Diagnostics company Guardant Health (NASDAQ: GH) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 38.5% year on year to $265.2 million. The company’s full-year revenue guidance of $967.5 million at the midpoint came in 4.9% above analysts’ estimates. Its non-GAAP loss of $0.39 per share was 20.3% above analysts’ consensus estimates.

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“This was an exceptional quarter for Guardant with broad-based growth across our business,” said Helmy Eltoukhy, co-founder and co-CEO.

Company Overview

Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Guardant Health’s sales grew at an exceptional 27.2% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Guardant Health’s annualized revenue growth of 29.8% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Guardant Health reported wonderful year-on-year revenue growth of 38.5%, and its $265.2 million of revenue exceeded Wall Street’s estimates by 12.6%.

Looking ahead, sell-side analysts expect revenue to grow 19.1% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and indicates the market is forecasting success for its products and services.

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Operating Margin

Guardant Health’s high expenses have contributed to an average operating margin of negative 81.6% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Guardant Health’s operating margin rose by 68.5 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 46.8 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

This quarter, Guardant Health generated a negative 37.3% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Guardant Health’s earnings losses deepened over the last five years as its EPS dropped 18.5% annually. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.

In Q3, Guardant Health reported adjusted EPS of negative $0.39, up from negative $0.45 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Guardant Health to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.94 will advance to negative $1.73.

Key Takeaways from Guardant Health’s Q3 Results

We were impressed by how significantly Guardant Health blew past analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 15.5% to $83.43 immediately after reporting.

Indeed, Guardant Health had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.