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May 10, 2018

CareDx Reports First Quarter Results

AlloSure launch momentum drives 21% revenue growth

Further expands product offerings for transplant patients

BRISBANE, Calif., May 10, 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 first quarter ended March 31, 2018.

Recent highlights:

  • Accelerated AlloSure penetration in key kidney transplant centers
    • As of March 31, 2018, 52 U.S. transplant centers have provided AlloSure testing to patients
    • Continued progress in AlloSure Registry (K-OAR) enrollment, with 12 centers initiated as of March 31, 2018

  • Achieved total revenue of $14.1 million for the first quarter of 2018, up 21% year-over-year
    • Testing revenue of $10.6 million, with 1,051 AlloSure and 3,847 AlloMap patient results provided
    • Product revenue of $3.3 million

  • Broadened testing and product offerings
    • Entered into partnership with Illumina to develop and sell its Next Generation Sequencing transplant solutions
    • Launched HeartCare, a comprehensive solution for surveillance of heart transplant patients, combining AlloMap with AlloSure-Heart
    • Validated Olerup QTYPE on multiple platforms and received CE mark certification

  • Completed balance sheet simplification by refinancing outstanding debt into a single $15 million term loan with Perceptive Advisors

“A number of our initiatives have delivered results in the first quarter. AlloSure has already made a big impact in many transplant centers and the community is embracing our approach to better surveillance. Our vision to be a leader in transplant care has been validated by becoming Illumina’s partner of choice for its Next Generation Sequencing transplant solutions.” said Peter Maag, CareDx President and Chief Executive Officer. “Our dedication to the field sets us apart and creates a platform for future innovations and partnerships in transplant patient care.”  

First Quarter 2018 Financial Results 

Revenue for the three months ended March 31, 2018 was $14.1 million, an increase of 21% compared with $11.6 million in the first quarter of 2017.  Testing revenue for the quarter was $10.6 million compared with $7.9 million in the same period of 2017. Product revenue in the three months ended March 31, 2018 was $3.3 million, compared to $3.7 million in the same period of 2017.

For the first quarter of 2018, the net loss was $9.0 million compared to a net loss of $5.6 million in the same period of 2017. Basic and diluted net loss per share was $0.30 in the first quarter of 2018, compared to basic and diluted net loss per share of $0.26 in the first quarter of 2017. 

Non-GAAP net loss was $4.0 million in the first quarter of 2017 compared to $6.7 million in the first quarter of 2017. Basic and diluted non-GAAP net loss per share was $0.14 in the first quarter of 2018, compared to $0.31 in the first quarter of 2017.

Cash and cash equivalents were $18.7 million as of March 31, 2018. Following the completion of our debt refinancing on April 17, 2018, the Company had approximately $22 million in cash and cash equivalents, and debt of $15 million.

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 $64 million to $66 million, with non-GAAP EBITDA profitability expected during the second half of the year. This guidance includes the anticipated contribution from the partnership agreement with Illumina to exclusively sell its Next Generation Sequencing transplantation products. Each of the components of CareDx’s guidance set forth above is an estimate only and actual performance could differ.

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 2018 revenue, timing for profitability, achievement of our financial and operational goals and 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 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 define non-GAAP EBITDA as net income before net interest expense, income tax expense, depreciation and amortization, impairment of goodwill, stock-based compensation expense, and restructuring, integration and other expenses. 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 March 31,  
    2018   2017  
           
Revenue:          
Testing revenue   $   10,604     $   7,902    
Product revenue       3,307         3,667    
License and other revenue       142         15    
Total revenue       14,053         11,584    
Operating expenses:          
Cost of testing       4,112         3,057    
Cost of product        2,272         2,327    
Research and development       3,368         3,283    
Sales and marketing       4,085         3,222    
General and administrative       5,307         6,502    
Goodwill impairment       —         1,958    
Change in estimated fair value of contingent consideration       144         (221 )  
Total operating expenses       19,288         20,128    
Loss from operations       (5,235 )       (8,544 )  
Interest expense       (2,695 )       (790 )  
Other expense, net       (2,809 )       (686 )  
Change in estimated value of common stock warrant liability and derivative liability       1,321         4,128    
Loss before income taxes       (9,418 )       (5,892 )  
Income tax benefit       424         283    
Net loss     (8,994 )     (5,609 )  
Net loss attributable to noncontrolling interest       (25 )       (47 )  
Net loss attributable to CareDx, Inc.   $   (8,969 )   $   (5,562 )  
Net loss per share attributable to CareDx, Inc.:          
Basic   $   (0.30 )   $   (0.26 )  
           
Diluted   $   (0.30 )   $   (0.26 )  
           
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
         
Basic        29,615,441         21,343,782    
           
Diluted       29,615,441         21,343,782    
 

 

   
CareDx, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
           
    March 31, 2018   December 31, 2017 (1)  
           
Assets          
Current assets:          
Cash and cash equivalents    $   18,695     $   16,895    
Accounts receivable       6,536         2,991    
Inventory        5,011         5,529    
Prepaid and other assets        2,455         1,352    
Total current assets       32,697         26,767    
Property and equipment, net        2,055         2,075    
Intangible assets, net       31,989         33,139    
Goodwill       12,005         12,005    
Restricted cash        206         9,579    
Total assets   $   78,952     $   83,565    
           
Liabilities and stockholders’ (deficit) equity          
Current liabilities:          
Accounts payable    $   4,269     $   3,391    
Accrued payroll liabilities       3,707         5,013    
Accrued and other liabilities       4,392         3,735    
Deferred revenue        39         39    
Deferred purchase consideration       577         407    
Derivative liability       -         14,600    
Current debt       461         15,721    
Total current liabilities       13,445         42,906    
Deferred rent, net of current portion        802         913    
Deferred revenue, net of current portion        721         730    
Deferred tax liability       4,415         4,933    
Long-term debt, net of current portion        9,729         18,338    
Contingent consideration       1,816         1,672    
Common stock warrant liability       13,247         18,712    
Other liabilities       1,384         1,315    
Total liabilities       45,559         89,519    
           
Stockholders’ equity:          
Common stock       35         29    
Additional paid-in capital       309,898         264,204    
Accumulated other comprehensive loss       (2,482 )       (2,345 )  
Accumulated deficit       (274,058 )       (268,022 )  
Total CareDx, Inc. stockholders' equity (deficit)        33,393         (6,134 )  
Noncontrolling interest       -         180    
Total stockholders' equity (deficit)        33,393         (5,954 )  
Total liabilities and stockholders’ equity   $   78,952     $   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 March 31,  
    2018   2017  
           
Cost of testing reconciliation:          
GAAP cost of testing   $   4,112     $   3,057    
Acquisition related-amortization of purchased intangibles       (127 )       -     
Stock-based compensation expense       (61 )       (55 )  
Non-GAAP cost of testing   $   3,924     $   3,002    
           
Cost of product reconciliation:          
GAAP cost of product   $   2,272     $   2,327    
Acquisition related-amortization of purchased intangibles       (383 )       (357 )  
Acquisition related-amortization of inventory valuation adjustment       (164 )       (32 )  
Non-GAAP cost of product    $   1,725     $   1,938    
           
Research and development expenses reconciliation:          
GAAP research and development expenses   $   3,368     $   3,283    
Stock-based compensation expense       (213 )       (64 )  
Non-GAAP research and development expenses   $   3,155     $   3,219    
           
Sales and marketing expenses reconciliation:          
GAAP sales and marketing expenses   $   4,085     $   3,222    
Acquisition related-amortization of purchased intangibles       (254 )       (231 )  
Stock-based compensation expense       (63 )       (38 )  
Non-GAAP sales and marketing expenses   $   3,768     $   2,953    
           
General and administrative expenses reconciliation:          
GAAP general and administrative expenses   $   5,307     $   6,502    
Stock-based compensation expense       (368 )       (234 )  
Non-GAAP general and administrative expenses   $   4,939     $   6,268    
           
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   $   144     $   (221 )  
Change in estimated fair value of contingent consideration       (144 )       221    
Non-GAAP change in estimated fair value of contingent consideration   $   —     $   —    
           
Interest expense reconciliation:          
GAAP interest expense   $   (2,695 )   $   (790 )  
Amortization of debt discount       1,923         184    
Non-GAAP interest expense   $   (772 )   $   (606 )  
           
Other expense, net reconciliation:          
GAAP other expense, net   $   (2,809 )   $   (686 )  
Debt financing related fees and expenses       —         250    
Loss on conversion from debt to equity       2,806         —    
Non-GAAP other expense, net   $   (3 )   $   (436 )  
           
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   $   1,321     $   4,128    
Change in estimated fair value of common stock warrant and derivative liabilities reconciliation:       (1,321 )       (4,128 )  
Non-GAAP change in estimated fair value of common stock warrant and derivative liabilities   $   —     $   —    
           
Income tax benefit reconciliation:          
GAAP income tax benefit   $   424     $   283    
Tax effect related to amortization of purchased intangibles       (232 )       (155 )  
Non-GAAP income tax benefit   $   192     $   128    
           
Net loss reconciliation:          
GAAP net loss attributable to CareDx, Inc.   $   (8,969 )   $   (5,562 )  
Acquisition related-amortization of purchased intangibles       764         588    
Acquisition related-amortization of inventory valuation adjustment       164         32    
Tax effect related to amortization of purchased intangibles       (232 )       (155 )  
Debt financing related fees and expenses       —         250    
Amortization of debt discount       1,923         184    
Loss on conversion from debt to equity       2,806         —    
Stock-based compensation expenses       705         391    
Goodwill impairment       —         1,958    
Change in estimated fair value of contingent consideration       144         (221 )  
Change in estimated fair value of common stock warrant liability and derivative liability       (1,321 )       (4,128 )  
Non-GAAP net loss   $   (4,016 )   $   (6,663 )  
           
Basic and diluted net loss per share reconciliation:          
GAAP basic and diluted net loss per share attributable to CareDx   $   (0.30 )   $   (0.26 )  
Acquisition related-amortization of purchased intangibles       0.03         0.03    
Acquisition related-amortization of inventory valuation adjustment       0.01         0.00    
Tax effect related to amortization purchased intangibles       (0.01 )       (0.01 )  
Debt financing related fees and expenses       -          0.01    
Amortization of debt discount       0.06         0.01    
Loss on conversion from debt to equity       0.09         -     
Stock-based compensation expenses       0.02         0.02    
Goodwill impairment       -          0.09    
Change in estimated fair value of contingent consideration       0.00         (0.01 )  
Change in estimated fair value of common stock warrant and derivative liabilities       (0.04 )       (0.19 )  
Non-GAAP basic net loss per share attributable to CareDx   $   (0.14 )   $   (0.31 )  
           
Non-GAAP diluted net loss per share attributable to CareDx   $   (0.14 )   $   (0.31 )  
           
Non-GAAP adjustment summary:          
Cost of testing    $   188     $   55    
Cost of product        547         389    
Research and development        213         64    
Sales and marketing        317         269    
General and administrative       368         234    
Goodwill impairment       —         1,958    
Change in estimated fair value of contingent consideration       144         (221 )  
Interest expense, net       1,923         184    
Other (expense) income, net        2,806         250    
Change in estimated fair value of common stock warrant and derivative liabilities       (1,321 )       (4,128 )  
Tax effect related to amortization of purchased intangibles       (232 )       (155 )  
Total Non-GAAP adjustment summary:   $   4,953     $   (1,101 )  
           

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