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CareDx Reports Third Quarter 2020 Results

CareDx, Inc.
·12 min read

SOUTH SAN FRANCISCO, Calif., Oct. 29, 2020 (GLOBE NEWSWIRE) -- CareDx, Inc. (Nasdaq: 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 September 30, 2020.

Third Quarter 2020 and Recent Highlights:

  • Achieved total revenue of $53.4 million for the three months ended September 30, 2020, increasing 58% year-over-year

  • Provided over 21,800 AlloSure Kidney and AlloMap Heart patient results

  • Received final positive Medicare coverage decision for AlloSure Heart

  • Announced publication of pivotal AlloSure Lung data

“Our team continues to deliver the winning formula for CareDx. Beginning with a decision to drive our initiatives with a singular focus on transplantation, we continue to execute on our objectives and achieve tremendous results as we march forward with our mission to improve transplant patient care,” said Peter Maag, CareDx Chairman and Chief Executive Officer. “We truly have an imminent opportunity to make our solutions be the standard of care for transplanted organ surveillance, and our efforts are centered on making this a reality.”

Third Quarter 2020 Financial Results

Revenue for the three months ended September 30, 2020 was $53.4 million, compared with $33.8 million in the third quarter of 2019. Testing services revenue for the third quarter was $45.5 million, compared with $28.2 million in the same period of 2019. Product revenue in the three months ended September 30, 2020 was $5.4 million, compared to $4.2 million in the same period of 2019. Digital and other revenue for the third quarter 2020 was $2.5 million, compared to $1.4 million in the same period of 2019.

For the third quarter of 2020, the net loss was $2.8 million compared to a net loss of $1.8 million in the same period of 2019. Diluted net loss per share was $0.06 in the third quarter of 2020, compared to a diluted net loss per share of $0.04 in the third quarter of 2019.

Non-GAAP net income was $5.1 million in the third quarter of 2020 compared to $0.9 million non-GAAP net income in the third quarter of 2019. Diluted non-GAAP net income per share was $0.10 in the third quarter of 2020, compared to a diluted non-GAAP net income per share of $0.02 in the third quarter of 2019.

Adjusted EBITDA for the third quarter of 2020 was a gain of $5.6 million, compared to an adjusted EBITDA gain of $0.8 million in the third quarter of 2019.

Cash and cash equivalents were $213.8 million as of September 30, 2020.

For additional information regarding non-GAAP financial measures discussed herein, please see “Use of Non-GAAP Financial Measures,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” and “Reconciliation of GAAP to Non-GAAP Adjusted EBITDA Financial Measures” below.

2020 Guidance

While CareDx experienced improved trends in the third quarter, due to the continued uncertainties with respect to the COVID-19 pandemic, CareDx will not be providing revenue guidance at this time.

About CareDx

CareDx, Inc., headquartered in South San Francisco, 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 testing services, products, 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 achievement of our financial and operational goals and our 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, 2019, filed by CareDx with the SEC on February 28, 2020, 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 basic and diluted net income per share and adjusted EBITDA. We define non-GAAP net income and per share results as the GAAP net income 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 income/(expense), income tax benefit, depreciation and amortization, and other income and expense. 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.

Investor Relations Contact

Greg Chodaczek
347-620-7010
investor@caredx.com



CareDx, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Revenue:

Testing services revenue

$

45,529

$

28,226

$

113,264

$

75,421

Product revenue

5,383

4,200

13,369

13,226

Digital and other revenue

2,457

1,385

6,917

2,600

Total revenue

53,369

33,811

133,550

91,247

Operating expenses:

Cost of testing services

11,900

7,421

30,631

21,928

Cost of product

3,705

2,986

9,635

9,161

Cost of digital and other

1,210

1,087

3,966

1,650

Research and development

12,474

8,521

35,616

21,765

Sales and marketing

13,870

11,058

37,727

28,627

General and administrative

13,117

9,485

35,436

27,103

Total operating expenses

56,276

40,558

153,011

110,234

Loss from operations

(2,907

)

(6,747

)

(19,461

)

(18,987

)

Other income (expense):

Interest income, net

29

37

146

679

Change in estimated fair value of common stock warrant liability

79

4,346

(990

)

(14

)

CARES Act Provider Relief Fund

4,813

Other expense, net

(254

)

(398

)

(572

)

(644

)

Total other (expense) income

(146

)

3,985

3,397

21

Loss before income taxes

(3,053

)

(2,762

)

(16,064

)

(18,966

)

Income tax benefit

235

949

865

1,775

Net loss

$

(2,818

)

$

(1,813

)

$

(15,199

)

$

(17,191

)

Net loss per share:

Basic

$

(0.06

)

$

(0.04

)

$

(0.33

)

$

(0.41

)

Diluted

$

(0.06

)

$

(0.04

)

$

(0.33

)

$

(0.41

)

Weighted-average shares used to compute net loss per share:

Basic

49,010,680

42,393,550

45,526,810

42,048,647

Diluted

49,010,680

42,393,550

45,526,810

42,048,647



CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

September 30, 2020

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

213,798

$

38,223

Accounts receivable

30,610

24,057

Inventory

9,906

6,014

Prepaid and other current assets

4,345

3,628

Total current assets

258,659

71,922

Property and equipment, net

10,144

4,430

Operating leases right-of-use assets

15,802

4,730

Intangible assets, net

43,830

45,541

Goodwill

23,857

23,857

Restricted cash

260

256

Other assets

1,000

1,000

Total assets

$

353,552

$

151,736

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

9,519

$

5,506

Accrued compensation

13,791

12,484

Accrued and other liabilities

18,617

16,838

Deferred revenue - CMS advance payment

20,496

Total current liabilities

62,423

34,828

Deferred tax liability

1,187

1,973

Common stock warrant liability

532

6,607

Deferred payments for intangible assets

3,480

5,207

Operating lease liability, less current portion

16,539

2,370

Other liabilities

747

1,751

Total liabilities

84,908

52,736

Commitments and contingencies

Stockholders’ equity:

Common stock

47

42

Additional paid-in capital

621,961

437,976

Accumulated other comprehensive loss

(4,352

)

(5,205

)

Accumulated deficit

(349,012

)

(333,813

)

Total stockholders’ equity

268,644

99,000

Total liabilities and stockholders’ equity

$

353,552

$

151,736



CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Cost of testing services reconciliation:

GAAP cost of testing services

$

11,900

$

7,421

$

30,631

$

21,928

Stock-based compensation expense

(431

)

(294

)

(1,101

)

(1,423

)

Acquisition related-amortization of purchased intangibles

(329

)

(156

)

(987

)

(408

)

Non-GAAP cost of testing services

$

11,140

$

6,971

$

28,543

$

20,097

Cost of product reconciliation:

GAAP cost of product

$

3,705

$

2,986

$

9,635

$

9,161

Stock-based compensation expense

(97

)

(77

)

(289

)

(192

)

Acquisition related-amortization of purchased intangibles

(445

)

(346

)

(1,210

)

(1,067

)

Non-GAAP cost of product

$

3,163

$

2,563

$

8,136

$

7,902

Cost of digital and other reconciliation:

GAAP cost of digital and other

$

1,210

$

1,087

$

3,966

$

1,650

Stock-based compensation expense

(124

)

(54

)

(338

)

(90

)

Acquisition related-amortization of purchased intangibles

(86

)

(74

)

(259

)

(131

)

Non-GAAP cost of digital and other

$

1,000

$

959

$

3,369

$

1,429

Research and development expenses reconciliation:

GAAP research and development expenses

$

12,474

$

8,521

$

35,616

$

21,765

Stock-based compensation expense

(1,224

)

(954

)

(3,490

)

(3,227

)

Non-GAAP research and development expenses

$

11,250

$

7,567

$

32,126

$

18,538

Sales and marketing expenses reconciliation:

GAAP sales and marketing expenses

$

13,870

$

11,058

$

37,727

$

28,627

Stock-based compensation expense

(1,623

)

(1,125

)

(4,175

)

(2,796

)

Acquisition related-amortization of purchased intangibles

(376

)

(336

)

(1,089

)

(882

)

Impairment

(150

)

Non-GAAP sales and marketing expenses

$

11,871

$

9,597

$

32,463

$

24,799

General and administrative expenses reconciliation:

GAAP general and administrative expenses

$

13,117

$

9,485

$

35,436

$

27,103

Stock-based compensation expense

(3,249

)

(3,460

)

(8,031

)

(9,282

)

Change in estimated fair value of contingent consideration

(35

)

(301

)

Acquisition related fees and expenses

(86

)

(654

)

Non-GAAP general and administrative expenses

$

9,833

$

5,939

$

27,104

$

17,167

Total other income (expense) reconciliation:

GAAP other income (expense), net

$

(146

)

$

3,985

$

3,397

$

21

Change in estimated fair value of common stock warrant liability

(79

)

(4,346

)

990

14

Accretion of liability

80

173

272

173

Non-GAAP other income (expense), net

$

(145

)

$

(188

)

$

4,659

$

208

Income tax benefit reconciliation:

GAAP income tax benefit

$

235

$

949

$

865

$

1,775

Tax effect related to amortization of purchased intangibles

(130

)

(119

)

(369

)

(364

)

Non-GAAP income tax benefit

$

105

$

830

$

496

$

1,411



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,

2020

2019

2020

2019

Net loss

$

(2,818

)

$

(1,813

)

$

(15,199

)

$

(17,191

)

Stock-based compensation expense

6,748

5,964

17,424

17,010

Acquisition related-amortization of purchased intangibles

1,236

912

3,545

2,488

Acquisition related fees and expenses

86

654

Change in estimated fair value of contingent consideration

35

301

Change in estimated fair value of common stock warrant liability

(79

)

(4,346

)

990

14

Accretion of liability

80

173

272

173

Tax effect related to amortization of purchased intangibles

(130

)

(119

)

(369

)

(364

)

Impairment

150

Non-GAAP net income

$

5,072

$

857

$

6,964

$

2,934

GAAP basic and diluted net loss per share

$

(0.06

)

$

(0.04

)

$

(0.33

)

$

(0.41

)

Non-GAAP basic net income per share

$

0.10

$

0.02

$

0.15

$

0.07

Non-GAAP diluted net income per share

$

0.10

$

0.02

$

0.15

$

0.07

Shares used in computing non-GAAP basic net income per share

49,010,680

42,393,550

45,526,810

42,048,647

Shares used in computing non-GAAP diluted net income per share

50,446,939

43,775,682

46,571,527

44,111,648



CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Non-GAAP net income

$

5,072

$

857

$

6,964

$

2,934

Interest income

(29

)

(37

)

(146

)

(679

)

Income tax benefit

(105

)

(830

)

(496

)

(1,411

)

Depreciation expense

486

395

1,235

1,199

CARES Act Provider Relief Fund

(4,813

)

Other expense, net

174

398

300

644

Adjusted EBITDA

$

5,598

$

783

$

3,044

$

2,687