CareDx, Inc.
Nov 9, 2017

CareDx Reports Third Quarter 2017 Financial Results

BRISBANE, Calif., Nov. 09, 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 third quarter ended September 30, 2017.

Recent highlights:

"With our core products performing well, we have a strong platform in place to grow CareDx's business in 2018 and beyond. We are excited to have had a successful AlloSure launch ahead of our original timeline, representing a transformational business opportunity for CareDx while meeting the needs of kidney transplant patients across the US," said Peter Maag, CareDx President and Chief Executive Officer. "Additionally, our recent successful follow-on offering provides increased financial flexibility as we continue our drive towards profitability in 2018."

Third Quarter 2017 Financial Results 
Revenue for the three months ended September 30, 2017 was $12.2 million compared with $12.5 million in the third quarter of 2016.  Revenue from AlloMap tests for the quarter was $8.2 million compared with $8.6 million in the same period in 2016. Revenue recognized in the third quarter of 2016 included $0.9 million related to a catch-up of cash collections from prior periods. Olerup revenue in the three months ended September 30, 2017 was $3.9 million, compared to $3.8 million in the same period in 2016.  

For the third quarter of 2017, net loss was $14.3 million compared to net loss of $3.8 million in the same period in 2016.  The third quarter of 2017 net loss includes charges totaling $9.2 million for changes in the estimated fair values of warrant and derivative liabilities, and contingent consideration.  Basic and diluted net loss per share was $0.63 in the third quarter of 2017, compared to basic and diluted net loss per share of $0.20 and $0.26, respectively, in the third quarter of 2016.

For the third quarter of 2017, non-GAAP net loss was $3.3 million compared to non-GAAP net loss of $2.9 million in the third quarter of 2016. Non-GAAP basic and diluted net loss per share was $0.15 in the third quarter of 2017, compared to non-GAAP basic and diluted net loss per share of $0.15 in the third quarter of 2016.

Net cash used in operating activities in the third quarter of 2017 was $2.2 million compared with $1.2 million in the comparative 2016 period, and year-to-date net cash used in operating activities was $12.2 million compared to $13.5 million for the corresponding period in 2016. Cash and cash equivalents were $6.0 million and restricted cash was $9.6 million as of September 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 $47 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 includes forward-looking statements, including expectations regarding the Company's fiscal 2017 revenue, prospects and drive toward future profitability. 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, 2016 filed by CareDx with the SEC on April 21, 2017 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 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.

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 

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,
   2017   2016   2017   2016 
         
Revenue:        
Testing revenue $8,163  $ 8,613  $24,485  $22,317 
Product revenue  3,873   3,754   10,916   7,228 
Collaboration and license revenue  155   108   420    226 
Total revenue  12,191   12,475   35,821   29,771 
Operating expenses:        
Cost of testing  3,156   2,604   9,224    8,228 
Cost of product  2,053   3,355   6,558   6,411 
Research and development  2,959   2,930   9,360   9,231 
Sales and marketing  3,255   3,451   9,747    8,544 
General and administrative  4,038   5,180    14,672   16,250 
Goodwill impairment  -   -   1,958   - 
Change in estimated fair value of contingent consideration  594   (112)  309   (422)
Total operating expenses  16,055   17,408   51,828   48,242 
Loss from operations  (3,864)  (4,933)  (16,007)  (18,471)
Interest expense  (1,685)  (568)  (4,166)  (1,351)
Other expense, net  (317)  (133)  (1,191)  (3,334)
Change in estimated fair value of common stock warrant liability and derivative liability  (8,599)  1,386   (3,404)   (1,779)
Loss before income taxes  (14,465)  (4,248)  (24,768)  (24,935)
Income tax benefit  178   449   837   888 
Net loss  (14,287)  (3,799)  (23,931)  (24,047)
Net loss attributable to noncontrolling interest  (19)  (35)  (133)  (58)
Net loss attributable to CareDx, Inc. $(14,268) $(3,764) $(23,798) $(23,989)
Net loss per share attributable to CareDx, Inc.:        
Basic $(0.63) $(0.20) $(1.09) $(1.61)
         
Diluted $(0.63) $(0.26) $(1.09) $(1.61)
          
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
        
Basic  22,526,615   19,098,626   21,765,292   14,894,218 
         
Diluted  22,526,615   19,481,424   21,765,292    14,894,218 
         


CareDx, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
      
  September 30, 2017 December 31, 2016 (1) 
  (Unaudited)   
Assets     
Current assets:     
Cash and cash equivalents $5,976  $17,258  
Accounts receivable  3,270   2,768  
Inventory   6,170   5,461  
Prepaid and other assets  1,530   1,186  
Total current assets  16,946   26,673  
Property and equipment, net  2,281    2,931  
Intangible assets, net  34,307    33,124  
Goodwill  12,005   13,839  
Restricted cash  9,554   143  
Other assets  -   20  
Total assets $75,093  $76,730  
      
Liabilities and stockholders' equity     
Current liabilities:     
Accounts payable $3,396  $3,065  
Accrued payroll liabilities  4,453   3,851  
Accrued and other liabilities  3,895   5,320  
Accrued royalties  294    263  
Deferred revenue  39   42  
Deferred purchase consideration  2,514   5,445  
Derivative liability  1,370   -   
Current debt  15,000   22,846  
Total current liabilities  30,961   40,832  
Deferred rent, net of current portion  1,018   1,301  
Deferred revenue, net of current portion  740   759  
Deferred tax liability  5,950   6,057  
Deferred purchase consideration, net of current portion  2,880   -  
Long-term debt, net of current portion  21,174   1,098  
Contingent consideration  801   492  
Common stock warrant liability  10,431   5,208  
Other liabilities  1,313   1,222  
Total liabilities  75,268   56,969  
Stockholders' equity:     
Common stock  23   21  
Additional paid-in capital  238,215   235,673  
Accumulated other comprehensive loss  (2,198)  (3,659) 
Accumulated deficit   (236,351)  (212,553) 
Total CareDx, Inc. stockholders' equity (deficit)   (311)  19,482  
Noncontrolling interest  136   279  
Total stockholders' equity (deficit)  (175)  19,761  
Total liabilities and stockholders' equity $75,093  $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 September 30, Nine Months Ended September 30,
   2017   2016   2017   2016 
         
Cost of testing reconciliation:        
GAAP cost of testing $3,156  $2,604  $9,224  $8,228 
Stock-based compensation expense  (38)  (38)  (157)  (105)
Non-GAAP cost of testing $3,118  $2,566  $9,067  $8,123  
         
Cost of product reconciliation:        
GAAP cost of product $2,053  $3,355  $6,558  $6,411 
Acquisition related-amortization of purchased intangibles  (383)  (343)  (1,093)  (646)
Acquisition related-amortization of inventory valuation adjustment  (250)  (1,273)  (420)  (2,438)
Non-GAAP cost of product $1,420  $1,739  $5,045  $3,327 
         
Research and development expenses reconciliation:        
GAAP research and development expenses $ 2,959  $2,930  $9,360  $9,231 
Stock-based compensation expense  (104)  (47)  (279)  (118)
Non-GAAP research and development expenses $2,855  $2,883  $9,081  $9,113 
         
Sales and marketing expenses reconciliation:         
GAAP sales and marketing expenses $3,255  $3,451  $9,747  $8,544 
Acquisition related-amortization of purchased intangibles  (254)  (241)  (719)  (454)
Stock-based compensation expense  (32)  (109)  (127)  (321)
Non-GAAP sales and marketing expenses $2,969  $3,101  $8,901  $7,769 
         
General and administrative expenses reconciliation:        
GAAP general and administrative expenses $4,038  $5,180  $14,672  $16,250 
Acquisition related fees and expenses     (458)      (4,298)
Stock-based compensation expense  (256)   (261)  (753)  (723)
Non-GAAP general and administrative expenses $3,782  $4,461  $13,919  $11,229 
         
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 $594  $(112) $309  $(422)
Change in estimated fair value of contingent consideration  (594)  112   (309)  422 
Non-GAAP change in estimated fair value of contingent consideration $  $  $  $ 
         
Interest expense reconciliation:        
GAAP interest expense  $(1,685) $(568) $(4,166) $(1,351)
Amortization of debt discount  650   43   1,367   127 
Non-GAAP interest expense $(1,035) $(525) $(2,799) $(1,224)
         
Other expense, net reconciliation:        
GAAP other expense, net $(317) $(133) $(1,191) $(3,334)
Debt financing related fees and expenses        309   2,939 
Non-GAAP other expense, net $(317) $(133) $(882) $(395)
         
         
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 $(8,599) $1,386   $(3,404) $(1,779)
Change in estimated fair value of common stock warrant liability and derivative liability reconciliation:  8,599   (1,386)  3,404    1,779 
Non-GAAP change in estimated fair value of common stock warrant liability and derivative liability $  $  $  $ 
         
Income tax benefit reconciliation:        
GAAP income tax benefit $178  $449  $837  $888 
Tax effect related to amortization of purchased intangibles  (199)  (427)  (535)  (807)
Non-GAAP income tax benefit $(21) $22  $302  $81 
         
Net loss reconciliation:        
GAAP net loss attributable to CareDx, Inc. $(14,268) $(3,764) $(23,798)  $(23,989)
Acquisition related-amortization of purchased intangibles  637   584   1,812   1,100 
Acquisition related-amortization of inventory valuation adjustment  250   1,273   420   2,438 
Tax effect related to amortization of purchased intangibles  (199)  (427)  (535)  (807)
Acquisition related fees and expenses     458      4,298 
Debt financing related fees and expenses         309   2,939 
Amortization of debt discount  650    43   1,367    127 
Stock-based compensation expenses  430    455   1,316   1,267 
Goodwill impairment        1,958    
Change in estimated fair value of contingent consideration  594   (112)  309   (422)
Change in estimated fair value of common stock warrant liability and derivative liability  8,599   (1,386)  3,404   1,779 
Non-GAAP net loss $(3,307) $(2,876) $(13,438) $ (11,270)
         
Basic net loss per share reconciliation:        
GAAP basic and diluted net loss per share attributable to CareDx $(0.63) $(0.20) $(1.09) $(1.61)
Acquisition related-amortization of purchased intangibles  0.03   0.03    0.08   0.07 
Acquisition related-amortization of inventory valuation adjustment   0.01   0.07   0.02   0.16 
Tax effect related to amortization purchased intangibles  (0.01)  (0.02)  (0.02)  (0.05)
Acquisition related fees and expenses  -   0.02   -   0.29 
Debt financing related fees and expenses  -   -   0.01   0.20 
Amortization of debt discount  0.03   0.00   0.06   0.01 
Stock-based compensation expenses  0.02   0.02   0.06   0.09 
Goodwill impairment  -   -   0.09   - 
Change in estimated fair value of contingent consideration  0.03   (0.01)  0.01   (0.03)
Change in estimated fair value of common stock warrant liability and derivative liability  0.38   (0.07)  0.16   0.12 
Non-GAAP basic net loss per share attributable to CareDx $(0.15) $(0.15)  $(0.62) $(0.76)
         
Non-GAAP diluted net loss per share attributable to CareDx $(0.15) $(0.15) $(0.62) $(0.76)
         
Non-GAAP adjustment summary:        
Cost of testing $38  $38  $157  $105 
Cost of product   633   1,616   1,513   3,084 
Research and development  104   47   279   118 
Sales and marketing  286   350    846   775 
General and administrative  256   719   753    5,021 
Goodwill impairment        1,958    
Change in estimated fair value of contingent consideration  594   (112)  309   (422)
Interest expense  650   43   1,367   127 
Other expense, net        309   2,939 
Change in estimated fair value of common stock warrant liability and derivative liability  8,599   (1,386)  3,404   1,779 
Tax effect related to amortization of purchased intangibles  (199)  (427)  (535)  (807)
Total Non-GAAP adjustment summary: $10,961  $888  $10,360  $12,719 
         

 

Source: CareDx, Inc.

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