Full Press Release Details
CareDx Reports Third Quarter 2017 Financial Results
BRISBANE, Calif., November 9, 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 third quarter ended September 30, 2017.
core products performing well, we have a strong platform in place to grow CareDx s business in 2018 and beyond. We are excited to have had a successful AlloSure launch ahead of our original timeline, representing a transformational business
opportunity for CareDx while meeting the needs of kidney transplant patients across the US, said Peter Maag, CareDx President and Chief Executive Officer. Additionally, our recent successful
follow-on offering provides increased financial flexibility as we continue our drive towards profitability in 2018.
Third Quarter 2017 Financial Results
three months ended September 30, 2017 was $12.2 million compared with $12.5 million in the third quarter of 2016. Revenue from AlloMap tests for the quarter was $8.2 million compared with $8.6 million in the same period
in 2016. Revenue recognized in the third quarter of 2016 included $0.9 million related to a catch-up of cash collections from prior periods. Olerup revenue in the three months ended September 30,
2017 was $3.9 million, compared to $3.8 million in the same period in 2016.
For the third quarter of 2017, net loss was $14.3 million compared to net loss of $3.8 million in the
same period in 2016. The third quarter of 2017 net loss includes charges totaling $9.2 million for changes in the estimated fair values of warrant and derivative liabilities, and contingent consideration. Basic and diluted net loss per
share was $0.63 in the third quarter of 2017, compared to basic and diluted net loss per share of $0.20 and $0.26, respectively, in the third quarter of 2016.
For the third quarter of 2017, non-GAAP net loss was $3.3 million compared to
non-GAAP net loss of $2.9 million in the third quarter of 2016. Non-GAAP basic and diluted net loss per share was $0.15 in the third quarter of 2017, compared to non-GAAP basic and diluted net loss per share of $0.15 in the third quarter of 2016.
Net cash used in operating
activities in the third quarter of 2017 was $2.2 million compared with $1.2 million in the comparative 2016 period, and year-to-date net cash used in operating
activities was $12.2 million compared to $13.5 million for the corresponding period in 2016. Cash and cash equivalents were $6.0 million and restricted cash was $9.6 million as of September 30, 2017.
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.
For the full year 2017, CareDx expects
revenue to be in the range of $47 million to $49 million, excluding any potential AlloSure revenue.
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.
This press release includes forward-looking statements, including expectations regarding the Company s fiscal 2017 revenue,
prospects and drive toward future profitability. 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, 2016 filed by CareDx with the SEC on April 21, 2017 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 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.
Chief Commercial Officer
Integrated Corporate Relations, Inc.
Consolidated Statements of Operations
thousands, except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue: | ||||||||||||||||
| Testing revenue | $ | 8,163 | $ | 8,613 | $ | 24,485 | $ | 22,317 | ||||||||
| Product revenue | 3,873 | 3,754 | 10,916 | 7,228 | ||||||||||||
| Collaboration and license revenue | 155 | 108 | 420 | 226 | ||||||||||||
| Total revenue | 12,191 | 12,475 | 35,821 | 29,771 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of testing | 3,156 | 2,604 | 9,224 | 8,228 | ||||||||||||
| Cost of product | 2,053 | 3,355 | 6,558 | 6,411 | ||||||||||||
| Research and development | 2,959 | 2,930 | 9,360 | 9,231 | ||||||||||||
| Sales and marketing | 3,255 | 3,451 | 9,747 | 8,544 | ||||||||||||
| General and administrative | 4,038 | 5,180 | 14,672 | 16,250 | ||||||||||||
| Goodwill impairment | 1,958 | |||||||||||||||
| Change in estimated fair value of contingent consideration | 594 | (112 | ) | 309 | (422 | ) | ||||||||||
| Total operating expenses | 16,055 | 17,408 | 51,828 | 48,242 | ||||||||||||
| Loss from operations | (3,864 | ) | (4,933 | ) | (16,007 | ) | (18,471 | ) | ||||||||
| Interest expense | (1,685 | ) | (568 | ) | (4,166 | ) | (1,351 | ) | ||||||||
| Other expense, net | (317 | ) | (133 | ) | (1,191 | ) | (3,334 | ) | ||||||||
| Change in estimated fair value of common stock warrant liability and derivative liability | (8,599 | ) | 1,386 | (3,404 | ) | (1,779 | ) | |||||||||
| Loss before income taxes | (14,465 | ) | (4,248 | ) | (24,768 | ) | (24,935 | ) | ||||||||
| Income tax benefit | 178 | 449 | 837 | 888 | ||||||||||||
| Net loss | (14,287 | ) | (3,799 | ) | (23,931 | ) | (24,047 | ) | ||||||||
| Net loss attributable to noncontrolling interest | (19 | ) | (35 | ) | (133 | ) | (58 | ) | ||||||||
| Net loss attributable to CareDx, Inc. | $ | (14,268 | ) | $ | (3,764 | ) | $ | (23,798 | ) | $ | (23,989 | ) | ||||
| Net loss per share attributable to CareDx, Inc.: | ||||||||||||||||
| Basic | $ | (0.63 | ) | $ | (0.20 | ) | $ | (1.09 | ) | $ | (1.61 | ) | ||||
| Diluted | $ | (0.63 | ) | $ | (0.26 | ) | $ | (1.09 | ) | $ | (1.61 | ) | ||||
| Weighted average shares used to compute net loss per share attributable to CareDx, Inc.: | ||||||||||||||||
| Basic | 22,526,615 | 19,098,626 | 21,765,292 | 14,894,218 | ||||||||||||
| Diluted | 22,526,615 | 19,481,424 | 21,765,292 | 14,894,218 |
Condensed Consolidated Balance Sheets
| September 30, 2017 | December 31, 2016 (1) | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,976 | $ | 17,258 | ||||
| Accounts receivable | 3,270 | 2,768 | ||||||
| Inventory | 6,170 | 5,461 | ||||||
| Prepaid and other assets | 1,530 | 1,186 | ||||||
| Total current assets | 16,946 | 26,673 | ||||||
| Property and equipment, net | 2,281 | 2,931 | ||||||
| Intangible assets, net | 34,307 | 33,124 | ||||||
| Goodwill | 12,005 | 13,839 | ||||||
| Restricted cash | 9,554 | 143 | ||||||
| Other assets | 20 | |||||||
| Total assets | $ | 75,093 | $ | 76,730 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,396 | $ | 3,065 | ||||
| Accrued payroll liabilities | 4,453 | 3,851 | ||||||
| Accrued and other liabilities | 3,895 | 5,320 | ||||||
| Accrued royalties | 294 | 263 | ||||||
| Deferred revenue | 39 | 42 | ||||||
| Deferred purchase consideration | 2,514 | 5,445 | ||||||
| Derivative liability | 1,370 | |||||||
| Current debt | 15,000 | 22,846 | ||||||
| Total current liabilities | 30,961 | 40,832 | ||||||
| Deferred rent, net of current portion | 1,018 | 1,301 | ||||||
| Deferred revenue, net of current portion | 740 | 759 | ||||||
| Deferred tax liability | 5,950 | 6,057 | ||||||
| Deferred purchase consideration, net of current portion | 2,880 | |||||||
| Long-term debt, net of current portion | 21,174 | 1,098 | ||||||
| Contingent consideration | 801 | 492 | ||||||
| Common stock warrant liability | 10,431 | 5,208 | ||||||
| Other liabilities | 1,313 | 1,222 | ||||||
| Total liabilities | 75,268 | 56,969 | ||||||
| Stockholders equity: | ||||||||
| Common stock | 23 | 21 | ||||||
| Additional paid-in capital | 238,215 | 235,673 | ||||||
| Accumulated other comprehensive loss | (2,198 | ) | (3,659 | ) | ||||
| Accumulated deficit | (236,351 | ) | (212,553 | ) | ||||
| Total CareDx, Inc. stockholders equity (deficit) | (311 | ) | 19,482 | |||||
| Noncontrolling interest | 136 | 279 | ||||||
| Total stockholders equity (deficit) | (175 | ) | 19,761 | |||||
| Total liabilities and stockholders equity | $ | 75,093 | $ | 76,730 |
Reconciliation of GAAP to Non-GAAP Financial Measures
thousands, except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Cost of testing reconciliation: | ||||||||||||||||
| GAAP cost of testing | $ | 3,156 | $ | 2,604 | $ | 9,224 | $ | 8,228 | ||||||||
| Stock-based compensation expense | (38 | ) | (38 | ) | (157 | ) | (105 | ) | ||||||||
| Non-GAAP cost of testing | $ | 3,118 | $ | 2,566 | $ | 9,067 | $ | 8,123 | ||||||||
| Cost of product reconciliation: | ||||||||||||||||
| GAAP cost of product | $ | 2,053 | $ | 3,355 | $ | 6,558 | $ | 6,411 | ||||||||
| Acquisition related-amortization of purchased intangibles | (383 | ) | (343 | ) | (1,093 | ) | (646 | ) | ||||||||
| Acquisition related-amortization of inventory valuation adjustment | (250 | ) | (1,273 | ) | (420 | ) | (2,438 | ) | ||||||||
| Non-GAAP cost of product | $ | 1,420 | $ | 1,739 | $ | 5,045 | $ | 3,327 | ||||||||
| Research and development expenses reconciliation: | ||||||||||||||||
| GAAP research and development expenses | $ | 2,959 | $ | 2,930 | $ | 9,360 | $ | 9,231 | ||||||||
| Stock-based compensation expense | (104 | ) | (47 | ) | (279 | ) | (118 | ) | ||||||||
| Non-GAAP research and development expenses | $ | 2,855 | $ | 2,883 | $ | 9,081 | $ | 9,113 | ||||||||
| Sales and marketing expenses reconciliation: | ||||||||||||||||
| GAAP sales and marketing expenses | $ | 3,255 | $ | 3,451 | $ | 9,747 | $ | 8,544 | ||||||||
| Acquisition related-amortization of purchased intangibles | (254 | ) | (241 | ) | (719 | ) | (454 | ) | ||||||||
| Stock-based compensation expense | (32 | ) | (109 | ) | (127 | ) | (321 | ) | ||||||||
| Non-GAAP sales and marketing expenses | $ | 2,969 | $ | 3,101 | $ | 8,901 | $ | 7,769 | ||||||||
| General and administrative expenses reconciliation: | ||||||||||||||||
| GAAP general and administrative expenses | $ | 4,038 | $ | 5,180 | $ | 14,672 | $ | 16,250 | ||||||||
| Acquisition related fees and expenses | (458 | ) | (4,298 | ) | ||||||||||||
| Stock-based compensation expense | (256 | ) | (261 | ) | (753 | ) | (723 | ) | ||||||||
| Non-GAAP general and administrative expenses | $ | 3,782 | $ | 4,461 | $ | 13,919 | $ | 11,229 | ||||||||
| 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 | $ | 594 | $ | (112 | ) | $ | 309 | $ | (422 | ) | ||||||
| Change in estimated fair value of contingent consideration | (594 | ) | 112 | (309 | ) | 422 | ||||||||||
| Non-GAAP change in estimated fair value of contingent consideration | $ | $ | $ | $ | ||||||||||||
| Interest expense reconciliation: | ||||||||||||||||
| GAAP interest expense | $ | (1,685 | ) | $ | (568 | ) | $ | (4,166 | ) | $ | (1,351 | ) | ||||
| Amortization of debt discount | 650 | 43 | 1,367 | 127 | ||||||||||||
| Non-GAAP interest expense | $ | (1,035 | ) | $ | (525 | ) | $ | (2,799 | ) | $ | (1,224 | ) | ||||
| Other expense, net reconciliation: | ||||||||||||||||
| GAAP other expense, net | $ | (317 | ) | $ | (133 | ) | $ | (1,191 | ) | $ | (3,334 | ) | ||||
| Debt financing related fees and expenses | 309 | 2,939 | ||||||||||||||
| Non-GAAP other expense, net | $ | (317 | ) | $ | (133 | ) | $ | (882 | ) | $ | (395 | ) | ||||
| Change in estimated fair value of common stock warrant liability and derivative liability reconciliation: | ||||||||||||||||
| GAAP change in estimated fair value of common stock warrant liability and derivative liability | $ | (8,599 | ) | $ | 1,386 | $ | (3,404 | ) | $ | (1,779 | ) | |||||
| Change in estimated fair value of common stock warrant liability and derivative liability reconciliation: | 8,599 | (1,386 | ) | 3,404 | 1,779 | |||||||||||
| Non-GAAP change in estimated fair value of common stock warrant liability and derivative liability | $ | $ | $ | $ | ||||||||||||
| Income tax benefit reconciliation: | ||||||||||||||||
| GAAP income tax benefit | $ | 178 | $ | 449 | $ | 837 | $ | 888 | ||||||||
| Tax effect related to amortization of purchased intangibles | (199 | ) | (427 | ) | (535 | ) | (807 | ) | ||||||||
| Non-GAAP income tax benefit | $ | (21 | ) | $ | 22 | $ | 302 | $ | 81 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net loss reconciliation: | ||||||||||||||||
| GAAP net loss attributable to CareDx, Inc. | $ | (14,268 | ) | $ | (3,764 | ) | $ | (23,798 | ) | $ | (23,989 | ) | ||||
| Acquisition related-amortization of purchased intangibles | 637 | 584 | 1,812 | 1,100 | ||||||||||||
| Acquisition related-amortization of inventory valuation adjustment | 250 | 1,273 | 420 | 2,438 | ||||||||||||
| Tax effect related to amortization of purchased intangibles | (199 | ) | (427 | ) | (535 | ) | (807 | ) | ||||||||
| Acquisition related fees and expenses | 458 | 4,298 | ||||||||||||||
| Debt financing related fees and expenses | 309 | 2,939 | ||||||||||||||
| Amortization of debt discount | 650 | 43 | 1,367 | 127 | ||||||||||||
| Stock-based compensation expenses | 430 | 455 | 1,316 | 1,267 | ||||||||||||
| Goodwill impairment | 1,958 | |||||||||||||||
| Change in estimated fair value of contingent consideration | 594 | (112 | ) | 309 | (422 | ) | ||||||||||
| Change in estimated fair value of common stock warrant liability and derivative liability | 8,599 | (1,386 | ) | 3,404 | 1,779 | |||||||||||
| Non-GAAP net loss | $ | (3,307 | ) | $ | (2,876 | ) | $ | (13,438 | ) | $ | (11,270 | ) | ||||
| Basic net loss per share reconciliation: | ||||||||||||||||
| GAAP basic and diluted net loss per share attributable to CareDx | $ | (0.63 | ) | $ | (0.20 | ) | $ | (1.09 | ) | $ | (1.61 | ) | ||||
| Acquisition related-amortization of purchased intangibles | 0.03 | 0.03 | 0.08 | 0.07 | ||||||||||||
| Acquisition related-amortization of inventory valuation adjustment | 0.01 | 0.07 | 0.02 | 0.16 | ||||||||||||
| Tax effect related to amortization purchased intangibles | (0.01 | ) | (0.02 | ) | (0.02 | ) | (0.05 | ) | ||||||||
| Acquisition related fees and expenses | 0.02 | 0.29 | ||||||||||||||
| Debt financing related fees and expenses | 0.01 | 0.20 | ||||||||||||||
| Amortization of debt discount | 0.03 | 0.00 | 0.06 | 0.01 | ||||||||||||
| Stock-based compensation expenses | 0.02 | 0.02 | 0.06 | 0.09 | ||||||||||||
| Goodwill impairment | 0.09 | |||||||||||||||
| Change in estimated fair value of contingent consideration | 0.03 | (0.01 | ) | 0.01 | (0.03 | ) | ||||||||||
| Change in estimated fair value of common stock warrant liability and derivative liability | 0.38 | (0.07 | ) | 0.16 | 0.12 | |||||||||||
| Non-GAAP basic net loss per share attributable to CareDx | $ | (0.15 | ) | $ | (0.15 | ) | $ | (0.62 | ) | $ | (0.76 | ) | ||||
| Non-GAAP diluted net loss per share attributable to CareDx | $ | (0.15 | ) | $ | (0.15 | ) | $ | (0.62 | ) | $ | (0.76 | ) | ||||
| Non-GAAP adjustment summary: | ||||||||||||||||
| Cost of testing | $ | 38 | $ | 38 | $ | 157 | $ | 105 | ||||||||
| Cost of product | 633 | 1,616 | 1,513 | 3,084 | ||||||||||||
| Research and development | 104 | 47 | 279 | 118 | ||||||||||||
| Sales and marketing | 286 | 350 | 846 | 775 | ||||||||||||
| General and administrative | 256 | 719 | 753 | 5,021 | ||||||||||||
| Goodwill impairment | 1,958 | |||||||||||||||
| Change in estimated fair value of contingent consideration | 594 | (112 | ) | 309 | (422 | ) | ||||||||||
| Interest expense | 650 | 43 | 1,367 | 127 | ||||||||||||
| Other expense, net | 309 | 2,939 | ||||||||||||||
| Change in estimated fair value of common stock warrant liability and derivative liability | 8,599 | (1,386 | ) | 3,404 | 1,779 | |||||||||||
| Tax effect related to amortization of purchased intangibles | (199 | ) | (427 | ) | (535 | ) | (807 | ) | ||||||||
| Total Non-GAAP adjustment summary: | $ | 10,961 | $ | 888 | $ | 10,360 | $ | 12,719 |