Press Releases

BRISBANE, Calif., Aug. 10, 2016 (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 preliminary financial results for the second quarter ended June 30, 2016.

Recent highlights:

• Achieved total revenue for the second quarter of 2016 of $10.7 million
  • AlloMap® revenues were $7.2 million in the quarter
  • AlloMap patient results volumes in the U.S. were up by 12% year-over-year
  • Olerup® revenues contributed $3.4 million in the second quarter
• Advanced AlloSure® development with first analysis of DART study data
• Completed PIPE financing with gross proceeds of $22.2 million
• Acquired Allenex AB, with its Olerup product line, on April 14, 2016

"This quarter points to the successful execution of our strategy in building CareDx as a transplant-focused genomic information company. We are reporting for the first time consolidated financials for the Olerup pre-transplant and CareDx post-transplant operations," said Peter Maag, CareDx President and Chief Executive Officer. "Along with the successful acquisition of Allenex, we achieved record core AlloMap test volumes. Most importantly, we believe we demonstrated the diagnostic blockbuster potential of AlloSure as a biomarker for rejection for kidney transplant patients with the first analysis of the DART data."

Preliminary Second Quarter Financial Results
These financial results for the three and six months ended June 30, 2016 are preliminary and may be updated with the filing of the upcoming Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. For more information regarding our preliminary results, please see "Purchase Accounting" below.    

Preliminary revenue for the three months ended June 30, 2016 increased to $10.7 million, from $7.1 million in the same period in 2015, reflecting the contribution of Olerup sales following the acquisition. The revenue trend also reflects progress in cash collections, with cash collections increasing sequentially quarter-over-quarter, benefiting revenue recognized on a cash basis.

For the second quarter of 2016, the preliminary net loss was $10.3 million compared to net loss of $3.2 million in the second quarter of 2015.  Basic and diluted preliminary net loss per share were $0.76 in the second quarter of 2016, compared to basic and diluted net loss per share of $0.27 in the second quarter of 2015. The increase in the year-over-year net loss reflects acquisition costs, acquisition related amortization of intangible assets, purchase accounting adjustments, a charge for a change in the estimated fair value of warrants, and our investment in the development of AlloSure.

For the second quarter of 2016, the preliminary non-GAAP net loss was $3.9 million compared to net loss of $2.6 million in the second quarter of 2015. The preliminary non-GAAP basic and diluted net loss per share were $0.29 in the second quarter of 2016, compared to non-GAAP basic and diluted earnings per share of $0.22 in the second quarter of 2015. The increase in the year-over-year non-GAAP net loss primarily reflects our investment in the development of AlloSure. 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 $17.1 million as of June 30, 2016.

2016 Guidance
For the full year 2016, we reiterate our revenue guidance. We expect fiscal 2016 revenue to grow by low- to mid-single digits on a pro forma basis over fiscal 2015 revenue, assuming that the Allenex acquisition closed on January 1, 2016.  Actual reported results will only include Allenex results subsequent to the close of the acquisition on April 14, 2016, and we expect reported revenue for the full year 2016 to be in the range of $40 million to $42 million.

Purchase Accounting
The Company has accounted for the acquisition of Allenex as a business combination. Under business combination accounting, the total purchase price was allocated to Allenex's net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of April 14, 2016, the closing date, which are reflected in our Condensed Consolidated Balance Sheet on a preliminary basis as of June 30, 2016 as set forth herein. The excess of the purchase price over the preliminary net tangible and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill. The preliminary allocation of the purchase price was based upon a third-party valuation and our estimates and assumptions, which are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to valuation of acquired inventory, income and non-income based taxes and residual goodwill. The amounts recorded for certain assets and liabilities are preliminary in nature and are subject to adjustment as we complete our close process and our independent registered public accounting firm completes its review of our financial statements as of and for the period ended June 30, 2016, to be included in our upcoming Form 10-Q for the quarter ended June 30, 2016.  Any potential adjustments made could be material in relation to the amounts presented in our financial statements.

Conference Call
Management will host a conference call today beginning at 1:30pm PT/4:30pm ET.  Individuals interested in listening to the conference call may do so by dialing (855) 420-0616 for domestic callers or +1 (678) 304-6848 for international callers. Please reference Conference ID: 56306305. To listen to a live webcast, please visit the investor relations section of CareDx's website at: www.CareDx.com.

A replay of the call will be available beginning August 10, 2016 at 4:30 pm PT/7:30 pm ET through 4:30 pm PT/7:30 pm ET on August 11, 2016. To access the replay, dial (855) 859-2056 or +1 (404) 537-3406 and reference Conference ID: 56306305. The webcast will also be available on CareDx's website for one year following the completion of the call.

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 and anticipated future financial results, including our guidance for full fiscal 2016 revenue and statements regarding the potential adjustment of the purchase accounting for the Company's acquisition of Allenex on April 14, 2016. 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 ability to complete 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, and our dependence on health insurers and other third-party payers to provide coverage for our current test and future tests, if any, completion of management's and our independent registered public accounting firm's review of our financial statements as of and for the period ended June 30, 2016, obtaining additional information about the fair values of certain assets and liabilities of Allenex that existed as of the April 14, 2016 acquisition date and finalization of the combined company's legal entity structure.  These factors, together with those that are described in our filings with the SEC, including the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and the Annual Report on Form 10-K for the year ended December 31, 2015 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. 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 and contingent consideration; acquisition related 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.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
			2016				2015				2016				2015
		(Preliminary)								(Preliminary)
Revenue:
Testing revenue		$	7,249			$	7,044			$	13,704			$	14,139
Product revenue			3,448				—				3,448				—
Collaboration, license and other revenue			11				85				118				205
Total revenue			10,708				7,129				17,270				14,344
Operating expenses:
Cost of testing			2,852				2,508				5,624				5,218
Cost of sales			2,997				—				2,997				—
Research and development			3,135				2,510				6,293				3,931
Sales and marketing			3,324				2,526				5,061				4,549
General and administrative			5,346				2,329				11,023				5,034
Change in estimated fair value of contingent consideration			(97	)			142				(310	)			(111	)
Total operating expenses			17,557				10,015				30,688				18,621
Loss from operations			(6,849	)			(2,886	)			(13,418	)			(4,277	)
Interest expense			(485	)			(256	)			(742	)			(1,083	)
Other (expense) income, net			(3,394	)			(43	)			(6,273	)			(97	)
Loss before income taxes			(10,728	)			(3,185	)			(20,433	)			(5,457	)
Income tax benefit			370				—				323				—
Net loss			(10,358	)			(3,185	)			(20,110	)			(5,457	)
Net loss attributable to noncontrolling interest			23				—				23				—
Net loss attributable to CareDx, Inc.		$	(10,335	)		$	(3,185	)		$	(20,087	)		$	(5,457	)
Net loss per share attributable to CareDx, Inc.:
Basic and diluted		$	(0.76	)		$	(0.27	)		$	(1.57	)		$	(0.46	)
Weighted average shares used to compute net loss per share attributable to CareDx, Inc.:
Basic and diluted			13,568,120				11,835,405				12,768,913				11,824,993

 

CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amount and par value)
		June 30, 2016				December 31, 2015 (1)
		(Preliminary)
Assets
Current assets:
Cash and cash equivalents		$	17,144			$	29,888
Accounts receivable			4,887				2,367
Inventory			8,851				766
Prepaid and other assets			1,779				1,341
Total current assets			32,661				34,362
Property and equipment, net			3,078				2,425
Intangible assets, net			36,344				6,650
Goodwill			27,918				12,005
Restricted cash			143				147
Other noncurrent assets			20				49
Total assets		$	100,164			$	55,638
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	3,339			$	1,644
Accrued payroll liabilities			2,944				2,366
Accrued and other liabilities			6,830				2,892
Accrued royalties			261				242
Deferred revenue			65				142
Deferred purchase consideration			5,766				—
Current portion of long-term debt			18,824				2,866
Total current liabilities			38,029				10,152
Deferred rent, net of current portion			1,269				1,426
Deferred revenue, net of current portion			749				703
Deferred tax liability			7,779				—
Long-term debt, net of current portion			10,072				12,887
Contingent consideration			638				948
Common stock warrant liability			8,122				—
Other liabilities			862				28
Total liabilities			67,520				26,144
Stockholders' equity:
Common stock			19				12
Additional paid-in capital			226,593				202,564
Accumulated other comprehensive loss			(1,408	)			—
Accumulated deficit			(193,171	)			(173,082	)
Total CareDx Inc. stockholders' equity			32,033				29,494
Noncontrolling interest			611				—
Total equity			32,644				29,494
Total liabilities and stockholders' equity		$	100,164			$	55,638
(1)  The condensed balance sheet at December 31, 2015 has 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,
			2016				2015				2016				2015
		(Preliminary)								(Preliminary)
Cost of testing reconciliation:
GAAP cost of testing		$	2,852			$	2,508			$	5,624			$	5,218
Stock-based compensation expense			(38	)			(54	)			(66	)			(69	)
Non-GAAP cost of testing		$	2,814			$	2,454			$	5,558			$	5,149
Cost of sales reconciliation:
GAAP cost of sales		$	2,997			$	—			$	2,997			$	—
Acquisition related-amortization of purchased intangibles			(303	)			—				(303	)			—
Acquisition related-amortization of inventory valuation adjustment			(1,225	)			—				(1,225	)			—
Non-GAAP cost of sales		$	1,469			$	—			$	1,469			$	—
Research and development expenses reconciliation:
GAAP research and development expenses		$	3,135			$	2,510			$	6,293			$	3,931
Stock-based compensation expense			(100	)			(89	)			(213	)			(136	)
Non-GAAP research and development expenses		$	3,035			$	2,421			$	6,080			$	3,795
Sales and marketing expenses reconciliation:
GAAP sales and marketing expenses		$	3,324			$	2,526			$	5,061			$	4,549
Acquisition related-amortization of purchased intangibles			(213	)			—				(213	)			—
Stock-based compensation expense			(43	)			(36	)			(71	)			(56	)
Non-GAAP sales and marketing expenses		$	3,068			$	2,490			$	4,777			$	4,493
General and administrative expenses reconciliation:
GAAP general and administrative expenses		$	5,346			$	2,329			$	11,023			$	5,034
Acquisition related fees and expenses			(1,581	)			—				(3,840	)			—
Stock-based compensation expense			(186	)			(232	)			(463	)			(431	)
Non-GAAP general and administrative expenses		$	3,579			$	2,097			$	6,720			$	4,603
Contingent consideration remeasurement reconciliation:
GAAP contingent consideration remeasurement		$	(97	)		$	142			$	(310	)		$	(111	)
Contingent consideration remeasurement			97				(142	)			310				111
Non-GAAP contingent consideration remeasurement		$	—			$	—			$	—			$	—
Other (expense) income, net reconciliation:
GAAP other (expense) income, net		$	(3,394	)		$	(43	)		$	(6,273	)		$	(97	)
Warrant liability remeasurement			3,165				—				3,165				—
Debt financing related fees and expenses			60				—				2,939				—
Non-GAAP other (expense) income, net		$	(169	)		$	(43	)		$	(169	)		$	(97	)
Income tax benefit reconciliation:
GAAP income tax benefit		$	370			$	—			$	323			$	—
Tax effect related to amortization of purchased intangibles			(427	)			—				(427	)			—
Non-GAAP income tax benefit, net		$	(57	)		$	—			$	(104	)		$	—
Net loss reconciliation:
GAAP net loss attributable to CareDx		$	(10,335	)		$	(3,185	)		$	(20,087	)		$	(5,457	)
Acquisition related-amortization of purchased intangibles			516				—				516				—
Acquisition related-amortization of inventory valuation adjustment			1,225				—				1,225				—
Tax effect related to amortization of purchased intangibles			(427	)			—				(427	)			—
Acquisition related fees and expenses			1,581				—				3,840				—
Debt financing related fees and expenses			60				—				2,939				—
Stock-based compensation expenses			367				411				813				692
Contingent consideration remeasurement			(97	)			142				(310	)			(111	)
Warrant liability remeasurement			3,165				—				3,165				—
Non-GAAP net loss		$	(3,945	)		$	(2,632	)		$	(8,326	)		$	(4,876	)
Basic and diluted net loss per share reconciliation:
GAAP basic and diluted net loss per share attributable to CareDx		$	(0.76	)		$	(0.27	)		$	(1.57	)		$	(0.46	)
Acquisition related-amortization of purchased intangibles			0.04				—				0.04				—
Acquisition related-amortization of inventory valuation adjustment			0.09				—				0.10				—
Tax effect related to amortization purchased intangibles			(0.03	)			—				(0.03	)			—
Acquisition related fees and expenses			0.12				—				0.30				—
Debt financing related fees and expenses			—				—				0.23				—
Stock-based compensation expenses			0.03				0.04				0.06				0.06
Contingent consideration remeasurement			(0.01	)			0.01				(0.02	)			(0.01	)
Warrant liability remeasurement			0.23				—				0.25				—
Non-GAAP basic and diluted net loss per share attributable to CareDx		$	(0.29	)		$	(0.22	)		$	(0.64	)		$	(0.41	)
Non-GAAP adjustment summary:
Cost of testing adjustments		$	38			$	54			$	66			$	69
Cost of sales adjustments			1,528				—				1,528				—
Research and development expenses adjustments			100				89				213				136
Sales and marketing expenses adjustments			256				36				284				56
General and administrative expenses adjustments			1,767				232				4,303				431
Contingent consideration remeasurement			(97	)			142				(310	)			(111	)
Other expense adjustments			3,225				—				6,104				—
Tax effect related to amortization of purchased intangibles			(427	)			—				(427	)			—
Total Non-GAAP adjustment summary:		$	6,390			$	553			$	11,761			$	581

Media Contacts - CareDxMolly Martell, Senior Director, Marketing

T: +1 415-728-6307

E: mmartell@caredx.com



Media Contacts - Investor

Jamar Ismail, Vice President

Westwicke Partners, LLC

T:  +1 415-513-1282

E:  jamar.ismail@westwicke.com

Source: CareDx, Inc.

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