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CareDx Reports Third Quarter Results

AlloSure launch momentum drives 74% revenue growth

BRISBANE, Calif., Nov. 08, 2018 (GLOBE NEWSWIRE) -- CareDx, Inc. (NASDAQ: CDNA), a molecular diagnostics company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients, today reported financial results for the third quarter ended September 30, 2018.

Recent highlights:

  • Continued the acceleration of AlloSure penetration
    • In the twelve months since launch, 96 U.S. transplant centers have provided AlloSure testing to over 4,000 patients, representing approximately 2% of all U.S. living kidney transplant patients. The number of standing order patients has increased to 2,736, cumulatively
    • Continued progress in AlloSure Registry (K-OAR) enrollment, with 40 centers initiated and 480 patients enrolled as of September 30, 2018
  • Achieved total revenue of $21.2 million for the third quarter of 2018, increasing 74% year-over-year
    • Testing services revenue of $16.8 million, with 3,708 AlloSure and 4,080 AlloMap patient results provided
    • Product revenue of $4.2 million
  • Announced details of new testing services and future product offerings
    • Launched the Surveillance HeartCare® Outcomes Registry (SHORE) during the 22nd Annual Scientific Meeting of the Heart Failure Society of America (HFSA)
    • Profiled the new AlloSeq suite of next generation sequencing based transplant laboratory products, to be launched in 2019, at the American Society of Histocompatability and Immunogenetics (ASHI) 

“The CareDx team delivered another record quarter, including 74% year-over-year revenue growth. We achieved positive adjusted EBITDA and operating cash flow results one quarter ahead of our initial expectations. The strong clinical value of AlloSure continues to resonate with the transplant community and, a year into the launch, we are 2% penetrated into this patient population,” said Peter Maag, CareDx President and Chief Executive Officer. “Our success to date positions CareDx as the leading provider of genomics-based information in transplantation, with the goal to leverage insights into the transplantome to benefit patients and improve their long-term outcomes.”

Third Quarter 2018 Financial Results 

Revenue for the three months ended September 30, 2018 was $21.2 million, compared with $12.2 million in the third quarter of 2017.  Testing services revenue for the third quarter was $16.8 million compared with $8.2 million in the same period of 2017. Product revenue in the three months ended September 30, 2018 was $4.2 million, compared to $3.9 million in the same period of 2017.

For the third quarter of 2018, the net loss was $20.0 million compared to a net loss of $14.3 million in the same period of 2017. Basic and diluted net loss per share was $0.54 in the third quarter of 2018, compared to basic and diluted net loss per share of $0.63 in the third quarter of 2017. 

Non-GAAP net loss was $0.6 million in the third quarter of 2018 compared to $3.3 million in the third quarter of 2017. Basic and diluted non-GAAP net loss per share was $0.01 in the third quarter of 2018, compared to $0.15 in the third quarter of 2017.

Adjusted EBITDA for the third quarter of 2018 was a gain of $0.2 million, compared to a loss of $1.7 million in the third quarter of 2017.

Net cash provided by operating activities in the third quarter of 2018 was $0.4 million compared with $2.2 million net cash used in operations in the comparative 2017 period. Cash and cash equivalents were $26.2 million as of September 30, 2018.

For additional information regarding non-GAAP financial measures discussed herein, please see “Use of Non-GAAP financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

2018 Guidance
For the full year 2018, CareDx expects revenue to be in the range of $74 million to $75 million (previously $68 million to $70 million).

About CareDx
CareDx, Inc., headquartered in Brisbane, California, is a molecular diagnostics company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant recipients. CareDx offers products along the pre- and post-transplant testing continuum.

For more information, please visit: www.CareDx.com.

Forward Looking Statements
This press release includes forward-looking statements, including expectations regarding the Company’s fiscal 2018 revenue, achievement of our financial and operational goals and our prospects. These forward-looking statements are based upon information that is currently available to CareDx and its current expectations, speak only as of the date hereof, and are subject to numerous risks and uncertainties, including general economic and market factors, among others discussed in CareDx’s filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed by CareDx with the SEC on March 22, 2018 and the periodic reports that CareDx has subsequently filed with the SEC. Any of these may cause CareDx’s actual results, performance or achievements to differ materially and adversely from those anticipated or implied by CareDx’s forward-looking statements. CareDx expressly disclaims any obligation, except as required by law, or undertaking to update or revise any such forward-looking statements.

Use of Non-GAAP Financial Measures
CareDx has presented in this release certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis, including non-GAAP net loss, non-GAAP basic and diluted net loss per share and adjusted EBITDA.  We define non-GAAP net loss and per share results as the GAAP net loss and per share results excluding the impacts of stock-based compensation; changes in estimated fair value of warrants, derivative liabilities and contingent consideration; acquisition related impairment charges and amortization of intangible assets, purchase accounting adjustments and related tax effects; costs involved with completing an acquisition; amortization of debt discount; and certain other financing charges. We define adjusted EBITDA as non-GAAP net loss before net interest expense, income tax expense, depreciation and amortization, other expense, and net loss attributable to noncontrolling interest. We are presenting these non-GAAP financial measures to assist investors in assessing our operating results through the eyes of management and because we believe that these measures provide an additional tool for investors to use in comparing our core business operating results over multiple periods. Management believes this non-GAAP information is useful for investors, when considered in conjunction with CareDx's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of CareDx's operating results as reported under GAAP. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not necessarily comparable to similarly-titled measures presented by other companies. A reconciliation between GAAP and non-GAAP financial information is provided immediately following the financial tables.

 
 
CareDx, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
      2018       2017       2018       2017  
                 
Revenue:                
Testing services revenue   $   16,847     $   8,163     $   41,448     $   24,485  
Product revenue       4,223         3,872         11,080         10,916  
Collaboration and license revenue       114         156         532         420  
Total revenue       21,184         12,191         53,060         35,821  
Operating expenses:                
Cost of testing services       5,752         3,156         14,432         9,224  
Cost of product       3,135         2,053         8,046         6,558  
Research and development       3,868         2,959         10,732         9,360  
Sales and marketing       5,971         3,255         15,916         9,747  
General and administrative       5,177         4,038         16,080         14,672  
Goodwill impairment       -          -          -          1,958  
Change in estimated fair value of contingent consideration       -          594         1,017         309  
Total operating expenses       23,903         16,055         66,223         51,828  
Loss from operations       (2,719 )       (3,864 )       (13,163 )       (16,007 )
Interest expense       (408 )       (1,685 )       (3,527 )       (4,166 )
Other expense, net       (40 )       (317 )       (2,891 )       (1,191 )
Change in estimated fair value of common stock warrant liability and derivative liability       (17,093 )       (8,599 )       (24,540 )       (3,404 )
Loss before income taxes       (20,260 )       (14,465 )       (44,121 )       (24,768 )
Income tax benefit       290         178         1,095         837  
Net loss     (19,970 )     (14,287 )     (43,026 )     (23,931 )
Net loss attributable to noncontrolling interest       —         (19 )       (25 )       (133 )
Net loss attributable to CareDx, Inc.   $   (19,970 )   $   (14,268 )   $   (43,001 )   $   (23,798 )
Net loss per share attributable to CareDx, Inc.:                
Basic   $   (0.54 )   $   (0.63 )   $   (1.26 )   $   (1.09 )
                 
Diluted   $   (0.54 )   $   (0.63 )   $   (1.26 )   $   (1.09 )
                 
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
               
Basic       37,154,293         22,526,615         34,134,138         21,765,292  
                 
Diluted       37,154,293         22,526,615         34,134,138         21,765,292  
                 


CareDx, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
         
    September 30, 2018   December 31, 2017 (1)
         
Assets        
Current assets:        
Cash and cash equivalents   $   26,202     $   16,895  
Accounts receivable       9,641         2,991  
Inventory       4,621         5,529  
Prepaid and other assets       1,479         1,352  
Total current assets       41,943         26,767  
Property and equipment, net       3,022         2,075  
Intangible assets, net       34,284         33,139  
Goodwill       12,005         12,005  
Restricted cash       192         9,579  
Total assets   $   91,446     $   83,565  
         
Liabilities and stockholders’ (deficit) equity        
Current liabilities:        
Accounts payable   $   2,676     $   3,391  
Accrued payroll liabilities       8,017         5,013  
Accrued and other liabilities       4,718         3,735  
Deferred revenue       39         39  
Deferred purchase consideration       367         407  
Derivative liability       -         14,600  
Current debt       -         15,721  
Total current liabilities       15,817         42,906  
Deferred rent, net of current portion       579         913  
Deferred revenue, net of current portion       701         730  
Deferred tax liability       3,447         4,933  
Long-term debt, net of current portion       13,384         18,338  
Contingent consideration       -         1,672  
Common stock warrant liability       11,612         18,712  
Other liabilities       1,518         1,315  
Total liabilities       47,058         89,519  
         
Stockholders’ equity:        
Common stock       39         29  
Additional paid-in capital       356,427         264,204  
Accumulated other comprehensive loss       (3,988 )       (2,345 )
Accumulated deficit       (308,090 )       (268,022 )
Total CareDx, Inc. stockholders' equity (deficit)       44,388         (6,134 )
Noncontrolling interest       -         180  
Total stockholders' equity (deficit)       44,388         (5,954 )
Total liabilities and stockholders’ equity   $   91,446     $   83,565  
         
(1)  The condensed balance sheets at December 31, 2017 have been derived from audited financial statements. 
         


CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
     
    Three Months Ended September 30,   Nine Months Ended September 30,
      2018       2017       2018       2017  
                 
GAAP net loss   $   (19,970 )   $   (14,268 )   $   (43,001 )   $   (23,798 )
Stock-based compensation expense       1,861         430         5,078         1,316  
Acquisition related-amortization of purchased intangibles       740         637         2,238         1,812  
Change in estimated fair value of contingent consideration       -          594         1,017         309  
Amortization of debt discount       70         650         2,048         1,367  
Debt financing related fees and expenses       -          -          -          309  
Loss on conversion from debt to equity       -          -          2,806         -   
Change in estimated fair value of common stock warrant and derivative liabilities       17,093         8,599         24,540         3,404  
Tax effect related to amortization of purchased intangibles       (384 )       (199 )       (616 )       (535 )
Acquisition-related amortization of inventory valuation adjustment       35         250         224         420  
Goodwill impairment       -          -          -          1,958  
Non-GAAP net loss   $   (555 )   $   (3,307 )   $   (5,666 )   $   (13,438 )
                 
GAAP basic and diluted net loss per share attributable to CareDx   $   (0.54 )   $   (0.63 )   $   (1.26 )   $   (1.09 )
                 
Non-GAAP basic and diluted net loss per share attributable to CareDx   $   (0.01 )   $   (0.15 )   $   (0.17 )   $   (0.62 )
                 
Shares used in computing basic and diluted net losses per share       37,154,293         22,526,615         34,134,138         21,765,292  
                 


CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)
     
    Three Months Ended September 30,   Nine Months Ended September 30,
      2018       2017       2018       2017  
                 
Non-GAAP net loss   $   (555 )   $   (3,307 )   $   (5,666 )   $   (13,438 )
Interest expense       338         1,035         1,479         2,799  
Income tax (benefit) expense       94         21         (479 )       (302 )
Depreciation expense       274         283         800         929  
Other expense       40         317         85         882  
Net loss attributable to noncontrolling interest       -          (19 )       (25 )       (133 )
Adjusted EBITDA   $   191     $   (1,670 )   $   (3,806 )   $   (9,263 )
                 

CONTACTS: 
CareDx, Inc.
Sasha King
Chief Commercial Officer
415-287-2393 
sking@caredx.com 

Investor Relations
David Clair
Integrated Corporate Relations, Inc.
646-277-1266
david.clair@icrinc.com 

 

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