CareDx Reports Fourth Quarter and Full Year 2016 Financial Results

BRISBANE, Calif., April 21, 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 fourth quarter and year ended December 31, 2016.

“We have made significant recent progress and are very well-positioned for the launch of our exciting new product, AlloSure,” said Peter Maag, CareDx President and Chief Executive Officer. “With both pre- and post-transplant products encompassing the continuum of care, we have become a transplant-focused multiproduct genomic information company.”

Fourth Quarter 2016 Financial Results
Revenue for the three months ended December 31, 2016 were $10.9 million compared with $6.6 million in the fourth quarter of 2015 and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016.  Revenue from AlloMap tests for the three months ended December 31, 2016 were $7.4 million compared with $6.7 million in the fourth quarter of 2015.  Olerup revenue in the three months ended December 31, 2016 were $3.5 million.   

For the three months ended December 31, 2016, the net loss was $15.5 million compared to a net loss of $4.8 million in the same period of 2015. In the three months ended December 31, 2016, the Company recorded an impairment of goodwill recorded in the acquisition of Allenex AB of $13.0 million. Basic and diluted net loss per share was $0.73 in the fourth quarter of 2016, compared to basic and diluted net loss per share of $0.40 in the fourth quarter of 2015.

For the fourth quarter of 2016, the non-GAAP net loss was $2.7 million compared to non-GAAP net loss of $4.0 million in the fourth quarter of 2015.  Non-GAAP basic and diluted net loss per share were $0.13 in the fourth quarter of 2016, compared to non-GAAP basic and diluted net loss per share of $0.34 in the fourth quarter of 2015.

Full Year 2016 Financial Results
Revenue for the year ended December 31, 2016 was $40.6 million compared with $28.1 million in 2015 and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016. Revenue from AlloMap tests for the year ended December 31, 2016 were $29.7 million compared with $27.9 million in 2015.  Olerup revenue in the year ended December 31, 2016 were $10.7 million and reflected the contribution of Olerup branded product sales following the acquisition of Allenex AB in April 2016.  

For the full year 2016, the net loss was $39.5 million compared to a net loss of $13.7 million in 2015.  Basic and diluted net loss per share were $2.39 in the full year 2016, compared to basic and diluted net loss per share of $1.16 in 2015.

For the full year 2016, the non-GAAP net loss was $13.9 million compared to non-GAAP net loss of $12.2 million in 2015.  Non-GAAP basic and diluted net loss per share was $0.84 in the full year 2016 compared to non-GAAP basic and diluted net loss per share of $1.03 in 2015.

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 $17.3 million as of December 31, 2016.

2017 Guidance
For the full year 2017, the Company continues to expect revenue to be in the range of $45 million to $50 million, excluding any potential AlloSure revenue. The Company has filed for coverage and reimbursement with the MolDx program at Palmetto and the dossier is currently under technical review.

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, anticipated future financial results, including our guidance for full fiscal 2017 revenue, which final results could change materially, filing for coverage and reimbursement for AlloSure, which might be denied, our proposed use of proceeds from the financing with the institutional investor and our prospects. 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 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, our dependence on health insurers and other third-party payers to provide coverage for our current test and future tests, if any, and our intellectual property position.  These factors, together with those that are described in our filings with the Securities and Exchange Commission (SEC), including the Annual Report on Form 10-K for the year ended December 31, 2016 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. The Company expressly disclaims any obligation or undertaking, except as required by law, 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 impairment charges and 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.      
Consolidated Statements of Operations      
(Unaudited)      
(In thousands, except share and per share data)      
                       
                       
    Three Months Ended December 31,   Twelve Months Ended December 31,      
      2016       2015     2016 (1)   2015 (1)      
    (Unaudited)   (Unaudited)              
Revenue:                      
Testing revenue   $ 7,363     $ 6,734     $ 29,680     $ 27,881        
Product revenue     3,487             10,715              
Collaboration and license revenue     10       (86 )     236       263        
Total revenue     10,860       6,648       40,631       28,144        
Operating expenses:                      
Cost of testing     2,654       2,486       10,882       10,273        
Cost of product     3,829             10,240              
Research and development     3,154       2,704       12,385       9,333        
Sales and marketing     2,622       1,896       11,166       8,349        
General and administrative     4,475       3,694       20,725       12,247        
Goodwill impairment     13,021             13,021              
Change in estimated fair value of contingent consideration     (34 )     330       (456 )     (126 )      
Total operating expenses     29,721       11,110       77,963       40,076        
Loss from operations     (18,861 )     (4,462 )     (37,332 )     (11,932 )      
Interest expense     (509 )     (253 )     (1,860 )     (1,587 )      
Other (expense) income, net     1,414       (47 )     (1,920 )     (188 )      
Change in estimated value of common stock warrant and derivative liabilities     1,529             (250 )            
Loss before income taxes     (16,427 )     (4,762 )     (41,362 )     (13,707 )      
Income tax benefit     718             1,606              
Net loss     (15,709 )     (4,762 )     (39,756 )     (13,707 )      
Net loss attributable to noncontrolling interest     (229 )           (287 )            
Net loss attributable to CareDx, Inc.   $ (15,480 )   $ (4,762 )   $ (39,469 )   $ (13,707 )      
Net loss per share attributable to CareDx, Inc.:                      
Basic   $ (0.73 )   $ (0.40 )   $ (2.39 )   $ (1.16 )      
                       
Diluted   $ (0.73 )   $ (0.40 )   $ (2.39 )   $ (1.16 )      
                       
Weighted average shares used to compute net loss per share
  attributable to CareDx, Inc.:
                     
Basic     21,270,151       11,902,325       16,496,911       11,860,885        
                       
Diluted     21,270,151       11,902,325       16,496,911       11,860,885        
                       
                       
(1) The Consolidated Statements of Operations for the twelve months ended December 31, 2015 and December 31, 2016 have been derived from audited      
financial statements.                      
                       

 

CareDx, Inc.  
Condensed Consolidated Balance Sheets  
(In thousands)  
           
    December 31, 2016 (1)   December 31, 2015 (1)  
           
Assets          
Current assets:          
Cash and cash equivalents   $ 17,258     $ 29,888    
Accounts receivable     2,768       2,367    
Inventory     5,461       766    
Prepaid and other assets     1,186       1,341    
Total current assets     26,673       34,362    
Property and equipment, net     2,931       2,425    
Intangible assets, net     33,124       6,650    
Goodwill     13,839       12,005    
Restricted cash     143       147    
Other noncurrent assets     20       49    
Total assets   $ 76,730     $ 55,638    
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable   $ 3,065     $ 1,644    
Accrued payroll liabilities     3,851       2,366    
Accrued and other liabilities     5,320       2,892    
Accrued royalties     263       242    
Deferred revenue     42       142    
Deferred purchase consideration     5,445          
Current portion of long-term debt     22,846       2,866    
Total current liabilities     40,832       10,152    
Deferred rent, net of current portion     1,301       1,426    
Deferred revenue, net of current portion     759       703    
Deferred tax liability     6,057          
Long-term debt, net of current portion     1,098       12,887    
Contingent consideration     492       948    
Common stock warrant liability     5,208          
Other liabilities     1,222       28    
Total liabilities     56,969       26,144    
Stockholders’ equity:          
Common stock     21       12    
Additional paid-in capital     235,673       202,566    
Accumulated other comprehensive loss     (3,659 )        
Accumulated deficit     (212,553 )     (173,084 )  
Total CareDx, Inc. stockholders’ equity     19,482       29,494    
Noncontrolling interest     279          
Total stockholders’ equity     19,761       29,494    
Total liabilities and stockholders’ equity   $ 76,730     $ 55,638    
           
           
(1)  The condensed balance sheets at December 31, 2015 and 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 December 31,   Twelve Months Ended December 31,  
      2016       2015       2016       2015    
                   
Cost of testing reconciliation:                  
GAAP cost of testing   $ 2,654     $ 2,486     $ 10,882     $ 10,273    
Stock-based compensation expense     (40 )     (14 )     (144 )     (109 )  
Non-GAAP cost of testing   $ 2,614     $ 2,472     $ 10,738     $ 10,164    
                   
Cost of product reconciliation:                  
GAAP cost of product   $ 3,829     $     $ 10,240     $    
Acquisition related-amortization of purchased intangibles     (393 )           (1,040 )        
Acquisition related-amortization of inventory valuation adjustment     (1,427 )           (3,926 )        
Non-GAAP cost of product   $ 2,009     $     $ 5,274     $    
                   
Research and development expenses reconciliation:                  
GAAP research and development expenses   $ 3,154     $ 2,704     $ 12,385     $ 9,333    
Stock-based compensation expense     (115 )     (60 )     (437 )     (247 )  
Non-GAAP research and development expenses   $ 3,039     $ 2,644     $ 11,948     $ 9,086    
                   
Sales and marketing expenses reconciliation:                  
GAAP sales and marketing expenses   $ 2,622     $ 1,896     $ 11,166     $ 8,349    
Acquisition related-amortization of purchased intangibles     (228 )           (681 )        
Stock-based compensation expense     (33 )     (47 )     (151 )     (173 )  
Non-GAAP sales and marketing expenses   $ 2,361     $ 1,849     $ 10,334     $ 8,176    
                   
General and administrative expenses reconciliation:                  
GAAP general and administrative expenses   $ 4,475     $ 3,694     $ 20,725     $ 12,247    
Acquisition related fees and expenses     (135 )           (4,433 )        
Stock-based compensation expense     (277 )     (281 )     (1,213 )     (1,067 )  
Non-GAAP general and administrative expenses   $ 4,063     $ 3,413     $ 15,079     $ 11,180    
                   
Goodwill impairment reconciliation:                  
GAAP goodwill impairment   $ 13,021     $     $ 13,021     $    
Goodwill impairment     (13,021 )           (13,021 )        
Non-GAAP goodwill impairment   $     $     $     $    
                   
Change in estimated fair value of contingent consideration reconciliation:                  
GAAP change in estimated fair value of contingent consideration   $ (34 )   $ 330     $ (456 )   $ (126 )  
Change in estimated fair value of contingent consideration     34       (330 )     456       126    
Non-GAAP change in estimated fair value of contingent consideration   $     $     $     $    
                   
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   $ 1,529     $     $ (250 )   $    
Change in estimated fair value of common stock warrant and derivative liabilities     (1,529 )           250          
Non-GAAP change in estimated fair value of common stock warrant and derivative liabilities   $     $     $     $    
                   
Other (expense) income, net reconciliation:                  
GAAP other (expense) income, net   $ 1,414     $ (47 )   $ (1,920 )   $ (188 )  
Debt financing related fees and expenses     (785 )           2,154          
Non-GAAP other (expense) income, net   $ 629     $ (47 )   $ 234     $ (188 )  
                   
Income tax benefit reconciliation:                  
GAAP income tax benefit   $ 718     $     $ 1,606     $    
Tax effect related to amortization of purchased intangibles     (551 )           (1,442 )        
Non-GAAP income tax benefit   $ 167     $     $ 164     $    
                   
Net loss reconciliation:                  
GAAP net loss attributable to CareDx, Inc.   $ (15,480 )   $ (4,762 )   $ (39,469 )   $ (13,707 )  
Acquisition related-amortization of purchased intangibles     621             1,721          
Acquisition related-amortization of inventory valuation adjustment     1,427             3,926          
Tax effect related to amortization of purchased intangibles     (551 )           (1,442 )        
Acquisition related fees and expenses     135             4,433          
Debt financing related fees and expenses     (785 )           2,154          
Stock-based compensation expenses     465       402       1,945       1,596    
Goodwill impairment     13,021             13,021          
Change in estimated fair value of contingent consideration     (34 )     330       (456 )     (126 )  
Change in estimated value of common stock warrant and derivative liabilities     (1,529 )           250          
Non-GAAP net loss   $ (2,710 )   $ (4,030 )   $ (13,917 )   $ (12,237 )  
                   
Basic and diluted net loss per share reconciliation:                  
GAAP basic and diluted net loss per share attributable to CareDx   $ (0.73 )   $ (0.40 )   $ (2.39 )   $ (1.16 )  
Acquisition related-amortization of purchased intangibles     0.03             0.10          
Acquisition related-amortization of inventory valuation adjustment     0.07             0.24          
Tax effect related to amortization purchased intangibles     (0.03 )           (0.09 )        
Acquisition related fees and expenses     0.01             0.27          
Debt financing related fees and expenses     (0.04 )           0.13          
Stock-based compensation expenses     0.02       0.03       0.12       0.13    
Goodwill impairment     0.61             0.79          
Change in estimated fair value of contingent consideration     (0.00 )     0.03       (0.03 )     (0.01 )  
Change in estimated value of common stock warrant and derivative liabilities     (0.07 )           0.02          
Non-GAAP basic and diluted net loss per share attributable to CareDx   $ (0.13 )   $ (0.34 )   $ (0.84 )   $ (1.03 )  
                   
Non-GAAP adjustment summary:                  
Cost of testing adjustments   $ 40     $ 14     $ 144     $ 109    
Cost of product adjustments     1,820             4,966          
Research and development expenses adjustments     115       60       437       247    
Sales and marketing expenses adjustments     261       47       832       173    
General and administrative expenses adjustments     412       281       5,646       1,067    
Goodwill impairment     13,021             13,021          
Change in estimated fair value of contingent consideration     (34 )     330       (456 )     (126 )  
Other (expense) income, net adjustments     (785 )           2,154          
Change in estimated value of common stock warrant and derivative liabilities     (1,529 )           250          
Tax effect related to amortization of purchased intangibles     (551 )           (1,442 )        
Total Non-GAAP adjustment summary:   $ 12,770     $ 732     $ 25,552     $ 1,470    
                   
CONTACT: Investor Contact
Jamar Ismail, Vice President
Westwicke Partners, LLC  
T:  +1 415-513-1282 
E:  jamar.ismail@westwicke.com
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