Does Guardant Health (GH) Have Long-Runway for Growth?

Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Health Care Fund”. A copy of the letter is available to download here. Baron Health Care Fund (the Fund) declined 6.97% (Institutional Shares) in the quarter, compared to the 4.88% decline for the Russell 3000 Health Care Index (the Benchmark) and the 3.96% decline for the Russell 3000 Index (the Index). The Fund appreciated 9.39% on an annualized basis since its inception, compared to the 8.97% gain for the Benchmark and the 13.26% gain for the Index. The disappointing stock selection drove the Fund’s underperformance in the quarter. Despite recent challenges, the Fund believes the long-term outlook for health care remains positive due to factors including an aging population, rising chronic disease rates, advances in biotechnology, and increased health care spending. In addition, please check the Fund’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Baron Health Care Fund highlighted Guardant Health, Inc. (NASDAQ:GH). Guardant Health, Inc. (NASDAQ:GH) is a precision oncology company that specializes in a liquid biopsy test to detect cancer from blood samples. On May 1, 2026, Guardant Health, Inc. (NASDAQ:GH) closed at $87.60 per share. One-month return of Guardant Health, Inc. (NASDAQ:GH) was -2.30%, and its shares gained 98.86% over the past 52 weeks. Guardant Health, Inc. (NASDAQ:GH) has a market capitalization of $11.49 billion.

Baron Health Care Fund stated the following regarding Guardant Health, Inc. (NASDAQ:GH) in its Q1 2026 investor letter:

“We bought shares of Guardant Health, Inc. (NASDAQ:GH), a diagnostics company which offers a portfolio of blood and tissue-based tests that are used for therapy selection for patients with advanced stage cancer, monitoring for recurrence in early-stage cancer patients, and screening for early-stage cancer in asymptomatic patients. Guardant’s flagship product, Guardant360, is the market leading liquid biopsy test used to help inform physicians 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 an invasive biopsy. Therapy selection is a $10 billion market opportunity, according to management estimates. Guardant Reveal provides minimal residual disease detection, recurrence monitoring and late-stage therapy monitoring, which represent a $20 billion market opportunity, according to management estimates. This year, the company will launch Guardant Reveal Ultra, a tissue-informed assay. Guardant is in the early innings of the launch of Shield, a blood test for colorectal cancer screening in adults age 45 and older who are at average risk for the disease. Based on our estimates, colorectal screening is an $18 billion annual market opportunity, and adoption of Shield has exceeded Wall Street analyst expectations to date. Management plans to increase the Shield sales force from 300 to 600 and partnered with Quest Diagnostics to provide expanded access to physicians and patients. In the future, the company expects to expand into lung cancer screening and multi-cancer detection with the Shield platform. Guardant’s business has accelerated the past few years, and in 2025 the company generated 33% revenue growth. Excluding Shield, Guardant generated positive free cash flow in Q3 and Q4 2025, and management is targeting free cash flow breakeven in Q4 2027. With cash at year end 2025 of $1.3 billion, Guardant has the balance sheet to execute its growth plans. Management is targeting 27% to 30% revenue growth in 2026 and we think the company has a long runway for future growth beyond 2026 with opportunity for significant free cash flow generation in the out years.”