Guardant Health, Inc. (Nasdaq: GH) today announced the pricing
of its offering of $1,000,000,000 aggregate principal amount of 0%
convertible senior notes due 2027 (the “notes”) in a private
offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities
Act”). The issuance and sale of the notes are scheduled to settle
on November 19, 2020, subject to customary closing conditions.
Guardant Health also granted the initial purchasers of the notes an
option to purchase, for settlement within a period of 13 days from,
and including, the date notes are first issued, up to an additional
$150,000,000 principal amount of notes.
The notes will be senior, unsecured obligations of Guardant
Health. The notes will not bear regular interest, and the principal
amount of the notes will not accrete. The notes will mature on
November 15, 2027, unless earlier repurchased, redeemed or
converted. Before August 15, 2027, noteholders will have the right
to convert their notes only upon the occurrence of certain events.
From and after August 15, 2027, noteholders may convert their notes
at any time at their election until the close of business on the
second scheduled trading day immediately before the maturity date.
Guardant Health 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 Guardant Health’s election.
The initial conversion rate is 7.1523 shares of common stock per
$1,000 principal amount of notes, which represents an initial
conversion price of approximately $139.82 per share of common
stock. The initial conversion price represents a premium of
approximately 34.0% over the last reported sale price of $104.34
per share of Guardant Health’s common stock on November 16, 2020.
The conversion rate and conversion price will be subject to
adjustment upon the occurrence of certain events.
The notes will not be redeemable at Guardant Health’s election
before November 20, 2024. The notes will be redeemable, in whole or
in part, for cash at Guardant Health’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,
but only if the last reported sale price per share of Guardant
Health’s common stock exceeds 130% of the conversion price for a
specified period of time. The redemption price will be equal to the
principal amount of the notes to be redeemed, plus accrued and
unpaid special and additional interest, if any, to, but excluding,
the redemption date.
If a “fundamental change” (as defined in the indenture for the
notes) occurs, then, subject to limited exceptions, noteholders may
require Guardant Health to repurchase their notes for cash. The
repurchase price will be equal to the principal amount of the notes
to be repurchased, plus accrued and unpaid special and additional
interest, if any, to, but excluding, the applicable repurchase
date.
Guardant Health estimates that the net proceeds from the
offering will be approximately $984.3 million (or approximately
$1,132.0 million if the initial purchasers fully exercise their
option to purchase additional notes), after deducting the initial
purchasers’ discounts and commissions and estimated offering
expenses. Guardant Health intends to use $78.3 million of the net
proceeds to fund the cost of entering into the capped call
transactions described below. Guardant Health intends to use the
remainder of the net proceeds from the offering for general
corporate purposes and working capital, including increasing
investment in research and development and sales and marketing
activities to expand its business, as well as general and
administrative matters. Guardant Health may also use a portion of
the net proceeds to acquire complementary products, technologies,
intellectual property or businesses as part of its growth strategy;
however, Guardant Health currently does not have any agreements or
commitments to complete any such transactions and is not involved
in negotiations regarding such transactions. If the initial
purchasers exercise their option to purchase additional notes, then
Guardant Health intends to use a portion of the proceeds from the
sale of the additional notes, up to approximately $11.7 million, to
enter into additional capped call transactions as described
below.
In connection with the pricing of the notes, Guardant Health
entered into privately negotiated capped call transactions with one
or more of the initial purchasers and/or their respective
affiliates and/or other financial institutions (the “option
counterparties”). The capped call transactions will cover, subject
to customary adjustments, the number of shares of common stock
initially underlying the notes. The capped call transactions are
expected generally to reduce potential dilution to Guardant
Health’s common stock upon conversion of the notes or at Guardant
Health’s election (subject to certain conditions) offset any cash
payments Guardant Health is required to make in excess of the
aggregate principal amount of converted notes, as the case may be,
with such reduction or offset subject to a cap. The cap price of
the capped call transactions will initially be approximately
$182.60, which represents a premium of 75% over the last reported
sale price of Guardant Health’s common stock of $104.34 per share
on November 16, 2020, and is subject to certain adjustments under
the terms of the capped call transactions. If the initial
purchasers exercise their option to purchase additional notes,
Guardant Health expects to enter into additional capped call
transactions with the option counterparties.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to purchase shares of Guardant
Health’s common stock and/or enter into various derivative
transactions with respect to Guardant Health’s common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Guardant Health’s common stock or the notes at that
time. In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Guardant Health’s
common stock and/or purchasing or selling Guardant Health’s common
stock or other securities issued by Guardant Health in secondary
market transactions following the pricing of the notes and prior to
the maturity of the notes (and are likely to do so on each exercise
date of the capped call transactions, which are expected to occur
during the 25 trading day period beginning on the 26th scheduled
trading day prior to the maturity date of the notes, or following
any termination of any portion of the capped call transactions in
connection with any repurchase, redemption or early conversion of
the notes). This activity could also cause or avoid an increase or
a decrease in the market price of Guardant Health’s common stock or
the notes, which could affect a noteholder’s ability to convert the
notes and, to the extent the activity occurs during any observation
period related to a conversion of the notes, it could affect the
number of shares and value of the consideration that a noteholder
will receive upon conversion of the notes.
In addition, if any such capped call transaction fails to become
effective, whether or not this offering of the notes is completed,
the option counterparty party thereto may unwind its hedge
positions with respect to Guardant Health’s common stock, which
could adversely affect the value of Guardant Health’s common stock
and, if the notes have been issued, the value of the notes.
The offer and sale of the notes and any shares of common stock
issuable upon conversion of the notes have not been, and will not
be, registered under the Securities Act or any other securities
laws, and the notes and any such shares cannot be offered or sold
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
any other applicable securities laws.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, the notes or any shares of common
stock issuable upon conversion of the notes, nor will there be any
sale of the notes or any such shares, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful.
About Guardant Health
Guardant Health is a leading precision oncology company focused
on helping conquer cancer globally through use of its proprietary
blood tests, vast data sets and advanced analytics. The Guardant
Health Oncology Platform leverages capabilities to drive commercial
adoption, improve patient clinical outcomes and lower healthcare
costs across all stages of the cancer care continuum. Guardant
Health has launched liquid biopsy-based Guardant360®, Guardant360
CDx and GuardantOMNI® tests for advanced stage cancer patients.
These tests fuel development of its LUNAR program, which aims to
address the needs of early stage cancer patients with neoadjuvant
and adjuvant treatment selection, cancer survivors with
surveillance, asymptomatic individuals eligible for cancer
screening and individuals at a higher risk for developing cancer
with early detection.
Forward-Looking Statements
This press release includes forward-looking statements,
including statements regarding the completion of the offering, the
expected amount and intended use of the net proceeds, the effects
of entering into the capped call transactions described above and
the actions of the option counterparties and their respective
affiliates. Forward-looking statements represent Guardant Health’s
current expectations regarding future events and are subject to
known and unknown risks and uncertainties that could cause actual
results to differ materially from those implied by the
forward-looking statements. Among those risks and uncertainties are
market conditions, the satisfaction of the closing conditions
related to the offering and risks relating to Guardant Health’s
business, including those described in periodic reports that
Guardant Health files from time to time with the SEC. Guardant
Health may not consummate the offering described in this press
release and, if the offering is consummated, cannot provide any
assurances regarding its ability to effectively apply the net
proceeds as described above. The forward-looking statements
included in this press release speak only as of the date of this
press release, and Guardant Health does not undertake to update the
statements included in this press release for subsequent
developments, except as may be required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20201116006112/en/
Investor Contact: Carrie Mendivil
investors@guardanthealth.com
Media Contact: Anna Czene press@guardanthealth.com
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