CareDx, Inc.
Apr 21, 2017

CareDx Reports Fourth Quarter and Full Year 2016 Financial Results

BRISBANE, Calif., April 21, 2017 (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 fourth quarter and year ended December 31, 2016.

"We have made significant recent progress and are very well-positioned for the launch of our exciting new product, AlloSure," said Peter Maag, CareDx President and Chief Executive Officer. "With both pre- and post-transplant products encompassing the continuum of care, we have become a transplant-focused multiproduct genomic information company."

Fourth Quarter 2016 Financial Results
Revenue for the three months ended December 31, 2016 were $10.9 million compared with $6.6 million in the fourth quarter of 2015 and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016.  Revenue from AlloMap tests for the three months ended December 31, 2016 were $7.4 million compared with $6.7 million in the fourth quarter of 2015.  Olerup revenue in the three months ended December 31, 2016 were $3.5 million.   

For the three months ended December 31, 2016, the net loss was $15.5 million compared to a net loss of $4.8 million in the same period of 2015. In the three months ended December 31, 2016, the Company recorded an impairment of goodwill recorded in the acquisition of Allenex AB of $13.0 million. Basic and diluted net loss per share was $0.73 in the fourth quarter of 2016, compared to basic and diluted net loss per share of $0.40 in the fourth quarter of 2015.

For the fourth quarter of 2016, the non-GAAP net loss was $2.7 million compared to non-GAAP net loss of $4.0 million in the fourth quarter of 2015.  Non-GAAP basic and diluted net loss per share were $0.13 in the fourth quarter of 2016, compared to non-GAAP basic and diluted net loss per share of $0.34 in the fourth quarter of 2015.

Full Year 2016 Financial Results
Revenue for the year ended December 31, 2016 was $40.6 million compared with $28.1 million in 2015 and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016. Revenue from AlloMap tests for the year ended December 31, 2016 were $29.7 million compared with $27.9 million in 2015.  Olerup revenue in the year ended December 31, 2016 were $10.7 million and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016.  

For the full year 2016, the net loss was $39.5 million compared to a net loss of $13.7 million in 2015.  Basic and diluted net loss per share were $2.39 in the full year 2016, compared to basic and diluted net loss per share of $1.16 in 2015.

For the full year 2016, the non-GAAP net loss was $13.9 million compared to non-GAAP net loss of $12.2 million in 2015.  Non-GAAP basic and diluted net loss per share was $0.84 in the full year 2016 compared to non-GAAP basic and diluted net loss per share of $1.03 in 2015.

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.

Cash and cash equivalents were $17.3 million as of December 31, 2016.

2017 Guidance
For the full year 2017, the Company continues to expect revenue to be in the range of $45 million to $50 million, excluding any potential AlloSure revenue. The Company has filed for coverage and reimbursement with the MolDx program at Palmetto and the dossier is currently under technical review.

About CareDx
CareDx, Inc., headquartered in Brisbane, California, is a global molecular diagnostics company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients. CareDx offers AlloMap®, a gene expression test that aids clinicians in identifying heart transplant patients with stable graft function who have a low probability of moderate to severe acute cellular rejection (ACR). CareDx is developing additional products for transplant monitoring using a variety of technologies, including AlloSure®, a proprietary next-generation sequencing-based test to detect donor-derived cell-free DNA (dd-cfDNA) after transplantation.

CareDx, with its presence through Olerup, also develops, manufactures, markets and sells high quality products that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. Olerup SSP® is a set of HLA typing products used prior to hematopoietic stem cell/bone marrow transplantation and organ transplantation. XM-ONE® is the first standardized test that quickly identifies a patient's antigens against HLA Class I, Class II or antibodies against a donor's endothelium. For more information, please visit: www.CareDx.com.

Forward Looking Statements
In addition to historical information, this press release contains forward-looking statements with respect to our business, research, development and commercialization efforts, anticipated future financial results, including our guidance for full fiscal 2017 revenue, which final results could change materially, filing for coverage and reimbursement for AlloSure, which might be denied, our proposed use of proceeds from the financing with the institutional investor and our prospects. These forward-looking statements are based upon information that is currently available to us and our current expectations, speak only as of the date hereof, and are subject to numerous risks and uncertainties, including risks related to our diagnostic studies, including obtaining sufficient clinical samples and participation of clinical investigators in such studies, the timeline for completion of research efforts, development and commercialization of additional diagnostic solutions including cell-free DNA, which is a lengthy and complex process that may not be successful, our dependence on Medicare for a substantial portion of our revenue, our dependence on health insurers and other third-party payers to provide coverage for our current test and future tests, if any, and our intellectual property position.  These factors, together with those that are described in our filings with the Securities and Exchange Commission (SEC), including the Annual Report on Form 10-K for the year ended December 31, 2016 as filed by us with the SEC, may cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by our forward-looking statements. The Company expressly disclaims any obligation or undertaking, except as required by law, to update or revise any such forward-looking statements.

Use of Non-GAAP Financial Measures
CareDx has presented certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis in this release, including non-GAAP net loss and non-GAAP basic and diluted net loss per share.  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 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, and certain financing charges.  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 December 31, Twelve Months Ended December 31,   
   2016   2015  2016 (1) 2015 (1)   
  (Unaudited) (Unaudited)       
Revenue:           
Testing revenue $7,363  $6,734  $29,680  $27,881    
Product revenue  3,487       10,715       
Collaboration and license revenue  10   (86)  236   263    
Total revenue  10,860   6,648   40,631   28,144     
Operating expenses:           
Cost of testing  2,654   2,486   10,882    10,273    
Cost of product  3,829      10,240       
Research and development  3,154   2,704   12,385   9,333     
Sales and marketing  2,622   1,896   11,166   8,349    
General and administrative  4,475   3,694   20,725   12,247    
Goodwill impairment   13,021   -   13,021   -    
Change in estimated fair value of contingent consideration  (34)  330   (456)  (126)   
Total operating expenses  29,721   11,110    77,963   40,076    
Loss from operations  (18,861)  (4,462)  (37,332)  (11,932)   
Interest expense  (509)  (253)  (1,860)  (1,587)   
Other (expense) income, net  1,414   (47)  (1,920)  (188)   
Change in estimated value of common stock warrant and derivative liabilities  1,529      (250)      
Loss before income taxes  (16,427)  (4,762)  (41,362)  (13,707)   
Income tax benefit  718      1,606       
Net loss   (15,709)  (4,762)  (39,756)  (13,707)   
Net loss attributable to noncontrolling interest  (229)     (287)       
Net loss attributable to CareDx, Inc. $(15,480) $(4,762) $(39,469) $(13,707)   
Net loss per share attributable to CareDx, Inc.:           
Basic $(0.73) $(0.40) $(2.39) $(1.16)   
            
Diluted $(0.73) $(0.40) $(2.39) $(1.16)   
             
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
            
Basic  21,270,151   11,902,325   16,496,911   11,860,885    
            
Diluted  21,270,151   11,902,325   16,496,911   11,860,885    
            
            
(1) The Consolidated Statements of Operations for the twelve months ended December 31, 2015 and December 31, 2016 have been derived from audited   
financial statements.           
            

 

CareDx, Inc. 
Condensed Consolidated Balance Sheets 
(In thousands) 
      
  December 31, 2016 (1) December 31, 2015 (1) 
      
Assets     
Current assets:     
Cash and cash equivalents $ 17,258  $29,888  
Accounts receivable  2,768   2,367  
Inventory  5,461   766  
Prepaid and other assets  1,186   1,341  
Total current assets  26,673    34,362  
Property and equipment, net  2,931   2,425  
Intangible assets, net  33,124   6,650  
Goodwill  13,839   12,005  
Restricted cash  143   147  
Other noncurrent assets  20   49  
Total assets $76,730  $ 55,638  
      
Liabilities and stockholders' equity      
Current liabilities:     
Accounts payable $3,065  $1,644  
Accrued payroll liabilities  3,851   2,366  
Accrued and other liabilities  5,320   2,892  
Accrued royalties  263   242  
Deferred revenue  42   142  
Deferred purchase consideration  5,445     
Current portion of long-term debt  22,846   2,866  
Total current liabilities  40,832   10,152  
Deferred rent, net of current portion  1,301    1,426  
Deferred revenue, net of current portion  759   703  
Deferred tax liability  6,057     
Long-term debt, net of current portion  1,098   12,887  
Contingent consideration  492   948  
Common stock warrant liability  5,208     
Other liabilities  1,222   28  
Total liabilities  56,969   26,144  
Stockholders' equity:     
Common stock  21   12  
Additional paid-in capital  235,673   202,566  
Accumulated other comprehensive loss  (3,659)    
Accumulated deficit  (212,553)   (173,084) 
Total CareDx, Inc. stockholders' equity  19,482   29,494  
Noncontrolling interest  279     
Total stockholders' equity   19,761   29,494  
Total liabilities and stockholders' equity $76,730  $55,638  
      
      
(1)  The condensed balance sheets at December 31, 2015 and December 31, 2016 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 December 31, Twelve Months Ended December 31 , 
   2016   2015   2016   2015  
          
Cost of testing reconciliation:         
GAAP cost of testing $2,654  $2,486  $10,882  $10,273  
Stock-based compensation expense  (40)  (14)  (144)  (109) 
Non-GAAP cost of testing $2,614  $2,472  $10,738  $10,164  
           
Cost of product reconciliation:         
GAAP cost of product $3,829  $  $10,240  $  
Acquisition related-amortization of purchased intangibles  (393)     (1,040)    
Acquisition related-amortization of inventory valuation adjustment  (1,427)     (3,926)    
Non-GAAP cost of product $2,009  $  $5,274  $  
          
Research and development expenses reconciliation:         
GAAP research and development expenses $3,154  $2,704  $12,385  $9,333  
Stock-based compensation expense  (115)  (60)  (437)   (247) 
Non-GAAP research and development expenses $3,039  $2,644  $11,948  $9,086  
          
Sales and marketing expenses reconciliation:         
GAAP sales and marketing expenses $2,622  $1,896  $11,166  $8,349  
Acquisition related-amortization of purchased intangibles  (228)     (681)    
Stock-based compensation expense  (33)  (47)  (151)  (173) 
Non-GAAP sales and marketing expenses $2,361  $1,849  $10,334   $8,176  
          
General and administrative expenses reconciliation:         
GAAP general and administrative expenses $4,475  $3,694  $20,725  $12,247  
Acquisition related fees and expenses  (135)     (4,433)    
Stock-based compensation expense  (277)  (281)  (1,213)  (1,067) 
Non-GAAP general and administrative expenses $4,063  $3,413  $15,079   $11,180  
          
Goodwill impairment reconciliation:         
GAAP goodwill impairment $ 13,021  $  $13,021  $  
Goodwill impairment  (13,021)      (13,021)    
Non-GAAP goodwill impairment $  $   $  $  
          
Change in estimated fair value of contingent consideration reconciliation:         
GAAP change in estimated fair value of contingent consideration $(34) $330  $(456) $(126) 
Change in estimated fair value of contingent consideration  34   (330)  456   126  
Non-GAAP change in estimated fair value of contingent consideration $  $  $  $  
           
Change in estimated fair value of common stock warrant and derivative liabilities reconciliation:          
GAAP change in estimated fair value of common stock warrant and derivative liabilities $1,529  $  $(250) $  
Change in estimated fair value of common stock warrant and derivative liabilities  (1,529)     250     
Non-GAAP change in estimated fair value of common stock warrant and derivative liabilities $  $  $  $   
          
Other (expense) income, net reconciliation:         
GAAP other (expense) income, net $1,414  $(47) $(1,920) $(188) 
Debt financing related fees and expenses  (785)      2,154     
Non-GAAP other (expense) income, net $629  $(47)  $234  $(188) 
          
Income tax benefit reconciliation:         
GAAP income tax benefit $718  $  $1,606  $  
Tax effect related to amortization of purchased intangibles  (551)     (1,442)    
Non-GAAP income tax benefit $167  $  $164  $  
          
Net loss reconciliation:         
GAAP net loss attributable to CareDx, Inc. $(15,480) $(4,762) $(39,469) $(13,707) 
Acquisition related-amortization of purchased intangibles  621      1,721     
Acquisition related-amortization of inventory valuation adjustment  1,427      3,926     
Tax effect related to amortization of purchased intangibles  (551)     (1,442)    
Acquisition related fees and expenses  135      4,433      
Debt financing related fees and expenses  (785)     2,154     
Stock-based compensation expenses  465   402    1,945   1,596  
Goodwill impairment   13,021      13,021     
Change in estimated fair value of contingent consideration  (34)  330   (456)   (126) 
Change in estimated value of common stock warrant and derivative liabilities  (1,529)     250     
Non-GAAP net loss $(2,710) $(4,030) $(13,917) $(12,237) 
          
Basic and diluted net loss per share reconciliation:         
GAAP basic and diluted net loss per share attributable to CareDx $(0.73) $(0.40) $(2.39) $(1.16) 
Acquisition related-amortization of purchased intangibles  0.03      0.10     
Acquisition related-amortization of inventory valuation adjustment  0.07      0.24      
Tax effect related to amortization purchased intangibles  (0.03)     (0.09)    
Acquisition related fees and expenses  0.01      0.27     
Debt financing related fees and expenses  (0.04)     0.13     
Stock-based compensation expenses  0.02   0.03   0.12    0.13  
Goodwill impairment  0.61      0.79     
Change in estimated fair value of contingent consideration  (0.00)  0.03   (0.03)  (0.01) 
Change in estimated value of common stock warrant and derivative liabilities  (0.07)     0.02     
Non-GAAP basic and diluted net loss per share attributable to CareDx $(0.13) $(0.34) $(0.84) $(1.03) 
          
Non-GAAP adjustment summary:         
Cost of testing adjustments $40  $14  $144  $109  
Cost of product adjustments  1,820      4,966     
Research and development expenses adjustments  115   60   437   247  
Sales and marketing expenses adjustments  261   47   832   173  
General and administrative expenses adjustments  412   281   5,646   1,067  
Goodwill impairment  13,021      13,021     
Change in estimated fair value of contingent consideration  (34)  330   (456)  (126) 
Other (expense) income, net adjustments  (785 )     2,154     
Change in estimated value of common stock warrant and derivative liabilities  (1,529)     250      
Tax effect related to amortization of purchased intangibles  (551)     (1,442)    
Total Non-GAAP adjustment summary: $12,770  $732  $25,552  $1,470  
          
Investor Contact

Jamar Ismail, Vice President

Westwicke Partners, LLC

T:  +1 415-513-1282

E:  jamar.ismail@westwicke.com

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Source: CareDx, Inc.

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