reached are included as research and development
expenses in the Company’s consolidated statements of operations, while costs incurred thereafter are recorded as
cost of development services and other.

The Company also recognizes revenue from other development services, in addition to companion diagnostic
development and regulatory approval services noted above, such as clinical study setup, monitoring and
maintenance, testing development and support, GuardantConnect and GuardantINFORM. These revenues are
generally recognized over time based on an input method to measure progress in the period when the associated
services have been performed.

In addition, other revenue includes amounts derived from licensing the Company's digital sequencing technologies
to its domestic customers and international laboratory partners, and kit fulfillment. For the licensed technology, the
Company is compensated through royalty-based payments, non-refundable upfront payments, guaranteed minimum
payments, and/or sample milestone payments. Depending on the nature of the technology licensing arrangements,
and considering factors including but not limited to enforceable right to payment and payment terms, and if an asset
with alternative use is created, these revenues are recognized in the period when royalty-bearing sales occur, when
the technology transfer is complete, or over the technology transfer period. Kit fulfillment related revenues are
recognized when such products are delivered.

117

Contracts with multiple performance obligations

Contracts with biopharmaceutical customers and international laboratory partners may include multiple distinct
performance obligations, such as provision of precision oncology testing, the above-mentioned development
services, and digital sequencing technology licensing, among others. The Company evaluates the terms and
conditions included within its contracts with biopharmaceutical customers and international laboratory partners to
ensure appropriate revenue recognition, including whether services are considered distinct performance obligations
that should be accounted for separately versus together. The Company first identifies material promises, in contrast
to immaterial promises or administrative tasks, under the contract, and then evaluates whether these promises are
both capable of being distinct and distinct within the context of the contract. In assessing whether a promised service
is capable of being distinct, the Company considers whether the customer could benefit from the service either on its
own or together with other resources that are readily available to the customer, including factors such as the
research, development, and commercialization capabilities of a third party as well as the availability of the
associated expertise in the general marketplace. In assessing whether a promised service is distinct within the
context of the contract, the Company considers whether it provides a significant integration of the services, whether
the services significantly modify or customize one another, or whether the services are highly interdependent or
interrelated.

For contracts with multiple performance obligations, the transaction price is allocated to the separate performance
obligations on a relative standalone selling price basis. The Company determines standalone selling price by
considering the historical selling price of these performance obligations in similar transactions as well as other
factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive
pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each
performance obligation plus appropriate margin; or by using the residual approach if standalone selling price is not
observable, by reference to the total transaction price less the sum of the observable standalone selling prices of
other performance obligations promised in the contract.

Deferred revenue

Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue
recognition from contracts with customers. For example, development services and other contracts with
biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to
the extent cash is received prior to the Company’s performance of the related services. Contract liabilities are
relieved as the Company performs its obligations under the contract and revenue is consequently recognized. As of
December 31, 2022, the deferred revenue balance was $21.2 million, of which $3.8 million is considered long-term
and was recorded within other long-term liabilities on the accompanying consolidated balance sheets. As of
December 31, 2021, the deferred revenue balance was $11.3 million. Revenue recognized in the year ended
December 31, 2022 that was included in the deferred revenue balance as of December 31, 2021 was $7.6 million,
and revenue recognized in the year ended December 31, 2021 that was included in the deferred revenue balance as
of December 31, 2020 was $8.3 million, respectively.

Transaction price allocated to the remaining performance obligations

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been
recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as
revenues in future periods. The Company expects to recognize substantially all of the remaining transaction price in
the next 1-2 years.

Costs of Precision Oncology Testing

Cost of precision oncology testing generally consists of cost of materials, cost of labor, including bonus, benefit and
stock-based compensation, equipment and infrastructure expenses associated with processing test samples (including
sample accessioning, library preparation, sequencing, and quality control analyses), freight, curation of test results
for physicians, phlebotomy, and license fees due to third parties. Infrastructure expenses include depreciation of
laboratory equipment, lease costs, amortization of leasehold improvements, and information technology costs. Costs
associated with performing the Company’s tests are recorded as the tests are performed regardless of whether
revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of
revenues generated using the associated technology are recorded as expense at the time the related revenues are
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 applicable patent rights.

118

Cost of Development Services and Other

Cost of development service and other primarily includes costs incurred for the performance of development
services requested by the Company’s biopharmaceutical customers and other revenues included as noted above. For
development of new products, costs incurred before technological feasibility has been achieved are reported as
research and development expenses, while costs incurred thereafter are reported as cost of development services and
other.

Research and Development Expenses

Research and development expenses are comprised of costs incurred to develop technology and include
compensation and benefits, reagents and supplies used in research and development laboratory work, infrastructure
expenses, including allocated facility occupancy and information technology costs, contract services and other
outside costs. 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 the Company’s technology
capabilities are recorded as research and development unless they meet the criteria to be capitalized as internal-use
software costs.

Advertising

The Company expenses advertising costs as incurred. The Company incurred advertising costs of $8.9 million,
$2.4 million and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Stock-Based Compensation

Stock-based compensation related to stock options granted to the Company’s and the Joint Venture's employees,
directors and nonemployees is measured at the grant date based on the fair value of the award. The fair value is
recognized as expense over the requisite service period, which is generally the vesting period of the respective
awards. Compensation expense for stock options with performance metrics is calculated based upon expected
achievement of the metrics specified in the grant.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options granted under
the 2012 Stock Plan, the 2018 Incentive Award Plan, and the Joint Venture's 2020 Equity Incentive Plan, and stock
purchase rights granted under the 2018 Employee Stock Purchase Plan. The Black-Scholes option-pricing model
requires assumptions to be made related to the expected term of an award, expected volatility, risk-free rate and
expected dividend yield. The board of directors of the Joint Venture determined the fair value of common stock of
the Joint Venture. Forfeitures are accounted for as they occur.

For market-based restricted stock units, the Company derives the requisite service period using the Monte Carlo
simulation model and the related compensation expense is recognized over the derived service period using an
accelerated attribution model commencing on the grant date. Stock-based compensation expense will be recorded
regardless of whether the market conditions are achieved or not. If the related market condition is achieved earlier
than its estimated derived service period, the stock-based compensation expense will be accelerated, and a
cumulative catch-up expense will be recorded during the period in which the market condition is met.

The Company measures the grant date fair value of its service-based and performance-based restricted stock units
issued to employees based on the closing market price of the common stock on the date of grant. For restricted stock
units with only service-based vesting conditions, compensation expense is recognized in the Company’s
consolidated statement of operations on a straight-line basis over the requisite service period. Compensation expense
for restricted stock units with performance metrics is calculated based upon expected achievement of the metrics
specified in the grant, and is recognized in the Company’s consolidated statement of operations using an accelerated
attribution model over the requisite service period for each separately vesting portion of the award.

Income Taxes

119

The Company’s tax positions are subject to income tax audits. The Company recognizes the tax benefit of an
uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing
authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit
which is more likely than not to be realized upon settlement with the taxing authority. The Company recognizes
interest accrued and penalties related to unrecognized tax benefits in its tax provision. The Company evaluates
uncertain tax positions on a regular basis. The evaluations are based on a number of factors, including changes in
facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and
effective settlement of audit issues. The provision for income taxes includes the effects of any accruals that the
Company believes are appropriate, as well as the related net interest and penalties.

Net Loss Per Share Attributable to Common Stockholders

The Company calculates basic net loss per share attributable to common stockholders by dividing the net loss
attributable to common stockholders by the weighted-average number of shares of common stock outstanding for
the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all
potential dilutive common stock equivalents outstanding for the period determined using the treasury stock method
or the as-if converted method, as appropriate. For purposes of this calculation, stock options, restricted stock units,
shares issuable pursuant to the employee stock purchase plan, shares subject to repurchase from early exercised
options and contingently issuable shares under the convertible senior notes are considered common stock
equivalents but have been excluded from the calculation of diluted net loss per share attributable to common
stockholders as their effect is anti-dilutive.

3. Joint Venture

In May 2018, the Company and an affiliate of SoftBank formed and capitalized the Joint Venture for the sale,
marketing and distribution of the Company’s tests generally outside the Americas and Europe, and to accelerate
commercialization of our products in Asia, the Middle East and Africa.

Under the terms of the joint venture agreement, each party held an approximately 50% ownership interest in the
Joint Venture and two seats on the board of the Joint Venture. In June 2020, the board of directors of the Joint
Venture authorized the adoption of the Joint Venture’s 2020 Equity Incentive Plan pursuant to which 4,595,555
shares of Class B common stock were reserved for issuance.

Put-call arrangements

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

Additionally, each of the Company and SoftBank may exercise its respective put-call rights for the Company to
purchase all shares of the Joint Venture held by SoftBank in the event of (i) certain material disagreements relating
to the Joint Venture or its business that may seriously affect the ability of the Joint Venture to perform its obligations
under the joint venture agreement or may otherwise seriously impair the ability of the Joint Venture to conduct its
business in an effective matter, other than one relating to the Joint Venture’s business plan or to factual matters that
may be capable of expert determination; (ii) the effectiveness of the Company’s initial public offering, a change in
control of the Company, the seventh anniversary of the formation of the Joint Venture, or each subsequent
anniversary of each of the foregoing events; or (iii) a material breach of the joint venture agreement by the other
party that goes unremedied within 20 business days. Unless the shares of the Joint Venture are publicly traded and
listed on a nationally recognized stock exchange, the purchase price per share of the Joint Venture in these situations
would be determined by a third-party valuation firm on the assumption that the sale is on an arm’s-length basis on
the date of the put or call notice.

Prior to the completion of the Joint Venture Acquisition in June 2022, the Joint Venture was deemed to be a VIE,
and the Company had been identified as the VIE’s primary beneficiary. As the primary beneficiary, the Company
had consolidated the financial position, results of operations and cash flows of the Joint Venture in its financial
statements and all intercompany balances had been eliminated in consolidation. The Company had concluded the
Joint Venture did not meet the definition of a business upon consolidation as it lacked the processes required to
generate outputs. Upon consolidation no liabilities were assumed and other than cash, any identifiable assets were
related to intellectual property rights that the Company transferred to the Joint Venture shortly before it became its
primary beneficiary and therefore such transfer was treated as a common control transaction.

120

Prior to November 2021, the noncontrolling interest held by SoftBank contained embedded put-call redemption
features that were not solely within the Company’s control and had been classified outside of permanent equity in
the consolidated balance sheets. The put-call feature embedded in the redeemable noncontrolling interest did not
require bifurcation as it did not meet the definition of a derivative and was considered to be clearly and closely
related to the redeemable noncontrolling interest. The Company elected to recognize the changes in redemption
value immediately as they occur as if the put-call redemption feature were exercisable at the end of the reporting
period. The carrying value of the redeemable noncontrolling interest was first adjusted for the earnings or losses
attributable to the redeemable noncontrolling interest based on the percentage of the economic or ownership interest
retained in the consolidated VIE by the noncontrolling parties, and then adjusted to equal to its redemption amount,
or the fair value of the noncontrolling interest held by SoftBank, as if the redemption occurred at the end of the
reporting date. The adjustment of redeemable noncontrolling interest was recorded as an adjustment to net loss
attributable to Guardant Health, Inc. common stockholders in the Company's consolidated statement of operations.

In November 2021, the Company exercised its call right contained in the joint venture agreement with SoftBank to
purchase all of the shares held by SoftBank and its affiliates in consideration for the payment of the aggregate
purchase price to be determined based on an independent third-party valuation. Upon the Company's exercise of the
call right in November 2021, SoftBank no longer had the option to exercise its put right. In connection with
exercising the call right, the Company reclassified $78.0 million from redeemable noncontrolling interest to
noncontrolling interest liability.

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

4. Consolidated Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consist of the following:

As of December 31,

2022

2021

(in thousands)

Machinery and equipment ......................................................................................... $

95,764 $

Leasehold improvements ........................................................................................

Computer hardware ................................................................................................
Construction in progress(1)
Furniture and fixtures .............................................................................................

........................................................................................

Computer software .................................................................................................

99,781

29,744

20,598

8,367

1,797

63,022

38,702

16,685

55,873

3,683

1,320

Property and equipment, gross ........................................................................ $

256,051 $

179,285

Less: accumulated depreciation ..............................................................................

(88,131)

(54,824)

Property and equipment, net ........................................................................... $

167,920 $

124,461

(1) As of December 31, 2022 and 2021, $2.2 million and $45.8 million of construction in progress was related to leasehold improvements, furniture and
equipment for the office in Palo Alto, California, respectively. Starting from February 2022, part of the Palo Alto office has been put in service and
related construction in progress has been transferred to fixed assets.

Depreciation expense related to property and equipment was $33.4 million, $20.2 million and $14.1 million for the
years ended December 31, 2022, 2021 and 2020, respectively.

121

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

As of December 31,

2022

2021

(in thousands)

Accounts payable ...................................................................................................... $

68,911 $

Accrued compensation ..............................................................................................

Operating lease liabilities ..........................................................................................

Others ........................................................................................................................

55,788

21,878

29,240

38,517

42,496

12,856

11,492

Total accounts payable and accrued liabilities ................................................... $

175,817 $

105,361

5. Fair Value Measurements, Cash Equivalents and Marketable Securities

Financial instruments consist of cash equivalents, marketable securities, accounts receivable, net, prepaid expenses
and other current assets, net, and accounts payable and accrued liabilities. Cash equivalents and marketable
securities are stated at fair value. Prepaid expenses and other current assets, net, and accounts payable and accrued
liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected
receipt or payment date.

Fair value is defined as the exchange price that would be received from sale of an asset or paid to transfer a liability
in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. The identification of market participant assumptions provides a basis for
determining what inputs are to be used for pricing each asset or liability. A financial instrument’s classification
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value
measurement.

A fair value hierarchy has been established which gives precedence to fair value measurements calculated using
observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels
as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets or liabilities.

122

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level
of inputs used in such measurements were as follows:

Financial Assets:

Money market funds

U.S. government debt securities

Total cash equivalents

December 31, 2022

Fair Value

Level 1

Level 2

Level 3

(in thousands)

3,104 $

— $

14,987

—

14,987

18,091 $

3,104 $

14,987 $

U.S. government debt securities

Total short-term marketable debt securities

$ 869,584 $
$ 869,584 $

— $ 869,584 $
— $ 869,584 $

Long-term marketable equity securities

18,291 $

— $

Total

$ 905,966 $

21,395 $ 884,571 $

—

—
—

—

Financial Liabilities:

Contingent consideration

Total

6,430 $

— $

6,430

December 31, 2021

Fair Value

Level 1

Level 2

Level 3

(in thousands)

Financial Assets:

Money market funds

Total cash equivalents

$ 357,785 $ 357,785 $

— $

U.S. government debt securities

$ 440,546 $

— $ 440,546 $

Total short-term marketable debt securities

$ 440,546 $

— $ 440,546 $

U.S. government debt securities

$ 698,034 $

— $ 698,034 $

Total long-term marketable debt securities

$ 698,034 $

— $ 698,034 $

Total

$ 1,496,365 $ 357,785 $ 1,138,580 $

—

Financial Liabilities:

Contingent consideration

Total

3,625 $

— $

3,625

The Company measures the fair value of money market funds based on quoted prices in active markets for identical
securities. U.S. government debt securities are valued taking into consideration valuations obtained from third-party
pricing services. The pricing services utilize industry standard valuation models, including both income and market-
based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.
These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit
spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs.

123

In July 2022, one of the Company's equity investees completed its IPO, subsequent to which, the Company started to
account for the investment at fair value on a recurring basis, and classified the investment within Level 1 of the fair
value hierarchy as the investment is valued using the quoted market price. The Company is subject to a 2-year lock-
up period from the IPO date, during which the Company shall not transfer the investee's shares between accounts,
establish or cancel pledges, sell, or withdraw such shares, without approval from the local securities and exchange
commission. As of December 31, 2022 and 2021, the balance of the investment was $18.3 million and $26.1 million,
respectively, included in other assets, net, on the accompanying consolidated balance sheets.

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

Acquisition-related contingent consideration is measured at fair value on a quarterly basis and change in estimated
contingent consideration to be paid are included in operating expenses in the consolidated statements of operations.
The fair value of acquisition-related contingent consideration is estimated using a multiple-outcome discounted cash
flow valuation technique. Contingent consideration is classified within Level 3 of the fair value hierarchy, as it is
based on a probability that includes significant unobservable inputs. The significant unobservable inputs include a
probability-weighted estimate of achievement of certain commercialization milestones, and discount rate to present
value the expected payments. A significant change in any of these input factors in isolation could have a material
impact to fair value measurement. As of December 31, 2022, the Company recorded contingent consideration
liability of $6.4 million, net of payment made in September 2022, of which $4.9 million is considered long-term and
was recorded within other long-term liabilities on the accompanying consolidated balance sheets. As of
December 31, 2021, the Company recorded contingent consideration liability of $3.6 million within other long-term
liabilities on the accompanying consolidated balance sheets.

As of December 31, 2021, the fair value of the noncontrolling interest liability was considered to be a Level 3
measurement and was determined based on an annual internal rate of return of 20% on the initial amount of
$41.0 million invested by SoftBank in May 2018, to the date of Company's exercising the call right in November
2021. In June 2022, the Company purchased all of the shares held by SoftBank and its affiliates in consideration for
the cash payment of the aggregate purchase price of $177.8 million, which was determined by an independent
valuation firm using a combination of the income approach with consideration of discounted future cash flows and
the market approach with consideration of comparable publicly traded companies. The noncontrolling interest
liability was fully paid by June 30, 2022.

The following tables summarize the activities for the Level 3 financial instruments for the years ended December 31,
2022, 2021 and 2020:

Contingent Consideration
Year Ended December 31,
2021

2020

2022

Fair value — beginning of period

Increase (decrease) in fair value

Settlement

Fair value — end of period

(in thousands)

3,625 $

1,245 $

1,365

4,305

(1,500)

2,380

—

(120)

—

6,430 $

3,625 $

1,245

Noncontrolling Interest
Liability

Redeemable
Noncontrolling Interest
Year Ended December 31, Year Ended December 31,

2022

2021

2020

Fair value — beginning of period

Increase in fair value
Net loss for the period
Settlement
Reclassification of redeemable noncontrolling interest to

noncontrolling interest liability

Fair value — end of period

78,000 $
99,785
—
(177,785)

(in thousands)
— $
—
—
—

57,100 $
27,244
(6,344)
—

49,600
12,934
(5,434)
—

—
— $

78,000
78,000 $

(78,000)

— $

—
57,100

124

The Company considers the fair value of the Convertible Notes as of December 31, 2022 to be a Level 2
measurement. The fair value of the Convertible Notes is primarily affected by the trading price of the Company's
common stock and market interest rates. As such, the carrying value of the Convertible Notes does not reflect the
market rate. See Note 8, Debt, for additional information related to the fair value of the Convertible Notes.

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

Amortized
Cost

December 31, 2022

Gross
Unrealized
Gain

Gross
Unrealized
Loss

(in thousands)

Estimated Fair
Value

Money market fund

U.S. government debt securities

Total

3,104 $

901,342

904,446 $

— $

(16,779)

8 $

(16,779) $

3,104

884,571

887,675

Amortized
Cost

December 31, 2021

Gross
Unrealized
Gain

Gross
Unrealized
Loss

(in thousands)

Estimated Fair
Value

Money market fund

U.S. government debt securities

Total

357,785 $

1,142,172

— $

357,785

(3,594)

1,138,580

1,499,957 $

2 $

(3,594) $

1,496,365

The following table presents the estimated fair values and gross unrealized losses of the Company's marketable debt
securities that have been in a continuous unrealized loss position as of December 31, 2022. None of the Company’s
investments in marketable debt securities had been in an unrealized loss position for more than one year as of
December 31, 2021.

December 31, 2022

Less Than 12 Months
Gross
Unrealized
Loss

Estimated
Fair Value

12 Months or Greater
Gross
Unrealized
Loss

Estimated
Fair Value

Total

Estimated
Fair Value

Gross
Unrealized
Loss

(in thousands)

U.S. government debt

securities ....................... $ 170,975 $

(2,958) $ 685,754 $

(13,821) $ 856,729 $

(16,779)

Total ....................... $ 170,975 $

(2,958) $ 685,754 $

(13,821) $ 856,729 $

(16,779)

There have been no material realized gains or losses on marketable debt securities for the periods presented. The
Company determined that it did have the ability and intent to hold all marketable debt securities that have been in a
continuous loss position until maturity or recovery and the loss position was temporary due to market volatility, thus
there has been no recognition of credit losses in the years ended December 31, 2022, 2021 and 2020, respectively.
The Company recorded $7.8 million unrealized losses on marketable equity securities for the year ended
December 31, 2022, included in other income (expense), net on the accompanying consolidated statement of
operations. The Company did not record any unrealized gains or losses on marketable equity securities for the years
ended December 31, 2021 and 2020.

125

6. Patent License Acquisition

In January 2017, the Company entered into a license agreement with a biotechnology company, KeyGene N.V., or
KeyGene. An arbitration was initiated between the parties in 2018. In March 2020, the Company and KeyGene
entered into a settlement and patent license agreement, or the SPLA, to resolve the dispute and to acquire an
extended worldwide non-exclusive license to certain patent rights with respect to KeyGene’s Next Generation
Sequencing technologies along with certain covenant rights and research and development technology for a one-time
payment of $18.5 million, ending all future royalty obligations to KeyGene. This transaction was accounted for as an
asset acquisition as the purchase did not meet the definition of a business. The total consideration, including
$0.6 million of certain capitalizable transaction costs, was allocated to various components of the SPLA.

The Company allocated $9.4 million to the patent and covenant rights granted under the SPLA, which have useful
lives in the range of 6-12 years. The Company allocated $8.5 million to IPR&D technology, which have no
alternative future use and was included in research and development expenses for the year ended December 31,
2020. The remaining $1.2 million was allocated to the settlement of the prior dispute between the parties and was
included in general and administrative expenses for the year ended December 31, 2020.

7. Intangible Assets, Net and Goodwill

The following table presents details of purchased intangible assets as of December 31, 2022 and 2021:

December 31, 2022

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

(in thousands)

Remaining
Weighted-
Average
Useful Life

(in years)

11,886 $

(3,579) $

8,307

5,100
1,600

(2,747)
(533)

2,353
1,067

7.8

2.9
1.4

Intangible assets subject to amortization: ................

Acquired license .................................................. $
Non-compete agreements and other covenant

rights ..............................................................
Acquired technology ...........................................

Total intangible assets subject to

amortization ..............................................

18,586

(6,859)

11,727

Intangible assets not subject to amortization: ..........

Goodwill .............................................................

Total purchased intangible assets .............. $

3,290
21,876 $

—
(6,859) $

3,290
15,017

December 31, 2021

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

(in thousands)

Intangible assets subject to amortization: ................

Acquired license .................................................. $
Non-compete agreements and other covenant
rights ...................................................................

Total intangible assets subject to

amortization ..............................................
Intangible assets not subject to amortization: ..........
IPR&D ................................................................
Goodwill .............................................................

Total purchased intangible assets .............. $

11,886 $

(2,473) $

9,413

5,100

(1,906)

3,194

16,986

(4,379)

12,607

1,600
3,290
21,876 $

—
—
(4,379) $

1,600
3,290
17,497

Remaining
Weighted-
Average
Useful Life

(in years)

8.8

3.9

Amortization of finite-lived intangible assets was $2.5 million, $1.9 million and $1.8 million, for the years ended
December 31, 2022, 2021 and 2020, respectively.

126

The following table summarizes estimated future amortization expense of finite-lived intangible assets, net:

Year Ending December 31,

2023

2024

2025

2026
2027
2028 and thereafter

Total

8. Debt

Convertible Senior Notes

(in thousands)
2,747

2,219

1,670

1,212
1,107
2,772

11,727

In November 2020, the Company issued $1.15 billion principal amount of its 0% Convertible Senior Notes due
2027, or the 2027 Notes. The 2027 Notes do not bear interest, and the principal amount of the Notes will not accrete.
However, special interest and additional interest may accrue on the 2027 Notes at a rate per annum not exceeding
0.50% (subject to certain exceptions) upon the occurrence of certain events such as the failure to file certain reports
to the Securities and Exchange Commission, or to remove certain restrictive legends from the Notes. The Notes will
mature on November 15, 2027, unless repurchased, redeemed or converted earlier.

Before August 15, 2027, holders of the 2027 Notes will have the right to convert their 2027 Notes only under the
following circumstances:

•

during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter
ending on March 31, 2021, if the last reported sale price of the Company's common stock exceeds 130% of
the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter, or
the sale price condition;

during the five consecutive business days immediately after any ten consecutive trading day period, or the
measurement period, if the trading price per $1,000 principal amount of the Notes for each trading day of
the measurement period is less than 98% of the product of the last reported sale price of the Company's
common stock on such trading day and the conversion rate on such trading day; or

•

upon the occurrence of specified corporate events

From and after August 15, 2027, holders of the 2027 Notes may convert their 2027 Notes at any time at their
election until the close of business on the second scheduled trading day immediately before the maturity date.

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

The initial conversion rate is 7.1523 shares of common stock per $1,000 principal amount of 2027 Notes, which
represents an initial conversion price of approximately $139.82 per share of common stock. The conversion rate and
conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if
certain corporate events that constitute a “Make-Whole Fundamental Change” occur, then the conversion rate will,
in certain circumstances, be increased for a specified period of time.

127

The Company may not redeem the 2027 Notes at its option at any time before November 20, 2024. The Notes will
be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after
November 20, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, at a cash
redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest
and additional interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share
of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days,
whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day
immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately
before the date the Company sends such notice. In addition, calling any Note for redemption will constitute a Make-
Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion
of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” occur, then, subject to a limited exception for
certain cash mergers, holders of Notes may require the Company to repurchase their 2027 Notes at a cash repurchase
price equal to the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid special interest and
additional interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental
Change includes certain business combination transactions involving the Company and certain de-listing events with
respect to the Company’s common stock.

Since the 2027 Notes were not convertible as of December 31, 2022, the net carrying amount of the 2027 Notes was
classified as a long-term liability.

The following table sets forth the net carrying amounts of the 2027 Notes as of December 31, 2022 and 2021:

Liability component:

Principal

Less: debt issuance costs, net of amortization

Net carrying amount

As of December 31,

2022

2021

(in thousands)

$ 1,150,000 $ 1,150,000

(12,609)

(15,179)

$ 1,137,391 $ 1,134,821

The total estimated fair value of the 2027 Notes was $0.7 billion and $1.2 billion as of December 31, 2022 and 2021,
respectively. The fair value was determined based on the closing trading price per $100 of the 2027 Notes as of the
last day of trading for the period.

The following table sets forth interest expense recognized related to the Notes:

Amortization of debt discount

Amortization of debt issuance costs

Total interest expense recognized

For the Year Ended December 31,

2022

2021

2020

—

2,569

(in thousands)
$

—

2,564

4,593

136

4,729

Effective interest rate of the liability component

0.2 %

5.2 %

Note Hedges

To minimize the impact of potential economic dilution upon conversion of the 2027 Notes, the Company entered
into convertible note hedge transactions, or the 2027 Note Hedges, with respect to its common stock concurrent with
the issuance of the Notes. The 2027 Note Hedges cover, subject to customary adjustments, the number of shares of
common stock initially underlying the Notes. The strike price of the 2027 Note Hedges will initially be
approximately $182.60 per share, which represents a premium of 75% over the last reported sale price of the
Company’s common stock of $104.34 per share on November 16, 2020, and is subject to certain adjustments under
the terms of the 2027 Note Hedges.

128

The 2027 Note Hedges will expire upon maturity of the 2027 Notes. The 2027 Note Hedges are separate
transactions and are not part of the terms of the 2027 Notes. Holders of the 2027 Notes will not have any rights with
respect to the 2027 Note Hedges. The shares receivable related to the 2027 Note Hedges are excluded from the
calculation of diluted earnings per share as they are anti-dilutive.

As these transactions meet certain accounting criteria, the 2027 Note Hedges are recorded in stockholders’ equity
and are not accounted for as derivatives. The Company paid an aggregate amount of $90.0 million for the 2027 Note
Hedges, which has been recorded as a reduction to additional paid-in capital and will not be remeasured.

9. Leases

The Company has entered into various operating lease agreements for office space, data center, lab and warehouse
use, with remaining terms ranging from 1 year to 11 years some of which include one or more options to renew. As
leases approach maturity, the Company considers various factors such as market conditions and the terms of any
renewal options that may exist to determine whether it will renew the lease, as such, the Company does not include
renewal options in its lease terms for calculating its lease liability, as the renewal options allow it to maintain
operational flexibility and the Company is not reasonably certain it will exercise these renewal options at the time of
the lease commencement. In July 2020, the Company entered into two lease agreements for additional office space
in Palo Alto, California, or the Palo Alto Lease, and in San Diego, California, or the San Diego Lease. The San
Diego Lease has a term of 8 years with rent payments commencing in May 2022. The Palo Alto Lease has a term of
12 years with an option to renew the lease term for an additional 10 years which has not been considered in the
determination of ROU or the lease liability as the Company does not consider it reasonably certain of exercising the
renewal option. After the initial payment of $0.9 million in February 2022, the remaining rent payments for the Palo
Alto Lease commenced in July 2022. Both leases consist of fixed and variable payments and are being accounting
for as operating leases. The Company took possession of these facilities in March 2021. The Company estimated
the incremental borrowing rate to determine the present value of lease payments for the San Diego and Palo Alto
leases using trading data of the Company's convertible debt adjusted for credit rating and market yield curves.

Operating lease expense for the year ended December 31, 2022, 2021 and 2020, was $28.6 million, $24.7 million
and $5.6 million, respectively, which includes both lease and non-lease components (primarily common area
maintenance charges and property taxes).

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of December 31,
2021
2022

9.1

3.93 %

10.0

4.01 %

The following table summarizes the Company's future principal contractual obligations for operating lease
commitments as of December 31, 2022:

Year Ending December 31,

2023

2024

2025

2026

2027

2028 and thereafter

Total operating lease payments

Less: imputed interest

Total operating lease liabilities

Finance leases are not material to the Company's consolidated financial statements.

129

(in thousands)

30,361

32,856

32,220

27,715

24,479

125,157

272,788

(40,895)

231,893

10. Commitments and Contingencies

License Agreements

The Company has patent license agreements with four different parties. Under these agreements, the Company has
made one-time upfront and milestone payments, which it has capitalized and is amortizing to expense ratably over
the useful life of the underlying patent right(s). Under some of these agreements, the Company is obligated to pay
low single-digit percentage running royalties on net sales where the licensed patent right(s) are used in the product
or service sold, subject to minimum annual royalties or fees in certain agreements.

Royalty expenses were included in cost of precision oncology testing on the accompanying consolidated statements
of operations. The Company recognized royalty expenses of $0.7 million, $0.7 million and $1.1 million, or 0.2%,
0.2% and 0.4% of precision oncology testing revenue in each period, for the years ended December 31, 2022, 2021
and 2020, respectively.

Indemnification Agreements

The Company has entered into indemnification agreements with certain directors and officers that require the
Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or
service as directors or officers. To date, no such matters have arisen and the Company does not believe that the
outcome of any claims under indemnification arrangements will have a material adverse effect on its financial
positions, results of operations or cash flows. Accordingly, the Company has not recorded a liability related to such
indemnifications as of December 31, 2022.

Legal Proceedings

In addition to commitments and obligations incurred in the ordinary course of business, from time to time the
Company may be subject to a variety of claims and legal proceedings, including claims from customers and vendors,
pending and potential legal actions for damages, governmental investigations and other matters. For example, the
Company has received, and may in the future continue to receive letters, claims or complaints from others alleging
false advertising, patent infringement, violation of employment practices and trademark infringement. The Company
has also instituted, and may in the future institute, additional legal proceedings to enforce its rights and seek
remedies, such as monetary damages, injunctive relief and declaratory relief. The Company cannot predict the
results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material
impact on the Company because of diversion of management time and attention as well as the financial costs related
to resolving such disputes.

The Company and its affiliates are parties to the legal claims and proceedings described below. The Company is
vigorously defending itself against those claims and in those proceedings. Significant developments in those matters
are described below. If the Company is unsuccessful in defending, or if it determines to settle, any of these matters,
it may be required to pay substantial sums, be subject to injunction and/or be forced to change how it operates its
business, which could have a material adverse impact on its financial position or results of operations.

Unless otherwise stated, the Company is unable to reasonably estimate the loss or a range of possible loss for the
matters described below. Often, it is not reasonably possible for the Company to determine that a loss is probable for
a claim, or to reasonably estimate the amount of loss or a range of loss, because of the limited information available
and the potential effects of future events and decisions by third parties, such as courts and regulators, that will
determine the ultimate resolution of the claim. Many of the matters described are at preliminary stages, raise novel
theories of liability or seek an indeterminate amount of damages. It is not uncommon for claims to be resolved over
a number of years. The Company reviews loss contingencies at least quarterly to determine whether the loss
probability has changed and whether it can make a reasonable estimate of the possible loss or range of loss. When
the Company determines that a loss from a claim is probable and reasonably estimable, it records a liability in the
amount of its estimate for the ultimate loss. The Company also provides disclosure when it is reasonably possible
that a loss may be incurred or when it is reasonably possible that the amount of a loss will exceed its recorded
liability.

130

Intellectual Property Disputes

In August 2021, TwinStrand Biosciences, Inc., or TwinStrand Biosciences, and the University of Washington filed a
patent infringement suit in the United States District Court for the District of Delaware alleging that the Company
infringes U.S. Patent Nos. 10,287,631; 10,689,699; 10,752,951; and 10,760,127. The Company answered the
complaint in October 2021, denying TwinStrand Biosciences’ allegations and asserted counterclaims of invalidity,
unenforceability due to inequitable conduct and infringement of four of the Company’s patents. Discovery in the
case is ongoing and trial is scheduled to commence in November 2023.

In March 2022, Illumina Inc., or Illumina, filed suit in the United States District Court for the District of Delaware
against the Company and its Co-Chief Executive Officers, Drs. Helmy Eltoukhy and AmirAli Talasaz, or
collectively, the Defendants, alleging that Illumina is the owner of certain of the Company’s patents and patent
applications, and that the Defendants allegedly misappropriated Illumina trade secrets. Illumina also alleges that Drs.
Eltoukhy and Talasaz breached various Illumina employment contracts, company policies, and implied covenants of
good faith and fair dealing as part of their former employment with Illumina prior to starting the Company. Illumina
is requesting unspecified compensatory and punitive damages, attorneys’ fees, and specific performance in the form
of a declaration of ownership and assignment of intellectual property filed for or obtained by the Defendants that
derives from the alleged misuse of Illumina confidential information. The Defendants deny the allegations of
misconduct, and have moved to dismiss the complaint, and discovery has been stayed pending resolution of the
Company's motion.

False Advertising Dispute

In May 2021, the Company also filed a lawsuit against Natera, Inc., or Natera, in the United States District Court for
the Northern District of California, wherein the Company alleged that Natera is misleading healthcare providers
about the performance of the Company’s new oncology test, Guardant Reveal, by suggesting the test is inaccurate
and/or insensitive, and inferior to Natera’s Signatera assay. The Company is seeking an injunction to prevent Natera
from continuing to make false and misleading statements and to require Natera to take corrective actions. Natera has
asserted counterclaims of false and misleading statements, false advertising, unlawful trade practices and unfair
competition. The Company moved to dismiss Natera’s counterclaims, and in January 2022, the court granted in part
and denied in part the Company's motion to dismiss. The Company and Natera have both moved for summary
judgment on various claims and the motions are pending. Trial is scheduled to commence in July 2023.

Civil Investigative Demand

In January 2022, the Company received a Civil Investigative Demand, or CID, from the United States Attorney for
the Northern District of California in connection with an investigation under the False Claims Act. The CID requests
information and documents regarding billing of government-funded programs for the Company’s panel of genetic
tests known as Guardant360. The Company is fully cooperating with the investigation. At this time, the Company is
unable to predict the outcome of this investigation.

11. Common Stock

The Company’s common stockholders are entitled to dividends if and when declared by the Company’s Board of
Directors, or the Board of Directors. As of December 31, 2022 and 2021, no dividends on the Company’s common
stock had been declared by the Board of Directors.

The Company’s common stock has been reserved for the following potential future issuances:

Shares underlying outstanding stock options

Shares underlying unvested restricted stock units

Market-based restricted stock units ...........................................................................
Performance-based restricted stock units ..................................................................

Shares available for issuance under the 2018 Incentive Award Plan
Shares available for issuance under the 2018 Employee Stock Purchase Plan

As of December 31,

2022

3,402,574

3,687,888

2,260,764
341,713

5,438,296
1,118,311

2021

2,624,974

1,498,553

2,260,764
374,596

5,231,624
1,426,264

Total ..............................................................................................................

16,249,546

13,416,775

131

Follow-on Offering

In June 2020, the Company completed an underwritten public offering, in which it issued and sold 4,312,500 shares
of its common stock at a price of $84.00 per share. The Company received net proceeds of $354.6 million after
deducting underwriting discounts and commissions and offering expenses payable by the Company.

12. Stock-Based Compensation

2012 Stock Plan and 2018 Incentive Award Plan

In June 2012 and September 2018, the Company’s Board of Directors adopted and its stockholders approved the
Company’s 2012 Stock Plan, or as amended and restated, the 2012 Plan, and the Company’s 2018 Incentive Award
Plan, or the 2018 Plan, respectively, under which the Company may grant cash and equity incentive awards such as
stock options, restricted shares, stock units and stock appreciation rights to its employees and non-employees. Stock
options granted may be either incentive stock options or nonstatutory stock options. Shares issued under the 2018
Plan may be authorized but unissued shares, or shares purchased in the open market or treasury shares. Upon
effectiveness of the 2018 Plan in connection with the IPO in October 2018, the 2012 Plan was terminated and
508,847 shares reserved under the 2012 Plan were forfeited. Any outstanding awards granted under the 2012 Plan
remain outstanding, subject to the terms of the 2012 Plan and applicable award agreement, and further cancellation
of awards granted under the 2012 Plan are not available for grant in the future. No further grants will be made under
the 2012 Plan.

132

Stock Option Activity

A summary of the Company’s stock option activity under the 2012 Plan and the 2018 Plan and related information is
as follows:

Options Outstanding

Shares
Available for
Grant

Shares
Subject to
Options
Outstanding

Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual
Life (Years)

2,726,225

4,494,889 $

10.90

7.7

Aggregate
Intrinsic
Value

(in thousands)
306,392
$

3,689,000

—

(127,590)

127,590

—

(1,446,843)

20,370

(74,455)

81.78

6.59

12.13

(823,454)
103,742

(3,391,148)

—
—

—

Balance as of January 1, 2020
2018 Plan annual increase(1)
Granted

Exercised

Canceled

Restricted stock units granted
Restricted stock units canceled
Market-based restricted stock units

granted

Performance-based restricted stock

units granted

Balance as of December 31, 2020

2018 Plan annual increase(1)

1,819,223

3,689,000

(377,922)

—
3,101,181

—

15.80

6.9

350,670

Granted

Exercised

Canceled
Restricted stock units granted
Restricted stock units canceled
Market-based restricted stock units

canceled

Performance-based restricted stock

units granted

Performance-based restricted stock

units canceled

Balance as of December 31, 2021
2018 Plan annual increase(1)
Granted
Granted in connection with the Joint

Venture Acquisition

Exercised
Canceled
Restricted stock units granted
Restricted stock units canceled
Performance-based restricted stock

units granted

Performance-based restricted stock

units canceled

Balance as of December 31, 2022
Vested and Exercisable as of

December 31, 2022

(345,774)

345,774

119.82

—

(693,074)

65,523
(873,916)
315,988

558,254

(52,917)

(128,907)

—
—

—

—
56,243
2,624,974
5,231,624
3,689,000
—
(1,051,466) 1,051,466

(15,128)

15,128

—
56,391

(228,311)
(60,683)

11.19

47.51

29.17

6.5

193,014

44.86

4.90

6.29
90.84

(2,995,533)
490,525

(26,935)

59,818
5,438,296

—
—

—

3,402,574 $

34.34

6.8 $

39,749

2,056,695 $

19.88

5.2 $

38,837

(1)

Effective as of January 1, 2020, 2021 and 2022, 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.

133

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock
and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised was
$12.2 million, $83.5 million and $120.0 million for the years ended December 31, 2022, 2021 and 2020,
respectively.

The weighted-average grant date fair value of options granted was $28.61, $70.25 and $48.99 per share for the years
ended December 31, 2022, 2021 and 2020, respectively.

Future stock-based compensation for unvested options as of December 31, 2022 was $45.0 million, which is
expected to be recognized over a weighted-average period of 3.0 years.

On December 31, 2020, the Company modified one of the performance based awards issued to a nonemployee
which resulted in reversal of expense of $0.7 million due to options not vested. There was no such modification in
2022 and 2021.

Restricted Stock Units

A summary of the Company’s restricted stock unit activity excluding the performance-based and market-based
restricted stock units under the 2012 Plan and the 2018 Plan and related information is as follows:

Restricted Stock
Units
Outstanding

Weighted-Average
Grant Date Fair
Value

Balance as of January 1, 2020

Granted

Vested and released

Canceled

Balance as of December 31, 2020

Granted

Vested and released

Canceled

Balance as of December 31, 2021

Granted

Granted in connection with the Joint Venture Acquisition

Vested and released

Canceled

496,131

823,454

(97,188)

(103,742)

1,118,655

873,916

(178,030)

(315,988)

1,498,553

2,902,217

93,316

(315,673)

(490,525)

Balance as of December 31, 2022

3,687,888

82.08

96.39

81.43

79.72

92.89

123.36

92.14

97.79

109.72

45.04

38.24

96.36

90.52

60.70

Future stock-based compensation for unvested restricted stock units as of December 31, 2022 was $190.4 million,
which is expected to be recognized over a weighted-average period of 3.0 years.

Performance-based Restricted Stock Units

Since November 2020, the Compensation Committee of the Board of Directors started to approve, and the Company
started to grant performance-based restricted stock units, or PSUs, under the 2018 Plan. The PSUs granted to
employees consist of financial and operational metrics to be met over a performance period of 1.5 years to 4 years
and an additional service period requirement of six months to one year after the performance metrics are met. The
PSUs granted to a consultant consistent of operational metrics to be met over a performance period of 4 years. The
PSUs are expected to be expensed over a period of approximately 2.5 years to 4.5 years subject to meeting the
respective performance metrics and service requirements. As of December 31, 2022, a significant portion of these
PSUs are not expected to achieve the related performance metrics, and therefore, no stock-based compensation
expense was recorded for the PSUs that were not probable to vest.

134

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

Performance-
based Restricted
Stock Units
Outstanding

Weighted-
Average Grant
Date Fair Value

Balance as of January 1, 2020 ..........................................................................

— $

Granted .........................................................................................................

Balance as of December 31, 2020 ....................................................................

Granted .........................................................................................................

377,922

52,917

Canceled .......................................................................................................

(56,243)

Balance as of December 31, 2021 ....................................................................

Granted .........................................................................................................

Canceled .......................................................................................................

Balance as of December 31, 2022 ....................................................................

374,596

26,935

(59,818)

341,713 $

—

113.40

135.94

113.40

116.58

37.50

114.94

110.64

Stock-based compensation recorded for the PSUs for the years ended December 31, 2022, 2021 and 2020 was $1.3
million, $1.3 million and $0.1 million, respectively. Future stock-based compensation for unvested PSUs that are
probable to vest as of December 31, 2022 was $2.9 million, which is expected to be recognized over a weighted-
average period of 2.1 years.

Market-based Restricted Stock Units

In May 2020, the Board of Directors approved and granted 1,695,574 market-based restricted stock units, or MSUs,
under the 2018 Plan to each of the Company's Co-Chief Executive Officers, which is subject to the achievement of
market-based share price goals established by the Board of Directors. The MSUs consist of three separate tranches
and the vesting of each tranche is subject to the Company's common stock closing price being maintained at or
above a predetermined share price goal for a period of 30 consecutive calendar days. The share price goal can be met
any time during the seven-year performance period from the date of grant. Upon vesting, the MSUs must be held for
a period of six to twelve months depending on the time of vesting within the seven-year performance period. The
vesting of the MSUs can also be triggered upon a change in control event and achievement of a certain change in
control price goal, or when there is a qualifying termination or in the event of death or disability. Any MSUs that
remain unvested at the end of the seven-year performance period will automatically be forfeited and terminated
without further consideration. The following table presents additional information relating to each MSU award:

Tranche

Price Goal

Tranche 1

$120 per share

Tranche 2

$150 per share

Tranche 3

$200 per share

Number of
RSUs

565,192

565,191

The grant date fair values of the MSUs were determined using a Monte Carlo valuation model for each tranche. The
related stock-based compensation expense for each tranche is recognized based on an accelerated attribution method
over the estimated derived service period. If the related share price goal is achieved earlier than its expected derived
service period, the stock-based compensation expense will be recognized as a cumulative catch-up expense from the
grant date to that point in time in achieving the share price goal. The derived service period is the median duration of
the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation
model. The Monte Carlo valuation model uses assumptions such as volatility, risk-free interest rate, cost of equity
and dividend estimated for the performance period of the MSU. The weighted-average grant date fair value of the
MSUs was $67.00 per share and the weighted-average derived service period was estimated to be in the range of
0.83 – 2.07 years.

135

On January 1, 2021, Tranche 1 of the MSUs became vested because it had met both service requirement and market-
based performance metrics as the predetermined share price goal of $120 per share was achieved for a period of 30
consecutive calendar days. A summary of the Company’s market-based restricted stock unit activity under the 2018
Plan and related information is as follows:

Market-based
Restricted Stock
Units
Outstanding

Weighted-
Average Grant
Date Fair Value

Balance as of January 1, 2020 ..........................................................................

— $

Granted .........................................................................................................

Balance as of December 31, 2020 ....................................................................

Vested and released ......................................................................................
Canceled (1)

...................................................................................................

3,391,148

(572,130)

(558,254)

Balance as of December 31, 2021 ....................................................................

2,260,764

Balance as of December 31, 2022 ....................................................................

2,260,764 $

—

67.00

70.58

65.20

(1)

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

No MSUs were granted, vested or canceled during the year ended December 31, 2022. The MSUs were fully
expensed as of June 30, 2022. Stock-based compensation for the MSUs for the years ended December 31, 2022,
2021 and 2020 was $16.1 million, $99.2 million and $111.9 million, respectively, which was recorded in general
and administrative expenses on the accompanying consolidated statement of operations. Any MSUs that remain
unvested at the end of the seven-year performance period will automatically be forfeited and terminated without
further consideration.

AMEA 2020 Equity Incentive Plan

In August 2020, the board of directors of the Joint Venture approved its 2020 Equity Incentive Plan, or the AMEA
2020 Plan, under which the Joint Venture may grant equity incentive awards such as stock options, restricted stock,
restricted stock units, stock appreciation rights and cash-based awards to its employees and non-employees. Stock
options granted may be either incentive stock options or nonstatutory stock options. Incentive stock options may be
granted only to employees of the Joint Venture or its affiliates. Nonstatutory stock options may be granted to
employees, directors and non-employee consultants. Stock options may be granted at an exercise price of not less
than the fair market value of the Joint Venture's common stock on the date of grant, determined by the board of
directors of the Joint Venture. Options generally vest over 4 years and expire as determined by the board of directors
of the Joint Venture, provided that the term of options may not exceed 10 years from the date of grant. For
individuals holding more than 10% of the total combined voting power of all classes of stock of the Joint Venture,
the exercise price of an option will not be less than 110% of the fair market value of the Joint Venture's common
stock on the date of grant, and the term of the option will not exceed 5 years. A total of 4,595,555 shares of the Joint
Venture's Class B common stock were initially reserved for issuance under the AMEA 2020 Plan, and the number of
shares may be increased in accordance with the terms of the AMEA 2020 Plan.

In June 2022, in connection with the Joint Venture Acquisition, the Company issued a tender offer to purchase the
Joint Venture's Class B common stock issued and issuable upon exercise of vested Joint Venture's stock options, at a
price of $4.44 per share determined pursuant to an independent valuation. In July 2022, the Company settled the
tender offer with the 39 grantees for a total amount of $13.7 million. In addition, in connection with the Joint
Venture Acquisition, the unvested Joint Venture's stock options were cancelled and such grantees received
replacement awards covering a number of shares of the Company's common stock. The replacement awards, valued
at $4.1 million, are subject to the same vesting schedule that applied to the unvested Joint Venture's stock option
immediately prior to the close of the Joint Venture Acquisition transaction, to be recognized over a weighted-
average period of 2.2 years. The Company accounted for this as a modification which resulted in an immaterial
incremental stock-based compensation expense. After the settlement of the tender offer in July 2022, the Company
cancelled the AMEA 2020 Plan.

136

A summary of the Joint Venture's stock option activity under the AMEA 2020 Plan and related information is as
follows:

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 January 1, 2020

Shares authorized

—

4,595,555

— $

—

Granted

Canceled

(4,062,224)

4,062,224

8,889

(8,889)

Balance as of December 31, 2020

542,220

4,053,335

Granted

Exercised

Canceled

Balance as of December 31, 2021

Exercised

Canceled
Canceled in connection with the
Joint Venture Acquisition

Balance as of December 31, 2022
Vested and Exercisable as of

December 31, 2022

(826,667)

826,667

—

625,375

340,928

(602,408)

(625,375)

3,652,219

— (2,051,645)

82,407

(82,407)

(423,335)

(1,518,167)

—

— $

—

0.58

—

— $

—

0.0 $

—

9.6

—

8.8

—

0.0 $

—

No stock options were granted under the AMEA 2020 Plan for the year ended December 31, 2022. The weighted-
average grant date fair value of options granted under the AMEA 2020 Plan was $0.33 and $0.33 per share for the
years ended December 31, 2021 and 2020, respectively.

Stock-Based Compensation Expense

The following table presents the effect of employee and non-employee related stock-based compensation expense
including the Joint Venture:

Year Ended December 31,

2022

2021

2020

Cost of precision oncology testing

Research and development expense

Sales and marketing expense

General and administrative expense

(in thousands)

5,498 $

3,468 $

26,630

25,442

37,115

18,907

15,479

113,595

122,971

1,839

10,024

9,279

Total stock-based compensation expense

94,685 $

151,449 $

144,113

137

Valuation of Stock Options

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

Expected term (in years)

Expected volatility

Risk-free interest rate

Expected dividend yield

Year Ended December 31,

2022

2021

2020

5.50 – 6.10

5.49 – 6.06

5.50 – 6.10

63.3% – 67.6%

63.6% – 66.7%

63.6% – 73.3%

1.9% – 4.4%

0.3% – 1.3%

0.3% – 1.6%

—%

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

Fair Value of Common Stock

The fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its
common stock, which is traded on the Nasdaq Global Select Market. The grant date fair value of the Joint Venture's
common stock was determined by the board of directors of the Joint Venture. The grant date fair value of the Joint
Venture’s common stock was determined using valuation methodologies which utilize certain assumptions including
probability weighting of events, volatility, time to liquidation, a risk-free interest rate and an assumption for a
discount for lack of marketability. In determining the fair value of the Joint Venture’s common stock, the
methodologies used to estimate the enterprise value of the Joint Venture were performed using methodologies,
approaches, and assumptions consistent with the American Institute of Certified Public Accountants Accounting and
Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Expected Term

The expected term represents the period that the options granted are expected to be outstanding and is determined
using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as
the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to
estimate expected term.

Expected Volatility

Prior to the commencement of trading of the Company’s common stock on the Nasdaq Global Select Market on
October 4, 2018 in connection with the IPO, there was no active trading market for the Company’s common stock.
Due to limited historical data for the trading of the Company’s common stock, expected volatility is estimated based
on the average volatility for comparable publicly traded peer group companies in the same industry plus the
Company's expected volatility for the available periods. The comparable companies are chosen based on their
similar size, stage in the life cycle or area of specialty.

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

Risk-Free Interest Rate

The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock
options.

Expected Dividend Yield

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

138

Valuation of MSUs

The estimated fair value of the MSUs was determined using a Monte Carlo simulation model. The valuation
assumptions used were substantially consistent with the assumption used to value stock options with the exception
of the following:

Expected Volatility

Due to limited historical data for the trading of the Company’s common stock, expected volatility is estimated based
on the average volatility for comparable publicly traded peer group companies and implied volatility of publicly
traded options in the same industry plus the Company's expected volatility for the available periods. The comparable
companies are chosen based on their similar size, stage in the life cycle or area of specialty.

Expected Term

The expected term represents the derived service period for the respective tranches which has been estimated using
the Monte Carlo simulation model.

Risky Rate

The risky rate represents the Company's cost of equity.

Discount for Lack of Marketability

The discount for lack of marketability represents the discount applied for post vest term restrictions and has been
derived using the Monte Carlo simulation model.

The following assumptions were used to calculate the stock-based compensation for MSUs: a weighted-average
expected term of 0.83 – 2.07 years; expected volatility of 65.5%; a risk-free interest rate of 0.53%; a zero dividend
yield; a risky rate (cost of equity) of 16%; and a discount for post-vesting restrictions of 10.4% – 14.5%.

2018 Employee Stock Purchase Plan

In September 2018, the Company’s Board of Directors adopted and its stockholders approved the 2018 Employee
Stock Purchase Plan, or the ESPP. A total of 922,250 shares of common stock were initially reserved for issuance
under the ESPP. Effective as of January 1, 2020, an additional 942,614 shares of common stock became available
for issuance under the ESPP.

Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll
deductions, up to 10% of their earnings for the purchase of the Company’s common stock at a discounted price per
share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the
Company’s common stock on the first or last day of the offering period, whichever is lower. The ESPP provides for
separate six-month offering periods beginning on May 15 and November 15 of each year.

Shares of common stock purchased under the ESPP were 307,953, 110,227 and 96,040, for the years ended
December 31, 2022, 2021 and 2020, respectively. The total compensation expense related to the ESPP was $4.6
million, $3.5 million and $3.0 million, for the years ended December 31, 2022, 2021 and 2020, respectively.

The fair value of the stock purchase right granted under the ESPP was estimated on the first day of each offering
period using the Black-Scholes option pricing model. The valuation assumptions used were substantially consistent
with the assumption used to value stock options with the exception of the expected term which was based on the
term of each purchase period.

The grant date fair value of the stock purchase right granted under the ESPP was estimated using a Black-Scholes
option-pricing model with the following assumptions:

Expected term (in years)
Expected volatility
Risk-free interest rate
Expected dividend yield

Year Ended December 31,

2022

2021

2020

0.50
81.8% – 92.0%
1.5% – 4.5%
—%

0.50
46.5% – 50.8%
—% – 0.1%
—%

0.50
45.7% – 73.2%
0.1% – 0.2%
—%

139

As of December 31, 2022, the unrecognized stock-based compensation expense related to the ESPP was $2.8
million, which is expected to be recognized over the remaining term of the offering period of 0.4 years.

13. Net Loss Per Share Attributable to Guardant Health, Inc. Common Stockholders

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

Net loss

Adjustment of redeemable noncontrolling interest
Net loss attributable to Guardant Health, Inc. common

stockholders, basic and diluted

Net loss per share attributable to Guardant Health, Inc. common

stockholders, basic and diluted

Weighted-average shares used in computing net loss per share
attributable to Guardant Health, Inc. common stockholders,
basic and diluted

Year Ended December 31,

2022

2021

2020

(in thousands, except per share data)

(654,588) $

(384,770) $

(246,283)

—

(20,900)

(7,500)

(654,588) $

(405,670) $

(253,783)

(6.41) $

(4.00) $

(2.60)

102,178

101,314

97,504

Since the Company was in a loss position for all periods presented, basic net loss per share attributable to Guardant
Health, Inc. common stockholders is the same as diluted net loss per share attributable to Guardant Health, Inc.
common stockholders, as the inclusion of all potential shares of common stock outstanding would have been anti-
dilutive. The following weighted-average common stock equivalents were excluded from the calculation of diluted
net loss per share attributable to Guardant Health, Inc. common stockholders for the periods presented as they had an
anti-dilutive effect:

Year Ended December 31,

2022

2021

2020

(in thousands)

Stock options issued and outstanding (1)
Restricted stock units ........................................................................

MSUs .................................................................................................

PSUs ..................................................................................................

ESPP obligation .................................................................................

Common stock subject to repurchase ................................................

Convertible senior notes ....................................................................

Total ...........................................................................................

2,799

2,342

2,261

354

105

—

8,225

16,086

2,715

1,208

2,357

397

8,225

14,954

3,830

687

2,031

961

7,624

(1) Excludes stock options of 3,652,219 and 4,053,335 shares of the Joint Venture's Class B common stock granted under the AMEA 2020 Plan as of

December 31, 2021 and 2020, respectively.

14. Income Taxes

The components of loss before provision for income taxes were as follows (in thousands):

United States

Foreign

Total

Year Ended December 31,

2022

2021

2020

(in thousands)

(659,757) $

(384,976) $

(246,463)

6,308

506

559

(653,449)

(384,470)

(245,904)

140

The components of the provision for income taxes are as follows:

Current:

State

Foreign

Total current tax expense

Deferred:

Federal

State

Foreign

Total deferred tax expense

Total provision for income taxes

Year Ended December 31,

2022

2021

2020

(in thousands)

127 $

4 $

1,248

118

1,375 $

122 $

18 $

108 $

(257)

(236) $

1,139 $

178 $

300 $

242

247

184

(86)

132

379

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of
the Company’s deferred tax assets are as follows:

Deferred tax assets:

Net operating losses carryforwards

Capitalized research and development costs

Property, equipment and intangible assets

Accruals and reserves

Research and development credits

Stock-based compensation

Lease liabilities

Other

Total deferred tax asset

Deferred tax liabilities:

Section 481 (a) adjustment
Right-of-use asset

Other

Total deferred tax liabilities

Less: valuation allowance

Net deferred tax assets

As of December 31,

2022

2021

(in thousands)

294,757 $

232,657

89,084

7,422

12,917

49,865

16,507

59,757

4,378

—

13,233

10,326

33,977

10,217

59,465

948

534,687 $

360,823

—

(44,825)

(316)

(305)
(47,130)

(14)

(45,141)

(47,449)

(489,040)

(313,125)

506 $

249

141

The following table presents a reconciliation of the income tax expense computed at the statutory federal rate and
the Company’s income tax expense for the periods presented:

Tax at the statutory federal rate

Other nondeductible items

Stock-based compensation

Research and development credits

Change in valuation allowance

State taxes, net of federal benefits

Other

Year Ended December 31,

2022

2021

2020

(in thousands)

$ (137,276) $

(80,739) $

(51,639)

1,795

7,905

1,399

1,354

786

(13,382)

(15,738)

(14,956)

(7,890)

175,916

106,227

81,395

(28,522)

(14,998)

(11,119)

(2,941)

2,013

2,228

379

Total provision for (benefit from) income taxes

1,139 $

300 $

The Company’s actual tax expense differed from the statutory federal income tax expense using a tax rate of 21%
for the year ended December 31, 2022, 2021 and 2020, primarily due to the change in valuation allowance, state
income taxes net of federal benefits, research and development tax credits, and stock-based compensation expenses.

As of December 31, 2022 and 2021, the Company had a net operating loss carryforwards of $1.2 billion and $1.0
billion for federal purposes, and $871.4 million and $542.0 million for state and local purposes, respectively, which
may be subject to limitations as described below. If not utilized, these carryforwards will begin to expire in 2031 for
federal, and 2023 for state and local purposes. Federal net operating losses incurred in 2018 and in future years may
be carried forward indefinitely, but the deductibility of such federal net operating losses is limited. Some but not all
states conform to the federal treatment of net operating losses.

As of December 31, 2022 and 2021, the Company had research and development tax credit carryforwards for federal
tax purposes of $32.7 million and $21.4 million, and state research and development tax credit carryforwards of
$21.8 million and $15.9 million, respectively. The federal research and development tax credit carryforwards will
expire at various dates beginning in the year 2032. The Company’s state research and development tax credit
carryforwards do not expire.

Utilization of the net operating loss, or NOL, carryforwards and credits may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and
similar state provisions. The annual limitation may result in the expiration of NOL carryforwards and credits before
utilization. Current laws impose substantial restrictions on the utilization of NOL carryforwards and credits in the
event of an “ownership change” within a three-year period as defined by the Internal Revenue Code Section 382, or
Section 382. If there should be an ownership change, the Company’s ability to utilize its NOL carryforwards and
credits could be limited. The Company has not performed a Section 382 analysis.

Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income
within the carryforward period. Due to the Company’s history of U.S. operating losses, the Company believes that
the recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more
likely than not to be realized and, accordingly, have provided a full valuation allowance against net U.S. deferred tax
assets. The net change in total valuation allowance was an increase of $175.9 million, an increase of $188.7 million
and a decrease of $0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company has not recorded a provision for deferred U.S. tax expense that could result from the remittance of
foreign undistributed earnings since the Company intends to reinvest the earnings in its foreign subsidiaries
indefinitely.

The Company has made an accounting policy election to treat Global Intangible Low-Taxed Income, or GILTI,
taxes as a current period expense rather than including these amounts in the measurement of deferred taxes.

Uncertain Tax Positions

The Company records unrecognized tax benefits, where appropriate, for all uncertain income tax positions. The
Company recorded unrecognized tax benefits for uncertain tax positions of $29.6 million and $20.1 million as of
December 31, 2022 and 2021, respectively, which, if recognized, would not affect the effective income tax rate due
to the valuation allowance that currently offsets the deferred tax assets.

142

A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows:

Year Ended December 31,

2022

2021

2020

(in thousands)

Unrecognized tax benefits - Beginning of period

20,100 $

11,269 $

Increases related to current year’s tax positions

Increases related to prior years’ tax positions

9,233

301

8,223

608

6,543

4,666

Unrecognized tax benefits - End of period

29,634 $

20,100 $

11,269

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a
component of income tax expense. During the years ended December 31, 2022, 2021 and 2020, the Company
recognized no interest and penalties associated with unrecognized tax benefits. There are no tax positions for which
it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease
within twelve months of the reporting date.

Due to the net operating loss carryforwards, all years remain open for income tax examination by tax authorities in
the United States, various states and foreign tax jurisdictions in which the Company files tax returns.

15. Employee Benefit Plan

The Company sponsors a 401(k) plan, and pursuant to its terms, eligible employees can elect to contribute to the
401(k) plan, subject to certain limitations, up to the lesser of the statutory maximum or 100% of eligible
compensation on a pre-tax basis. For the years ended December 31, 2022, 2021 and 2020, the Company contributed
$6.7 million, $4.5 million and $2.8 million, respectively, to match employee contributions as permitted by the plan.
The Company pays the administrative costs for the plan.

16. Segment and Geographic Information

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

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

Year Ended December 31,

2022

2021

2020

(in thousands)

United States ...................................................................................... $
International(1) ....................................................................................

420,618 $

352,561 $

264,657

28,920

21,092

22,073

Total revenue ........................................................................... $

449,538 $

373,653 $

286,730

(1) No single country outside of the United States accounted for more than 10% of total revenue during each of the years ended December 31, 2022,

2021 and 2020.

As of December 31, 2022 and 2021, 99% and 98%, respectively, of the Company’s long-lived assets and right-of-
use assets are located in the United States.

17. Related Party Transactions

As discussed in Note 3, Joint Venture, in May 2018, the Company and an affiliate of SoftBank formed and
capitalized the Joint Venture to accelerate commercialization of its products in Asia, the Middle East and Africa.
Prior to the completion of the Joint Venture Acquisition in June 2022, the Company had consolidated the financial
position, results of operations and cash flows of the Joint Venture in its financial statements and all intercompany
balances had been eliminated in consolidation.

143

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our co-chief executive officers, or Co-CEOs, and chief financial officer,
or CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act), as of the end of the period
covered by this Annual Report on Form 10-K. Based on that evaluation, our Co-CEOs and CFO have concluded that
as of December 31, 2022, our disclosure controls and procedures are designed at a reasonable assurance level and
are effective to provide reasonable assurance that information we are required to disclose in reports that we file or
submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified
in the rules and forms of the SEC, and that such required information is accumulated and communicated to our
management, including our Co-CEOs and CFO, as appropriate, to allow timely decisions regarding required
disclosures.

Management report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in the Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our
management, including our Co-CEOs and CFO, we conducted an assessment of the effectiveness of our internal
control over financial reporting based on the framework in Internal Control Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of our assessment
under the framework in the Internal Control—Integrated Framework (2013), our management concluded that our
internal control over financial reporting was effective as of December 31, 2022.The effectiveness of our internal
control over financial reporting as of December 31, 2022, has been audited by an independent registered public
accounting firm, as stated in their report included in Part II, Item 8, “Financial Statements” of this Annual Report
on Form 10-K.

Changes in internal control

There was no change in our internal control over financial reporting identified in connection with the evaluation
required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this
Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

Inherent Limitations Over Internal Controls

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of our assets that could have a material effect on the financial statements.

Management, including our Co-CEOs and CFO, do not expect that our internal controls will prevent or detect all
errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide
absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of
the effectiveness of controls in future periods are subject to the risk that those internal controls may become
inadequate because of changes in business conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

144

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Guardant Health, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Guardant Health, Inc.’s internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Guardant Health, Inc. (the
Company) maintained, in all material respects, effective internal control over financial reporting as of December 31,
2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021 and
consolidated statements of operations, comprehensive loss, redeemable noncontrolling interest and stockholders’
equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and
our report dated February 23, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ Ernst & Young LLP

San Mateo, California
February 23, 2023

Item 9B. Other Information.

None.

145

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

146

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item 10 of Form 10-K will be included in our 2023 Proxy Statement to be filed
with the SEC in connection with the solicitation of proxies for our 2023 Annual Meeting of Stockholders and is
incorporated herein by reference. The 2023 Proxy Statement will be filed with the SEC within 120 days after the end
of the fiscal year to which this Annual Report on Form 10-K relates.

Item 11. Executive Compensation

The information required by this Item 11 of Form 10-K will be included in our 2023 Proxy Statement and is
incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

The information required by this Item 12 of Form 10-K will be included in our 2023 Proxy Statement and is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item 13 of Form 10-K will be included in our 2023 Proxy Statement and is
incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by this Item 14 of Form 10-K will be included in our 2023 Proxy Statement and is
incorporated herein by reference.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)

(1)

Documents filed as part of this report

All financial statements

See Index to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

(2)

Financial Statement Schedules

All financial statement schedules have been omitted since the required information was not applicable or was not
present in amounts sufficient to require submission of the schedules, or because the information required is included
in the consolidated financial statements or the accompanying notes.

(3)

Exhibits required by Item 601 of Regulation S-K

The exhibits listed in the following Index to Exhibits are filed, furnished or incorporated by reference as part of this
Annual Report on Form 10-K.

147

INDEX TO EXHIBITS

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed/Furnished
Herewith

Amended and Restated Certificate of
Incorporation

Amended and Restated Bylaws

Description of Registrant’s Securities
Registered under Section 12 of the Exchange
Act
Indenture, dated as of November 19, 2020,
between Guardant Health, Inc. and U.S. Bank
National Association, as trustee

Amended and Restated 2012 Stock Plan

Form of Notice of Stock Option Grant and
Stock Option Agreement under the Amended
and Restated 2012 Stock Plan

2018 Incentive Award Plan

Form of Stock Option Agreement under the
2018 Incentive Award Plan

Form of Restricted Stock Award Agreement
under the 2018 Incentive Award Plan

Form of Restricted Stock Unit Award
Agreement under the 2018 Incentive Award
Plan
Forms of Performance-Based Restricted Stock
Unit Award Agreement under the 2018
Incentive Award Plan

8-K

001-38683

3.1

3.2

10/9/2018

10-K

001-38683

4.1

3/2/2020

8-K

S-1

S-8

001-38683

4.1

11/20/2020

333-227206

10.3

9/6/2018

333-227206

10.4

9/6/2018

333-227762

99.2(a)

10/10/2018

S-1/A 333-227206

10.9(a)

9/21/2018

S-1/A 333-227206

10.9(b)

9/21/2018

S-1/A 333-227206

10.9(c)

9/21/2018

10-K

001-38683

10.3(d)

2/25/2021

Exhibit
Number

3.1

3.2

4.1

4.2

10.1#

10.1(a)#

10.2#

10.2(a)#

10.2(b)#

10.2(c)#

10.2(d)#

10.3#

2018 Employee Stock Purchase Plan

S-8

333-227762

99.3

10/10/2018

10.3(a)#

10.4#

First Amendment to 2018 Employee Stock
Purchase Plan

10-K

001-38683

10.4(a)

3/29/2019

Executive Severance Plan

S-1/A 333-227206

10.13

9/21/2018

10.4(a)#

First Amendment to Executive Severance Plan

10-K

001-38683

10.5(a)

3/29/2019

10.5#

Non-Employee Director Compensation
Program, effective as of June 12, 2020

10-Q

001-38683

10.1

8/6/2020

Form of Indemnification Agreement between
Guardant Health, Inc. and its directors and
officers

Lease, dated November 1, 2014, by and
between the Registrant and Metropolitan Life
Insurance Company

First Amendment to Lease, dated October 17,
2017, by and between the Registrant and
Metropolitan Life Insurance Company
Sublease Agreement, dated July 31, 2020, by
and between Guardant Health, Inc. and 3000
Hanover, LLC

Supply Agreement, dated September 15, 2014,
by and between the Registrant and Illumina,
Inc.

Amendment to Supply Agreement, dated
August 11, 2015, by and between the Registrant
and Illumina, Inc.

Amendment #2 to Supply Agreement, dated
December 24, 2016, by and between the
Registrant and Illumina, Inc.

Amendment #3 to Supply Agreement, dated
August 14, 2017, by and between the Registrant
and Illumina, Inc.

Amendment #4 to Supply Agreement, dated
June 26, 2018, by and between the Registrant
and Illumina, Inc.

S-1/A 333-227206

10.8

9/18/2018

S-1

333-227206

10.2

9/6/2018

S-1

333-227206

10.2(a)

9/6/2018

10-Q

001-38683

10.1

11/5/2020

S-1

333-227206

10.7

9/6/2018

S-1

333-227206

10.7(a)

9/6/2018

S-1

333-227206

10.7(b)

9/6/2018

S-1

333-227206

10.7(c)

9/6/2018

S-1

333-227206

10.7(d)

9/6/2018

10.6

10.7

10.8

10.9

10.10§

10.11§

10.12§

10.13§

10.14§

148

Exhibit
Number

10.15§

10.16#
10.17#
10.18

21.1

23.1

24.1

31.1

31.2

31.3

32.1

32.2

32.3

101.INS

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

104

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed/Furnished
Herewith

Incorporated by Reference

Amendment #5 to Supply Agreement, dated
January 1, 2021, by and between the Registrant
and Illumina, Inc.

Form of letter agreement relating to certain
time-based equity awards held by Helmy
Eltoukhy and AmirAli Talasaz
Form of Waiver Letter Agreement
Form of Capped Call Confirmation

List of Subsidiaries

Consent of Independent Registered Public
Accounting Firm

Power of Attorney (included on the signatures
page of this Annual Report on Form 10-K)

Certification of the Co-Chief Executive Officer
pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Certification of the Chief Financial Officer
pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Certification of the Co-Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002

Certification of the Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002

Inline XBRL Instance Document - the instance
document does not appear in the Interactive
Data File because its XBRL tags are embedded
within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema
Document

Inline XBRL Taxonomy Extension Calculation
Linkbase Document

Inline XBRL Taxonomy Extension Definition
Linkbase Document

Inline XBRL Taxonomy Extension Label
Linkbase Document

Inline XBRL Taxonomy Extension
Presentation Linkbase Document
Cover Page Interactive Data File (formatted as
inline XBRL with applicable taxonomy
extension information contained in Exhibits
101)

10-K

001-38683

10.19

2/25/2021

10-K
8-K
8-K

001-38683
001-38683
001-38683

10.19
10.2
10.1

3/29/2019
5/27/2020
11/20/2020

___________________________
Filed herewith.
*
Furnished herewith.
**
Indicates management contract or compensatory plan.
#

149

Portions of this exhibit (indicated by asterisks) have been omitted pursuant to, a request for confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, or Item
601(a)(5) of Regulation S-K.

Item 16. Form 10-K Summary

None.

150

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Dated:

February 23, 2023

GUARDANT HEALTH, INC.

By:

/s/ Helmy Eltoukhy

Name: Helmy Eltoukhy

Title:

Co-Chief Executive Officer and Chairman of the Board

By:

/s/ AmirAli Talasaz

Name: AmirAli Talasaz

Title:

Co-Chief Executive Officer and Director

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Helmy Eltoukhy and AmirAli Talasaz, his or her attorneys-in-fact, each with the power of substitution, for
him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the
same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated:

151

Signature

/s/ Helmy Eltoukhy
Helmy Eltoukhy

/s/ AmirAli Talasaz
AmirAli Talasaz

/s/ Michael Bell
Michael Bell

/s/ Ian Clark
Ian Clark

/s/ Vijaya Gadde
Vijaya Gadde

/s/ Steve Krognes
Steve Krognes

/s/ Meghan Joyce
Meghan Joyce

/s/ Samir Kaul
Samir Kaul

/s/ Myrtle Potter
Myrtle Potter

Title
Co-Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)

Date
February 23, 2023

Co-Chief Executive Officer and Director
(Principal Executive Officer)

February 23, 2023

Chief Financial Officer
(Principal Accounting Officer and Principal Financial Officer)

February 23, 2023

Director

February 23, 2023

152

CORPORATE
INFORMATION

Common Stock
Guardant Health, Inc. common stock
is listed on the Nasdaq Global Select
Market (ticker symbol “GH”)

Investor Relations
Quarterly and annual reports as
well as other corporate documents
are available on our website at
https://investors.guardanthealth.com/.

2023 Annual
Stockholder Meeting
Guardant Health, Inc.’s 2023 Annual
Meeting will be held on Wednesday,
June 14, 2023, at 9:30am Pacific Time
via live webcast that will be available at
virtualshareholdermeeting.com/GH2023

DIRECTORS
AND OFFICERS

Board of Directors

Helmy Eltoukhy, Ph.D.
Chairperson of the Board,
Co-Chief Executive Officer,
Guardant Health, Inc.

AmirAli Talasaz, Ph.D.
Co-Chief Executive Officer,
Guardant Health, Inc.

Ian Clark
Former Chief Executive Officer,
Genentech Inc.

Vijaya Gadde
Former Chief Legal Officer,
Twitter, Inc.

Meghan Joyce
Independent Advisor

Samir Kaul
General Partner,
Khosla Ventures

Steve Krognes
Former Chief Financial Officer,
Denali Therapeutics Inc.

Myrtle Potter
Chief Executive Officer,
Sumitovant Biopharma, Inc.

Musa Tariq
Chief Marketing Officer,
GoFundMe

Corporate Officers

Helmy Eltoukhy, Ph.D.
Chairperson of the Board,
Co-Chief Executive Officer,

AmirAli Talasaz, Ph.D.
Co-Chief Executive Officer,
Guardant Health, Inc.

Michael Bell
Chief Financial Officer

Craig Eagle, M.D.
Chief Medical Officer

Christopher Freeman
Chief Commercial Officer

Kumud Kalia
Chief Information Officer and Chief
Operating Officer, Oncology

John Saia
Chief Legal Officer and
Corporate Secretary

Andy Ament
Senior Vice President, Operations

Darya Chudova
Senior Vice President,
Technology

Bill Getty
Senior Vice President, Commercial
Screening

Amelia Merrill
Senior Vice President, People

Darl Moreland
Senior Vice President,
Regulatory & Quality

Jennifer Higgins
Vice President,
Public Affairs

GUARDANT HEALTH, INC.
3100 Hanover Street
Palo Alto, CA 94304
guardanthealth.com