Guardant Health, Inc.GH
Guardant Health, Inc. Fair Value Disclosure
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.
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:
| December 31, 2025 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Money market funds | $ | 31,775 | $ | 31,775 | $ | — | $ | — | |||||||||||||||
Income deposit funds | 107,709 | — | 107,709 | — | |||||||||||||||||||
Commercial paper | 182,739 | — | 182,739 | — | |||||||||||||||||||
U.S. government debt securities | 112,000 | — | 112,000 | — | |||||||||||||||||||
Total cash equivalents and restricted cash | $ | 434,223 | $ | 31,775 | $ | 402,448 | $ | — | |||||||||||||||
| Commercial paper | $ | 647,117 | $ | — | $ | 647,117 | $ | — | |||||||||||||||
U.S. government debt securities | 176,278 | — | 176,278 | — | |||||||||||||||||||
Total short-term marketable debt securities | $ | 823,395 | $ | — | $ | 823,395 | $ | — | |||||||||||||||
Total | $ | 1,257,618 | $ | 31,775 | $ | 1,225,843 | $ | — | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Contingent consideration | $ | 34,000 | $ | — | $ | — | $ | 34,000 | |||||||||||||||
| Total | $ | 34,000 | $ | — | $ | — | $ | 34,000 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Money market funds | $ | 57,151 | $ | 57,151 | $ | — | $ | — | |||||||||||||||
Income deposit funds | 103,581 | — | 103,581 | — | |||||||||||||||||||
| U.S. government debt securities | 429,294 | — | 429,294 | — | |||||||||||||||||||
Total cash equivalents and restricted cash | $ | 590,026 | $ | 57,151 | $ | 532,875 | $ | — | |||||||||||||||
U.S. government debt securities | $ | 314,438 | $ | — | $ | 314,438 | $ | — | |||||||||||||||
Total short-term marketable debt securities | $ | 314,438 | $ | — | $ | 314,438 | $ | — | |||||||||||||||
Total | $ | 904,464 | $ | 57,151 | $ | 847,313 | $ | — | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Contingent consideration | $ | 6,050 | $ | — | $ | — | $ | 6,050 | |||||||||||||||
Total | $ | 6,050 | $ | — | $ | — | $ | 6,050 | |||||||||||||||
The Company measures the fair value of money market funds based on quoted prices in active markets for identical securities. Income deposit funds, commercial paper and 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.
In July 2022, one of the Company's equity investees, Lunit Inc., or Lunit, completed its initial public offering, or IPO, subsequent to which, the Company started to account for the investment in Lunit at fair value on a recurring basis, and classified the investment as marketable equity securities within Level 1 of the fair value hierarchy as the investment is valued using the quoted market price. The Company was subject to a 2-year lock-up period from Lunit's IPO date, during which the Company shall not transfer Lunit's shares between accounts, establish or cancel pledges, sell, or withdraw such shares, without approval from the Korea Exchange. In November 2023, Lunit issued bonus shares to its existing shareholders by allocating one new share for each existing share, and the Company was subject to the same lock-up period with the same restrictions for these bonus shares which expired in July 2024. In 2024, the Company sold all of its investment in Lunit. In addition, the Company recorded $79.7 million unrealized gains for the year ended December 31, 2023, on its investment in Lunit held as of December 31, 2023, included in other income (expense), net on the accompanying consolidated statements of operations.
There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.
Acquisition-related contingent considerations are measured at fair value on a quarterly basis and changes in estimated contingent consideration to be paid are included in general and administrative expense on the consolidated statements of operations. The fair value of acquisition-related contingent considerations is estimated using a multiple-outcome discounted cash flow valuation technique. Contingent considerations are classified within Level 3 of the fair value hierarchy, as they are based on a probability that includes significant unobservable inputs. The significant unobservable inputs include a probability-weighted estimate of achievement of certain commercialization and regulatory 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, 2025 and 2024, the Company's acquisition-related contingent consideration liabilities were $34.0 million and $6.1 million, respectively, of which $34.0 million and $2.1 million were considered long-term and recorded within other long-term liabilities on the accompanying consolidated balance sheets.
The following table summarizes the activities for the Level 3 financial instruments for the years ended December 31, 2025, 2024 and 2023:
| Contingent Consideration | ||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Fair value — beginning of period | $ | 6,050 | $ | 6,540 | $ | 6,430 | ||||||||||||||
| Initial valuation on the date of acquisition | 34,000 | — | — | |||||||||||||||||
| Increase in fair value | 950 | 1,010 | 110 | |||||||||||||||||
| Settlement | (7,000) | (1,500) | — | |||||||||||||||||
| Fair value — end of period | $ | 34,000 | $ | 6,050 | $ | 6,540 | ||||||||||||||
The Company considers the fair value of the Convertible Notes as of December 31, 2025 and 2024 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 7, Debt, for additional information related to the fair values of the Convertible Notes.
The following tables summarize the Company’s cash equivalents, restricted cash and marketable debt securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category:
| December 31, 2025 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Estimated Fair Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Money market funds | $ | 31,775 | $ | — | $ | — | $ | 31,775 | |||||||||||||||
Income deposit funds | 107,709 | — | — | 107,709 | |||||||||||||||||||
| Commercial paper | 829,896 | — | (40) | 829,856 | |||||||||||||||||||
U.S. government debt securities | 288,148 | 130 | — | 288,278 | |||||||||||||||||||
Total | $ | 1,257,528 | $ | 130 | $ | (40) | $ | 1,257,618 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Estimated Fair Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Money market funds | $ | 57,151 | $ | — | $ | — | $ | 57,151 | |||||||||||||||
Income deposit funds | 103,581 | — | — | 103,581 | |||||||||||||||||||
U.S. government debt securities | 743,500 | 232 | — | 743,732 | |||||||||||||||||||
Total | $ | 904,232 | $ | 232 | $ | — | $ | 904,464 | |||||||||||||||
None of the Company’s marketable debt securities had been in a continuous unrealized loss position for more than one year as of December 31, 2025 and 2024. There have been no realized gains or losses, and no recognition of credit losses on marketable debt securities for the periods presented.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 19, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.