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CareDx Reports Second Quarter 2023 Results

CareDx, Inc. (Nasdaq: CDNA) – The Transplant 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 second quarter ended June 30, 2023.

Second Quarter 2023 Highlights and Other Recent Updates

  • CareDx received the industry’s first and only multimodal MolDX approval in transplant with HeartCare for Medicare patients.
  • CareDx received the industry’s first and only donor-derived cell-free DNA (dd-cfDNA) MolDX approval for lung transplant patients with AlloSure® Lung for Medicare patients.
  • Reported revenue of $70.3 million, a decrease of 13% year-over-year due to the impact of the Medicare Billing Article revisions.
  • Reported testing services revenue of $53.4 million, a decrease of 20% year-over-year. Achieved growth in non-testing services business with revenues of $9.0 million for Patient and Digital Solutions and $7.9 million for Products, representing year-over-year growth of 33% and 17% respectively.
  • Achieved over 80% adoption of new test requisition forms (TRFs) by the end of June, two quarters ahead of target.
  • Delivered approximately 37,500 patient test results for AlloMap® and AlloSure, a decline of approximately 17% year-over-year, driven by the impact of the Medicare Billing Article revisions and operational adjustments required of customers.
  • Collected over $20.0 million in incremental cash, driven by cash collections at 110% of revenue for testing services in the last three quarters.
  • Maintained strong balance sheet with $283 million of cash and cash equivalents, and marketable securities, with no debt.

“We are proud to continue our transplant innovation leadership, as the first and only company to receive Medicare coverage for multimodality in transplantation with HeartCare, and dd-cfDNA in lung with AlloSure Lung,” said Reg Seeto, CEO and President of CareDx. “A key focus for the second quarter was operational execution of the Billing Article revisions and we are pleased to achieve over 80 percent adoption rate for our new TRFs, well ahead of target.”

Second Quarter 2023 Financial Results

Revenue for the three months ended June 30, 2023, was $70.3 million, a decrease of 13% compared with $80.6 million in the second quarter of 2022. Testing services revenue for the quarter was $53.4 million, compared with $67.1 million in the same period in 2022. This includes approximately $7.8 million in revenue associated with AlloSure Kidney Medicare tests that the company did not submit for reimbursement in the first quarter of 2023.

Total AlloSure and AlloMap patient results provided in the quarter were approximately 37,500, representing a decrease of approximately 17% as compared to the same quarter a year ago, and primarily attributable to the impact of the Medicare Billing Article revisions on AlloSure Kidney testing volumes.

For the second quarter of 2023, net loss was $25.0 million, compared to a net loss of $21.7 million in the same period in 2022. Basic and diluted net loss per share in the second quarter of 2023 was $0.46, compared to basic and diluted net loss per share of $0.41 in the second quarter of 2022.

Non-GAAP net loss was $9.9 million in the second quarter of 2023, compared to a non-GAAP net loss of $7.0 million in the second quarter of 2022. Basic and diluted non-GAAP net loss per share was $0.18 in the second quarter of 2023, compared to a basic and diluted non-GAAP net loss per share of $0.13 in the second quarter of 2022.

Adjusted EBITDA for the second quarter of 2023 was a loss of $10.4 million, compared to an adjusted EBITDA loss of $5.7 million in the second quarter of 2022.

Cash and cash equivalents and marketable securities were $283 million as of June 30, 2023.

2023 Guidance

For the full year 2023, CareDx expects revenue to be in the range of $240 to $260 million.

About CareDx – The Transplant Company™

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 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 with respect to expectations regarding its 2023 revenue. All statements other than statements of historical fact contained in this press release, including statements regarding the future financial position of CareDx, including financial targets, business strategy and plans and objectives for future operations, are forward-looking statements. 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, all of which are difficult to predict and many of which are beyond our control, including general economic and market factors, and global economic and marketplace uncertainties, among others discussed in CareDx’s filings with the Securities and Exchange Commission (the “SEC”), including but not limited to, the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed by CareDx with the SEC on February 27, 2023, the quarterly report on Form 10-Q for the quarter ended March 31, 2023 filed by CareDx with the SEC on May 10, 2023, and the quarterly report on Form 10-Q for the quarter ended June 30, 2023 to be filed by CareDx with the SEC on or about August 8, 2023, and other reports that CareDx has 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. You are cautioned not to place undue reliance on these forward-looking statements. CareDx expressly disclaims any obligation, except as required by law, or undertaking to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

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 cost of testing services, non-GAAP cost of product, non-GAAP cost of patient and digital solutions, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP other income (expense), net, non-GAAP income tax expense, non-GAAP gross profit, non-GAAP gross margin (%), non-GAAP net loss, non-GAAP basic and diluted net loss per share, adjusted EBITDA, adjusted revenue from testing services, and adjusted total revenue. 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 contingent consideration; acquisition-related impairment charges and amortization of purchased intangible assets and related tax effects; costs involved with completing an acquisition; unrealized loss on investments; restructuring charges and certain other charges. We define adjusted EBITDA as non-GAAP net loss before net interest income, income tax benefit, depreciation and other expense, net. This release also contains adjusted revenue from testing services, which was prepared on a non-GAAP basis that excludes the $7.8 million revenue associated with the recognized AlloSure Kidney Medicare claims. 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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

Testing services revenue

$

53,414

 

 

$

67,135

 

 

$

115,198

 

 

$

133,579

 

Product revenue

 

7,876

 

 

 

6,714

 

 

 

14,737

 

 

 

13,502

 

Patient and digital solutions revenue

 

9,011

 

 

 

6,785

 

 

 

17,628

 

 

 

12,969

 

Total revenue

 

70,301

 

 

 

80,634

 

 

 

147,563

 

 

 

160,050

 

Operating expenses:

 

 

 

 

 

 

 

Cost of testing services

 

15,324

 

 

 

18,230

 

 

 

30,620

 

 

 

35,858

 

Cost of product

 

3,926

 

 

 

3,887

 

 

 

7,992

 

 

 

8,286

 

Cost of patient and digital solutions

 

6,637

 

 

 

5,422

 

 

 

13,241

 

 

 

10,277

 

Research and development

 

20,233

 

 

 

22,632

 

 

 

44,590

 

 

 

44,512

 

Sales and marketing

 

21,630

 

 

 

26,950

 

 

 

44,861

 

 

 

50,098

 

General and administrative

 

29,327

 

 

 

25,232

 

 

 

57,359

 

 

 

51,791

 

Restructuring costs

 

848

 

 

 

 

 

 

848

 

 

 

 

Total operating expenses

 

97,925

 

 

 

102,353

 

 

 

199,511

 

 

 

200,822

 

Loss from operations

 

(27,624

)

 

 

(21,719

)

 

 

(51,948

)

 

 

(40,772

)

Other income (expense):

 

 

 

 

 

 

 

Interest income, net

 

2,871

 

 

 

478

 

 

 

5,537

 

 

 

667

 

Change in estimated fair value of common stock warrant liability

 

3

 

 

 

48

 

 

 

10

 

 

 

75

 

Other expense, net

 

(271

)

 

 

(553

)

 

 

(2,245

)

 

 

(1,376

)

Total other income (expense)

 

2,603

 

 

 

(27

)

 

 

3,302

 

 

 

(634

)

Loss before income taxes

 

(25,021

)

 

 

(21,746

)

 

 

(48,646

)

 

 

(41,406

)

Income tax benefit (expense)

 

68

 

 

 

49

 

 

 

(56

)

 

 

61

 

Net loss

$

(24,953

)

 

$

(21,697

)

 

$

(48,702

)

 

$

(41,345

)

Net loss per share:

 

 

 

 

 

 

 

Basic

$

(0.46

)

 

$

(0.41

)

 

$

(0.91

)

 

$

(0.78

)

Diluted

$

(0.46

)

 

$

(0.41

)

 

$

(0.91

)

 

$

(0.78

)

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

 

 

 

 

 

 

 

Basic

 

53,846,260

 

 

 

53,249,545

 

 

 

53,745,299

 

 

 

53,133,149

 

Diluted

 

53,846,260

 

 

 

53,249,545

 

 

 

53,745,299

 

 

 

53,133,149

 

 

CareDx, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

June 30, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

87,786

 

 

$

89,921

 

Marketable securities

 

194,887

 

 

 

203,168

 

Accounts receivable

 

51,625

 

 

 

66,312

 

Inventory

 

18,840

 

 

 

19,232

 

Prepaid and other current assets

 

7,676

 

 

 

9,216

 

Total current assets

 

360,814

 

 

 

387,849

 

Property and equipment, net

 

36,084

 

 

 

35,529

 

Operating leases right-of-use assets

 

32,118

 

 

 

34,689

 

Intangible assets, net

 

43,529

 

 

 

43,051

 

Goodwill

 

39,655

 

 

 

37,523

 

Restricted cash

 

584

 

 

 

522

 

Other assets

 

2,036

 

 

 

3,828

 

Total assets

$

514,820

 

 

$

542,991

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,880

 

 

$

9,942

 

Accrued compensation

 

14,441

 

 

 

16,902

 

Accrued and other liabilities

 

50,175

 

 

 

49,131

 

Total current liabilities

 

74,496

 

 

 

75,975

 

Deferred tax liability

 

51

 

 

 

 

Common stock warrant liability

 

 

 

 

32

 

Deferred payments for intangible assets

 

4,224

 

 

 

2,418

 

Operating lease liability, less current portion

 

30,589

 

 

 

33,406

 

Other liabilities

 

247

 

 

 

249

 

Total liabilities

 

109,607

 

 

 

112,080

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock

 

52

 

 

 

52

 

Additional paid-in capital

 

923,514

 

 

 

898,806

 

Accumulated other comprehensive loss

 

(8,450

)

 

 

(7,503

)

Accumulated deficit

 

(509,903

)

 

 

(460,444

)

Total stockholders’ equity

 

405,213

 

 

 

430,911

 

Total liabilities and stockholders’ equity

$

514,820

 

 

$

542,991

 

 

CareDx, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(In thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cost of testing services reconciliation:

 

 

 

 

 

 

 

GAAP cost of testing services

$

15,324

 

 

$

18,230

 

 

$

30,620

 

 

$

35,858

 

Stock-based compensation expense

 

(492

)

 

 

(566

)

 

 

(971

)

 

 

(585

)

Acquisition related-amortization of purchased intangibles

 

(329

)

 

 

(329

)

 

 

(658

)

 

 

(658

)

Non-GAAP cost of testing services

$

14,503

 

 

$

17,335

 

 

$

28,991

 

 

$

34,615

 

Cost of product reconciliation:

 

 

 

 

 

 

 

GAAP cost of product

$

3,926

 

 

$

3,887

 

 

$

7,992

 

 

$

8,286

 

Stock-based compensation expense

 

(274

)

 

 

(402

)

 

 

(634

)

 

 

(530

)

Acquisition related-amortization of purchased intangibles

 

(416

)

 

 

(437

)

 

 

(834

)

 

 

(890

)

Non-GAAP cost of product

$

3,236

 

 

$

3,048

 

 

$

6,524

 

 

$

6,866

 

Cost of patient and digital solutions reconciliation:

 

 

 

 

 

 

 

GAAP cost of patient and digital solutions

$

6,651

 

 

$

5,422

 

 

$

13,255

 

 

$

10,277

 

Stock-based compensation expense

 

(367

)

 

 

(391

)

 

 

(769

)

 

 

(583

)

Acquisition related-amortization of purchased intangibles

 

(255

)

 

 

(236

)

 

 

(503

)

 

 

(472

)

Restructuring costs

 

(14

)

 

 

 

 

 

(14

)

 

 

 

Non-GAAP cost of patient and digital solutions

$

6,015

 

 

$

4,795

 

 

$

11,969

 

 

$

9,222

 

Research and development expenses reconciliation:

 

 

 

 

 

 

 

GAAP research and development expenses

$

20,478

 

 

$

22,632

 

 

$

44,835

 

 

$

44,512

 

Stock-based compensation expense

 

(1,704

)

 

 

(2,323

)

 

 

(3,666

)

 

 

(4,513

)

Restructuring costs

 

(245

)

 

 

 

 

 

(245

)

 

 

 

Non-GAAP research and development expenses

$

18,529

 

 

$

20,309

 

 

$

40,924

 

 

$

39,999

 

Sales and marketing expenses reconciliation:

 

 

 

 

 

 

 

GAAP sales and marketing expenses

$

22,178

 

 

$

26,950

 

 

$

45,409

 

 

$

50,098

 

Stock-based compensation expense

 

(2,779

)

 

 

(3,907

)

 

 

(6,516

)

 

 

(7,030

)

Acquisition related-amortization of purchased intangibles

 

(606

)

 

 

(543

)

 

 

(1,201

)

 

 

(1,148

)

Restructuring costs

 

(548

)

 

 

 

 

 

(548

)

 

 

 

Non-GAAP sales and marketing expenses

$

18,245

 

 

$

22,500

 

 

$

37,144

 

 

$

41,920

 

General and administrative expenses reconciliation:

 

 

 

 

 

 

 

GAAP general and administrative expenses

$

29,368

 

 

$

25,232

 

 

$

57,400

 

 

$

51,791

 

Stock-based compensation expense

 

(7,084

)

 

 

(5,004

)

 

 

(13,898

)

 

 

(9,986

)

Change in estimated fair value of contingent consideration

 

(67

)

 

 

(500

)

 

 

(488

)

 

 

(564

)

Acquisition related fees and expenses

 

 

 

 

(186

)

 

 

(284

)

 

 

(329

)

Restructuring costs and charges

 

(41

)

 

 

 

 

 

(99

)

 

 

 

Non-GAAP general and administrative expenses

$

22,176

 

 

$

19,542

 

 

$

42,631

 

 

$

40,912

 

Total other income (expense) reconciliation:

 

 

 

 

 

 

 

GAAP other income (expense), net

$

2,603

 

 

$

(27

)

 

$

3,302

 

 

$

(634

)

Unrealized (gain) loss on long-term marketable equity securities

 

(53

)

 

 

(21

)

 

 

857

 

 

 

486

 

Asset impairments and write-downs

 

 

 

 

 

 

 

1,000

 

 

 

 

Other charges (income)

 

7

 

 

 

(11

)

 

 

28

 

 

 

17

 

Non-GAAP other income (expense), net

$

2,557

 

 

$

(59

)

 

$

5,187

 

 

$

(131

)

Income tax benefit (expense) reconciliation:

 

 

 

 

 

 

 

GAAP income tax benefit (expense)

$

68

 

 

$

49

 

 

$

(56

)

 

$

61

 

Tax effect related to amortization of purchased intangibles

 

(100

)

 

 

(107

)

 

 

(201

)

 

 

(220

)

Non-GAAP income tax expense

$

(32

)

 

$

(58

)

 

$

(257

)

 

$

(159

)

 

CareDx, Inc.

Reconciliation of GAAP to Non-GAAP Gross Profit and Gross Margin

(Unaudited)

(In thousands, except percentages)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Total revenue

$

70,301

 

 

$

80,634

 

 

$

147,563

 

 

$

160,050

 

GAAP cost of sales

 

25,901

 

 

 

27,539

 

 

 

51,867

 

 

 

54,421

 

GAAP gross profit

 

44,400

 

 

 

53,095

 

 

 

95,696

 

 

 

105,629

 

Stock-based compensation expense

 

1,133

 

 

 

1,359

 

 

 

2,374

 

 

 

1,698

 

Restructuring costs

 

14

 

 

 

 

 

 

14

 

 

 

 

Acquisition related-amortization of purchased intangibles

 

1,000

 

 

 

1,002

 

 

 

1,995

 

 

 

2,020

 

Non-GAAP gross profit

$

46,547

 

 

$

55,456

 

 

$

100,079

 

 

$

109,347

 

Non-GAAP gross margin %

 

66

%

 

 

69

%

 

 

68

%

 

 

68

%

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP net loss

$

(24,953

)

 

$

(21,697

)

 

$

(48,702

)

 

$

(41,345

)

Stock-based compensation expense

 

12,700

 

 

 

12,593

 

 

 

26,454

 

 

 

23,227

 

Asset impairments and write-downs

 

 

 

 

 

 

 

1,000

 

 

 

 

Unrealized (gain) loss on long-term marketable equity securities

 

(53

)

 

 

(21

)

 

 

857

 

 

 

486

 

Acquisition related-amortization of purchased intangibles

 

1,606

 

 

 

1,545

 

 

 

3,196

 

 

 

3,168

 

Acquisition related fees and expenses

 

 

 

 

186

 

 

 

284

 

 

 

329

 

Change in estimated fair value of contingent consideration

 

67

 

 

 

500

 

 

 

488

 

 

 

564

 

Restructuring costs and charges

 

848

 

 

 

 

 

 

906

 

 

 

 

Tax effect related to amortization of purchased intangibles

 

(100

)

 

 

(107

)

 

 

(201

)

 

 

(220

)

Other charges (income)

 

7

 

 

 

(11

)

 

 

28

 

 

 

17

 

Non-GAAP net loss

$

(9,878

)

 

$

(7,012

)

 

$

(15,690

)

 

$

(13,774

)

 

 

 

 

 

 

 

 

GAAP basic and diluted net loss per share

$

(0.46

)

 

$

(0.41

)

 

$

(0.91

)

 

$

(0.78

)

 

 

 

 

 

 

 

 

Non-GAAP basic net loss per share

$

(0.18

)

 

$

(0.13

)

 

$

(0.29

)

 

$

(0.26

)

Non-GAAP diluted net loss per share

$

(0.18

)

 

$

(0.13

)

 

$

(0.29

)

 

$

(0.26

)

 

 

 

 

 

 

 

 

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

 

53,846,260

 

 

 

53,249,545

 

 

 

53,745,299

 

 

 

53,133,149

 

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

 

53,846,260

 

 

 

53,249,545

 

 

 

53,745,299

 

 

 

53,133,149

 

 

CareDx, Inc.

Reconciliation of Non-GAAP to Adjusted EBITDA

(Unaudited)

(In thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Non-GAAP net loss

$

(9,878

)

 

$

(7,012

)

 

$

(15,690

)

 

$

(13,774

)

Interest income

 

(2,871

)

 

 

(478

)

 

 

(5,537

)

 

 

(667

)

Income tax benefit (expense)

 

68

 

 

 

58

 

 

 

(56

)

 

 

159

 

Depreciation expense

 

2,052

 

 

 

1,162

 

 

 

3,860

 

 

 

2,102

 

Other expense, net

 

279

 

 

 

537

 

 

 

664

 

 

 

798

 

Adjusted EBITDA

$

(10,350

)

 

$

(5,733

)

 

$

(16,759

)

 

(11,382

)

 

CareDx, Inc.

Reconciliation of GAAP Revenue to Adjusted Revenue

(Unaudited)

(In thousands)

 

 

Three Months Ended June 30, 2023

 

Testing Services

 

Total Revenue

GAAP revenue

$

53,414

 

 

$

70,301

 

Recognized AlloSure Kidney Medicare claims

 

(7,771

)

 

 

(7,771

)

Total adjusted revenue

$

45,643

 

 

$

62,530

 

 

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