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CareDx Reports Second Quarter 2019 Results

AlloSure momentum drives 76% second quarter revenue growth

BRISBANE, Calif., Aug. 01, 2019 (GLOBE NEWSWIRE) -- CareDx, Inc. (CDNA), a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value healthcare solutions for transplant patients and caregivers, today reported financial results for the quarter ended June 30, 2019.

Recent highlights:

  • Accelerated leadership position in transplantation in the second quarter of 2019
    - Provided 7,355 AlloSure patient results for 5,548 kidney transplant patients
    - Continued progress in AlloSure Registry (K-OAR) enrollment, with 51 centers initiated and 1,204 patients enrolled as of June 30, 2019
    - Provided 4,572 AlloMap patient results, increasing 11% year-over-year
    - Established new Digital transplant business through acquisition of OTTR, an electronic medical records company used in 60 U.S. Transplant Centers
    - Introduced AlloSeq product line at EFI (European Immunogenetics and Histocompatibility Conference) which will provide more than 1 million worldwide transplant patients access to novel surveillance solutions
  • Achieved total revenue of $31.5 million for the second quarter of 2019, increasing 76% year-over-year
    - Testing services revenue of $25.7 million, growth of 83% compared to prior year period
    - Product revenue of $4.6 million, an increase of 29% year-over-year
    - Digital & other revenue of $1.2 million
  • Generated GAAP net loss of $7.8 million, non-GAAP net loss of $0.1 million, and positive adjusted EBITDA of $0.1 million

“The CareDx team continues to execute at a high level, delivering another consecutive record quarter, with revenue increasing 76% year-over-year and the Company generating its fourth consecutive quarter of positive adjusted EBITDA.”  said Peter Maag, CareDx Chief Executive Officer. “The American Transplant Congress marked another milestone in the Company’s history, with CareDx and key opinion leaders presenting strong AlloSure clinical data, further solidifying our position as a pioneer in the transplant industry. During the quarter, we announced the next generation in kidney transplantation surveillance, KidneyCare, a multimodality test combining next generation sequencing, gene expression and smart analytical tools, bringing precision medicine to transplantation and widening CareDx’s competitive moat. Our results highlight the momentum in our business, and we are optimally positioned for continued growth in 2019 and beyond.”

Second Quarter 2019 Financial Results 

Revenue for the three months ended June 30, 2019 was $31.5 million, compared with $17.8 million in the second quarter of 2018.  Testing services revenue for the second quarter was $25.7 million compared with $14.0 million in the same period of 2018. Product revenue in the three months ended June 30, 2019 was $4.6 million, compared to $3.6 million in the same period of 2018.  Digital and other revenue for second quarter 2019 was $1.2 million, reflecting our recent acquisition of OTTR.

For the second quarter of 2019, the net loss was $7.8 million compared to a net loss of $14.1 million in the same period of 2018. The second quarter 2019 net loss included $5.0 million of stock-based compensation expense and a $1.4 million expense from the change in estimated fair value of common stock warrant liabilities.  Basic and diluted net loss per share was $0.19 in the second quarter of 2019, compared to basic and diluted net loss per share of $0.40 in the second quarter of 2018. 

Non-GAAP net loss was $0.1 million in the second quarter of 2019 compared to a $1.3 million non-GAAP net loss in the second quarter of 2018. Basic and diluted non-GAAP net loss per share was $0.00 in the second quarter of 2019, compared to a non-GAAP net loss per share of $0.04 in the second quarter of 2018.

Adjusted EBITDA for the second quarter of 2019 was a gain of $0.1 million, compared to an adjusted EBITDA loss of $0.8 million in the second quarter of 2018.

Cash and cash equivalents were $43.5 million as of June 30, 2019.

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.

2019 Guidance
For the full year 2019, CareDx now expects revenue to be in the range of $123 million to $125 million (previously $113 million to $115 million).

About CareDx
CareDx, Inc., headquartered in Brisbane, California, is a leading precision medicine solutions company focused on the discovery, development and commercialization of clinically differentiated, high-value healthcare solutions for transplant patients and caregivers. CareDx offers products, testing services and digital healthcare solutions along the pre- and post-transplant patient journey, and is the leading provider of genomics-based information for transplant patients.

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 2019 revenue, achievement of our financial and operational goals and our prospects and the opportunity for patients through the AlloSeq product line. 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, 2018 filed by CareDx with the SEC on March 6, 2019 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 in this release certain financial information in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and also on a non-GAAP basis, including non-GAAP net income, non-GAAP net loss, non-GAAP basic and diluted net income and net loss per share and adjusted EBITDA.  We define non-GAAP net income and non-GAAP net loss and per share results as the GAAP net income or 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 adjusted EBITDA as non-GAAP net income/(loss) before net interest expense, income tax expense, depreciation and amortization, other expense, and net loss attributable to noncontrolling interest. 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:

Investor Relations
David Clair
Westwicke Partners
646-277-1266
david.clair@icrinc.com

 
 
CareDx, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
           
  Three Months Ended   Six Months Ended
  June 30, 2019 June 30, 2018   June 30, 2019 June 30, 2018
           
Revenue:          
Testing services revenue $ 25,677   $ 13,997     $ 47,195   $ 24,601  
Product revenue   4,593     3,550       9,026     6,857  
Digital and other revenue   1,184     276       1,215     418  
Total revenue   31,454     17,823       57,436     31,876  
Cost of revenue   11,512     7,207       21,245     13,591  
Gross profit   19,942     10,616       36,191     18,285  
Operating expenses:          
Research and development   7,630     3,496       13,244     6,864  
Sales and marketing   10,644     5,860       17,569     9,945  
General and administrative   8,512     5,596       17,618     10,903  
Change in estimated fair value of contingent consideration   -     873       -     1,017  
Total operating expenses   26,786     15,825       48,431     28,729  
Loss from operations   (6,844 )   (5,209 )     (12,240 )   (10,444 )
Other income (expense):          
Interest income (expense), net   300     (424 )     642     (3,119 )
Debt extinguishment expenses   -     -       -     (2,806 )
Change in estimated fair value of common stock warrant liability and derivative liability   (1,351 )   (8,768 )     (4,360 )   (7,447 )
Other expense, net   (172 )   (42 )     (246 )   (45 )
Total other income (expense)   (1,223 )   (9,234 )     (3,964 )   (13,417 )
Loss before income taxes   (8,067 )   (14,443 )     (16,204 )   (23,861 )
Income tax benefit   220     381       826     805  
Net loss $ (7,847 ) $ (14,062 )   $ (15,378 ) $ (23,056 )
Net loss attributable to noncontrolling interest   -     -       -     (25 )
Net loss attributable to CareDx, Inc. $ (7,847 ) $ (14,062 )   $ (15,378 ) $ (23,031 )
Net loss per share attributable to CareDx, Inc.:          
Basic $ (0.19 ) $ (0.40 )   $ (0.37 ) $ (0.71 )
Diluted $ (0.19 ) $ (0.40 )   $ (0.37 ) $ (0.71 )
           
Weighted average shares used to compute net loss per share attributable to CareDx, Inc.:          
Basic   42,132,396     35,549,837       41,873,337     32,599,032  
Diluted   42,132,396     35,549,837       41,873,337     32,599,032  
           
           

 

CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
     
  June 30, 2019 December 31, 2018
             
Assets            
Current assets:            
Cash and cash equivalents $ 43,469   $ 64,616  
Accounts receivable   17,052     9,760  
Inventory   5,341     4,943  
Prepaid and other current assets   2,462     1,795  
Total current assets   68,324     81,114  
Property and equipment, net   3,508     4,134  
Operating leases right-of-use assets   2,657     -  
Intangible assets, net   45,604     33,252  
Goodwill   22,559     12,005  
Restricted cash   255     192  
Total assets $ 142,907   $ 130,697  
             
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   7,380     4,711  
Accrued compensation   7,490     9,156  
Accrued and other liabilities   13,750     5,637  
Total current liabilities   28,620     19,504  
Deferred tax liability   2,310     2,968  
Common stock warrant liability   11,286     10,003  
Deferred payment for intangible assets   4,930     -  
Other liabilities   2,595     2,294  
Total liabilities   49,741     34,769  
             
Stockholders’ equity:            
Common stock   42     41  
Additional paid-in capital   425,418     412,010  
Accumulated other comprehensive loss   (5,071 )   (4,278 )
Accumulated deficit   (327,223 )   (311,845 )
Total stockholders' equity   93,166     95,928  
Total liabilities and stockholders’ equity $ 142,907   $ 130,697  
             
             

 

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,
    2019     2018       2019     2018  
                           
Net loss attributable to CareDx, Inc. $ (7,847 ) $ (14,062 )   $ (15,378 ) $ (23,031 )
Stock-based compensation expense   4,992     2,512       11,045     3,217  
Acquisition related-amortization of purchased intangibles   805     734       1,541     1,498  
Acquisition related fees and expenses   568     -       568        
Change in estimated fair value of contingent consideration   -     873       -     1,017  
Change in estimated fair value of common stock warrant liability and derivative liability   1,351     8,768       4,360     7,447  
Amortization of debt discount   -     55       -     1,978  
Loss on conversion from debt to equity   -     -       -     2,806  
Tax effect related to amortization of purchased intangibles   (122 )   (190 )     (245 )   (422 )
Acquisition-related amortization of inventory valuation adjustment   17     25       35     189  
Impairment   150     -       150     -  
Non-GAAP net income (loss) $ (86 ) $ (1,285 )   $ 2,076   $ (5,301 )
Net loss attributable to noncontrolling interest   -     -       -     (25 )
Net loss attributable to CareDx, Inc. $ (86 ) $ (1,285 )   $ 2,076   $ (5,276 )
                           
GAAP basic and diluted net loss per share attributable to CareDx $ (0.19 ) $ (0.40 )   $ (0.37 ) $ (0.71 )
GAAP basic and diluted net loss per share attributable to CareDx $ (0.19 ) $ (0.40 )   $ (0.37 ) $ (0.71 )
                           
Non-GAAP basic net income (loss) per share attributable to CareDx $ (0.00 ) $ (0.04 )   $ 0.05   $ (0.16 )
Non-GAAP diluted net income (loss) per share attributable to CareDx $ (0.00 ) $ (0.04 )   $ 0.05   $ (0.16 )
                           
Shares used in computing non-GAAP basic net income (loss) per share   42,132,396     35,549,837       41,873,337     32,599,032  
Shares used in computing non-GAAP diluted net income (loss) per share   42,132,396     35,549,837       44,897,442     32,599,032  
                           
                           

 

CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)
           
  Three Months Ended   Six Months Ended
  June 30, 2019 June 30, 2018   June 30, 2019 June 30, 2018
           
Non-GAAP net income (loss) $ (86 ) $ (1,285 )   $ 2,076   $ (5,301 )
Interest income (expense)   (300 )   369       (642 )   1,141  
Income tax benefit   (98 )   (191 )     (581 )   (383 )
Depreciation expense   397     248       804     526  
Other expense, net   172     42       246     45  
Net loss attributable to noncontrolling interest   -     -       -     (25 )
Adjusted EBITDA $ 85   $ (817 )   $ 1,903   $ (3,997 )
           

 

CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
                 
                 
                 
  Three Months Ended June 30, 2019
  Total
revenue
Cost of
revenue
Research
and
development
Sales and
marketing
General and
administrative
Total other
income
(expense)
Income tax
benefit
Net income
(loss)
GAAP $ 31,454 $ 11,512   $ 7,630   $ 10,644   $ 8,512   $ (1,223 ) $ 220   $ (7,847 )
Non-GAAP adjustments:                
Stock-based compensation expense     (508 )   (1,441 )   (940 )   (2,103 )       4,992  
Acquisition related-amortization of purchased intangibles     (522 )     (283 )         805  
Acquisition related fees and expenses           (568 )       568  
Change in estimated fair value of contingent consideration                 -  
Change in estimated fair value of common stock warrant liability and derivative liability             1,351       1,351  
Amortization of debt discount                 -  
Debt extinguishment expenses                 -  
Tax effect related to amortization of purchased intangibles               (122 )   (122 )
Acquisition-related amortization of inventory valuation adjustment     (17 )             17  
Impairment         (150 )         150  
Non-GAAP $ 31,454 $ 10,465   $ 6,189   $ 9,271   $ 5,841   $ 128   $ 98   $ (86 )
                 
  Six Months Ended June 30, 2019
  Total revenue Cost of
revenue
Research
and
development
Sales and
marketing
General and
administrative
Total other
income
(expense)
Income tax
benefit
Net income
(loss)
GAAP $ 57,436 $ 21,245   $ 13,244   $ 17,569   $ 17,618   $ (3,964 ) $ 826   $ (15,378 )
Non-GAAP adjustments:                
Stock-based compensation expense     (1,284 )   (2,273 )   (1,667 )   (5,821 )       11,045  
Acquisition related-amortization of purchased intangibles     (995 )     (546 )         1,541  
Acquisition related fees and expenses           (568 )       568  
Change in estimated fair value of contingent consideration                 -  
Change in estimated fair value of common stock warrant liability and derivative liability             4,360       4,360  
Amortization of debt discount                 -  
Debt extinguishment expenses                 -  
Tax effect related to amortization of purchased intangibles               (245 )   (245 )
Acquisition-related amortization of inventory valuation adjustment     (35 )             35  
Impairment         (150 )         150  
Non-GAAP $ 57,436 $ 18,931   $ 10,971   $ 15,206   $ 11,229   $ 396   $ 581   $ 2,076  


CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
                     
  Three Months Ended June 30, 2018
  Total
revenue
Cost of
revenue
Research
and
development
Sales and
marketing
General and
administrative
Change in
estimated fair
value of
contingent
consideration
Total other
income
(expense)
Income tax
benefit
Net loss
attributable to
noncontrolling
interest
Net loss
attributable to
CareDx, Inc.
GAAP $ 17,823 $ 7,207   $ 3,496   $ 5,860   $ 5,596   $ 873   $ (9,234 ) $ 381   $ -   $ (14,062 )
Non-GAAP adjustments:                    
Stock-based compensation expense     (191 )   (466 )   (462 )   (1,393 )           2,512  
Acquisition related-amortization of purchased intangibles     (485 )     (249 )             734  
Acquisition related fees and expenses                     -  
Change in estimated fair value of contingent consideration             (873 )         873  
Change in estimated fair value of common stock warrant liability and derivative liability               8,768         8,768  
Amortization of debt discount               55         55  
Debt extinguishment expenses                     -  
Tax effect related to amortization of purchased intangibles                 (190 )     (190 )
Acquisition-related amortization of inventory valuation adjustment     (25 )                 25  
Impairment                     -  
Non-GAAP $ 17,823 $ 6,506   $ 3,030   $ 5,149   $ 4,203   $ -   $ (411 ) $ 191   $ -   $ (1,285 )
                     
                     
                     
  Six Months Ended June 30, 2018
  Total
revenue
Cost of
revenue
Research and
development
Sales and
marketing
General and
administrative
Change in
estimated fair
value of
contingent
consideration
Total other
income
(expense)
Income tax
benefit
Net loss
attributable to
noncontrolling
interest
Net loss
attributable to
CareDx, Inc.
GAAP $ 31,876 $ 13,591   $ 6,864   $ 9,945   $ 10,903   $ 1,017   $ (13,417 ) $ 805   $ (25 ) $ (23,031 )
Non-GAAP adjustments:                    
Stock-based compensation expense     (252 )   (679 )   (526 )   (1,761 )           3,217  
Acquisition related-amortization of purchased intangibles     (995 )     (503 )             1,498  
Acquisition related fees and expenses                     -  
Change in estimated fair value of contingent consideration             (1,017 )         1,017  
Change in estimated fair value of common stock warrant liability and derivative liability               7,447         7,447  
Amortization of debt discount               1,978         1,978  
Debt extinguishment expenses               2,806         2,806  
Tax effect related to amortization of purchased intangibles                 (422 )     (422 )
Acquisition-related amortization of inventory valuation adjustment     (189 )                 189  
Impairment                     -  
Non-GAAP $ 31,876 $ 12,155   $ 6,185   $ 8,916   $ 9,142   $ -   $ (1,186 ) $ 383   $ (25 ) $ (5,301 )