CareDx, Inc.
Aug 10, 2017

CareDx Reports Second Quarter 2017 Financial Results

Reports 16% AlloMap Revenue Growth

BRISBANE, Calif., Aug. 10, 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 second quarter ended June 30, 2017.

Recent highlights: 

"With our core products performing well, we have a great platform in place to grow CareDx's business in 2018 and beyond. We are excited to be a few months in front of our October AlloSure launch, which provides a transformational business opportunity for us," said Peter Maag, CareDx President and Chief Executive Officer. "We recently restructured the obligations with certain shareholders, which has increased our financial flexibility ahead of the launch and allows us to continue our drive toward profitability in 2018."

Second Quarter 2017 Financial Results
Revenue for the three months ended June 30, 2017 was $12.0 million compared with $10.7 million in the second quarter of 2016.  Revenue from AlloMap tests for the three months ended June 30, 2017 was $8.4 million compared with $7.2 million in the second quarter of 2016. Olerup revenue in the three months ended June 30, 2017 was $3.4 million.  

For the second quarter of 2017, net loss was $4.0 million compared to net loss of $10.5 million in the second quarter of 2016.  Basic and diluted net loss per share was $0.19 in the second quarter of 2017, compared to basic and diluted net loss per share of $0.77 in the second quarter of 2016.

For the second quarter of 2017, non-GAAP net loss was $3.6 million compared to non-GAAP net loss of $4.0 million in the second quarter of 2016. Non-GAAP basic and diluted net loss per share was $0.17 in the second quarter of 2017, compared to the non-GAAP basic and diluted net loss per share of $0.29 in the second quarter of 2016.

Net cash used in operating activities in the second quarter of 2017 declined to $3.2 million compared with $6.7 million in the first quarter of 2017. Cash and cash equivalents were $9.1 million as of June 30, 2017.

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.

2017 Guidance
For the full year 2017, CareDx expects revenue to be in the range of $46 million to $49 million, excluding any potential AlloSure revenue.

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 across the transplant testing continuum, including AlloMap® and AlloSure™ for post-transplant surveillance and Olerup SSP®, Olerup QTYPE®, and Olerup SBT™ for pre-transplant HLA testing.

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

Forward Looking Statements
This press release contains forward-looking statements about our business, research, development and commercialization efforts, including, but not limited to our anticipated future financial results, including our guidance for full fiscal 2017 revenue, AlloMap test volume growth and the development, commercialization, utility, performance and adoption of AlloSure. 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 risk associated with successful research, development and planned commercialization of our technologies.  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 fiscal year ended December 31, 2016 filed by us with the SEC on April 21, 2017.  Any of these may cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by our forward-looking statements. We expressly disclaim 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 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, 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 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 June 30, Six Months Ended June 30,
   2017   2016   2017   2016 
         
Revenue:        
Testing revenue $  8,420  $  7,249  $  16,322  $  13,704 
Product revenue    3,376     3,475     7,043     3,475 
Collaboration and license revenue    250     11     265     118 
Total revenue    12,046     10,735     23,630     17,297 
Operating expenses:        
Cost of testing    3,011     2,852     6,068     5,624 
Cost of product     2,178     3,056     4,505     3,056 
Research and development    3,118     3,143     6,401     6,302 
Sales and marketing    3,270     3,356     6,492     5,093 
General and administrative    4,132     5,393     10,634     11,070 
Goodwill impairment    -      -      1,958     -  
Change in estimated fair value of contingent consideration    (64)    (97)    (285)    (310)
Total operating expenses    15,645     17,703      35,773     30,835 
Loss from operations    (3,599)    (6,968)    (12,143)    (13,538)
Interest expense    (1,691)    (526)    (2,481)    (783)
Other expense, net    (188)    (274)    (874)    (3,200)
Change in estimated fair value of common stock warrant liability and derivative liability    1,067     (3,165)    5,195     (3,165)
Loss before income taxes    (4,411)    (10,933)    (10,303)    (20,686)
Income tax benefit    376     440     659     440 
Net loss  (4,035)  (10,493)  (9,644)   (20,246)
Net loss attributable to noncontrolling interest    (67)     (23)    (114)    (23)
Net loss attributable to CareDx, Inc. $  (3,968) $  (10,470) $  (9,530) $  (20,223)
Net loss per share attributable to CareDx, Inc.:         
Basic $  (0.19) $  (0.77) $  (0.45) $  (1.58)
         
Diluted $  (0.19) $  (0.77) $  (0.45) $  (1.58)
         
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
        
Basic     21,412,480     13,568,120      21,378,321     12,768,913 
         
Diluted    21,412,480     13,568,120     21,378,321     12,768,913 

 

CareDx, Inc. 
Condensed Consolidated Balance Sheets 
(In thousands) 
       
   June 30, 2017 December 31, 2016 (1)  
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents  $  9,104  $  17,258   
Accounts receivable    3,005     2,768   
Inventory     6,343     5,461   
Prepaid and other assets     1,457     1,186   
Total current assets    19,909     26,673   
Property and equipment, net     2,528     2,931   
Intangible assets, net    33,743     33,124   
Goodwill    12,005     13,839   
Restricted cash     9,553     143   
Other assets     -     20   
Total assets $  77,738  $  76,730   
       
Liabilities and stockholders' equity      
Current liabilities:      
Accounts payable  $  3,599  $  3,065    
Accrued payroll liabilities    3,440     3,851    
Accrued and other liabilities    4,960     5,320   
Accrued royalties     304     263   
Deferred revenue     39     42   
Deferred purchase consideration    7,004     5,445   
Derivative liability    1,000     -   
Current debt    33,890     22,846   
Total current liabilities    54,236     40,832   
Deferred rent, net of current portion     1,113     1,301   
Deferred revenue, net of current portion     750     759   
Deferred tax liability    5,894     6,057   
Long-term debt, net of current portion     -     1,098   
Contingent consideration    207     492   
Common stock warrant liability    2,203     5,208   
Other liabilities    1,349     1,222   
Total liabilities    65,752      56,969   
Stockholders' equity:      
Common stock    21     21   
Additional paid-in capital    236,617     235,673   
Accumulated other comprehensive loss    (2,724)    (3,659)  
Accumulated deficit    (222,083)    (212,553)  
Total CareDx, Inc. stockholders' equity    11,831     19,482   
Noncontrolling interest    155     279   
Total stockholders' equity    11,986     19,761   
Total liabilities and stockholders' equity $  77,738  $  76,730   
       
(1)  The condensed balance sheets at 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 June 30, Six Months Ended June 30,
   2017   2016   2017   2016 
         
Cost of testing reconciliation:        
GAAP cost of testing $  3,011  $  2,852  $  6,068  $  5,624 
Stock-based compensation expense    (64)    (38)    (119)    (66)
Non-GAAP cost of testing $  2,947  $  2,814  $  5,949  $  5,558 
         
Cost of product reconciliation:        
GAAP cost of product $  2,178  $  3,056  $  4,505  $  3,056 
Acquisition related-amortization of purchased intangibles    (353)    (303)    (710)    (303)
Acquisition related-amortization of inventory valuation adjustment    (138)    (1,225)    (170)    (1,225)
Non-GAAP cost of product  $  1,687  $  1,528  $  3,625  $  1,528 
         
Research and development expenses reconciliation:        
GAAP research and development expenses $  3,118  $  3,143  $  6,401  $  6,302 
Stock-based compensation expense    (111)    (100)    (175)    (213)
Non-GAAP research and development expenses $  3,007  $  3,043  $  6,226  $  6,089 
          
Sales and marketing expenses reconciliation:        
GAAP sales and marketing expenses $  3,270  $  3,356  $  6,492  $  5,093 
Acquisition related-amortization of purchased intangibles    (234)    (213)    (465)    (213)
Stock-based compensation expense    (57)    (43)    (95)    (71)
Non-GAAP sales and marketing expenses $  2,979  $  3,100  $  5,932   $  4,809 
         
General and administrative expenses reconciliation:        
GAAP general and administrative expenses $  4,132  $  5,393  $  10,634  $  11,070 
Acquisition related fees and expenses    —     (1,581)    —     (3,840)
Stock-based compensation expense    (263)    (186)    (497)    (463)
Non-GAAP general and administrative expenses $  3,869  $  3,626  $  10,137  $  6,767 
          
Goodwill impairment reconciliation:         
GAAP goodwill impairment $  —  $  —   $  1,958  $  — 
Goodwill impairment      —     —     (1,958)    — 
Non-GAAP goodwill impairment $  —  $  —  $  —  $  — 
         
Change in estimated fair value of contingent consideration reconciliation:        
GAAP change in estimated fair value of contingent consideration $  (64) $  (97) $   (285) $  (310)
Change in estimated fair value of contingent consideration    64     97     285     310 
Non-GAAP change in estimated fair value of contingent consideration $  —  $  —  $  —  $  — 
          
Interest expense reconciliation:        
GAAP interest expense $  (1,691) $  (526) $  (2,481) $  (783)
Amortization of debt discount    606     43     717     84 
Non-GAAP interest expense $  (1,085) $  (483) $  (1,764) $  (699)
         
Other expense, net reconciliation:        
GAAP other expense, net $  (188 ) $  (274) $  (874) $  (3,200)
Debt financing related fees and expenses    (125)    60     309     2,939 
Non-GAAP other expense, net  $  (313) $  (214) $  (565) $  (261)
         
          
Change in estimated fair value of common stock warrant liability and derivative liability reconciliation:        
GAAP change in estimated fair value of common stock warrant liability and derivative liability $  1,067  $  (3,165) $  5,195  $  (3,165)
Change in estimated fair value of common stock warrant liability and derivative liability reconciliation:    (1,067)    3,165     (5,195)    3,165 
Non-GAAP change in estimated fair value of common stock warrant liability and derivative liability $  —  $  —  $  —  $  — 
         
Income tax benefit reconciliation:        
GAAP income tax benefit $  376  $  440  $  659  $  440 
Tax effect related to amortization of purchased intangibles    (181)    (427)    (336)    (427)
Non-GAAP income tax benefit $  195  $  13  $  323  $  13 
         
Net loss reconciliation:        
GAAP net loss attributable to CareDx, Inc. $  (3,968) $  (10,470) $  (9,530) $  (20,223)
Acquisition related-amortization of purchased intangibles    587     516     1,175     516 
Acquisition related-amortization of inventory valuation adjustment    138     1,225     170     1,225 
Tax effect related to amortization of purchased intangibles    (181)    (427)    (336)    (427)
Acquisition related fees and expenses     —     1,581     —     3,840 
Debt financing related fees and expenses    (125)    60     309      2,939 
Amortization of debt discount    606     43     717     84 
Stock-based compensation expenses    495     367     886     813 
Goodwill impairment    —     —     1,958     — 
Change in estimated fair value of contingent consideration    (64)    (97)    (285)    (310)
Change in estimated fair value of common stock warrant liability and derivative liability    (1,067)    3,165     (5,195)    3,165 
Non-GAAP net loss $  (3,579) $  (4,037) $  (10,131) $  (8,378)
         
Basic and diluted net loss per share reconciliation:        
GAAP basic and diluted net loss per share attributable to CareDx $  (0.19) $  (0.77) $  -   $  (1.58)
Acquisition related-amortization of purchased intangibles    0.03     0.04      0.05     0.04 
Acquisition related-amortization of inventory valuation adjustment    0.01     0.09     0.01     0.10 
Tax effect related to amortization purchased intangibles    (0.01)    (0.03)    (0.02)    (0.03)
Acquisition related fees and expenses    -      0.12     -      0.30 
Debt financing related fees and expenses    (0.01)    0.00     0.01     0.23 
Amortization of debt discount    0.03     0.00     0.03     0.01 
Stock-based compensation expenses    0.02      0.03     0.04     0.03 
Goodwill impairment    -      -      0.09     -  
Change in estimated fair value of contingent consideration    (0.00)    (0.01)    (0.01)    (0.02)
Change in estimated fair value of common stock warrant liability and derivative liability    (0.05)    0.23     (0.24)    0.25 
Non-GAAP basic and diluted net loss per share attributable to CareDx $  (0.17) $  (0.29) $  (0.03) $  (0.69)
         
Non-GAAP adjustment summary:        
Cost of testing  $  64  $  38  $  119  $  66 
Cost of product      491     1,528     880     1,528 
Research and development     111     100     175     213 
Sales and marketing     291     256     560     284 
General and administrative    263     1,767     497     4,303 
Goodwill impairment    —     —     1,958     — 
Change in estimated fair value of contingent consideration    (64)    (97)    (285)    (310)
Interest expense    606     43     717     84 
Other expense, net     (125)    60     309     2,939 
Change in estimated fair value of common stock warrant liability and derivative liability    (1,067)    3,165     (5,195)    3,165 
Tax effect related to amortization of purchased intangibles    (181)    (427)    (336)    (427)
Total Non-GAAP adjustment summary: $  389  $  6,433  $  (601) $  11,845 
         

 

Investor Contact

Caroline Corner, Managing Director

Westwicke Partners, LLC 

T:  +1 415-202-5678

E:  caroline.corner@westwicke.com

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