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
first quarter ended March 31, 2023.
First Quarter 2023 Highlights
- Delivered record number of patient test results for AlloMap®
and AlloSure® of approximately 49,900 tests, growing year-over-year
by 17%, and exceeding year-over-year market growth of 10%.
- Reported revenue of $77.3 million, a decrease of 3% year-over
year. This excludes approximately $8.9 million in revenue
associated with approximately 3,200 AlloSure Kidney Medicare tests
that the Company did not submit for reimbursement in Q1 2023 (the
“Impacted March Tests”), and plans to submit in Q2 2023. This was
to allow the Company further time to understand and evaluate the
implications of the new Billing Article related to the Local
Coverage Determination covering AlloSure Kidney entitled Molecular
Testing for Solid Organ Allograft Rejection (the “Billing Article”)
issued in early March 2023.
Including the revenue associated with the
Impacted March Tests, total revenue would have been $86.2 million
and testing services revenue would have been $70.7 million,
increases of 9% and 6% year-over-year, respectively, which would
have been the highest ever quarterly revenues for the Company and
its Testing Services business.
- Achieved record revenues of $8.6 million for Patient and
Digital Solutions business, an increase of 39% year-over-year.
- Reported GAAP net loss of $23.7 million, non-GAAP net loss of
$5.8 million and adjusted EBITDA loss of $6.4 million. Including
revenue associated with the Impacted March Tests, the Company would
have achieved a positive adjusted EBITDA of $2.5 million.
- Maintained strong balance sheet with $285.9 million in cash and
cash equivalents and marketable securities, with no debt. Generated
$0.7 million in net cash from operating activities compared to
$21.5 million of cash used in operating activities in the first
quarter of 2022. This represents the second consecutive quarter
where the Company generated positive cash from its operating
activities.
- Achieved cash collections at 110% of revenue for testing
services, representing an approximate 10% year-over-year increase,
and demonstrating continued strong operational progress on this key
initiative.
- Strong transplant ecosystem support in response to the Billing
Article from leading professional societies, including the American
Society of Transplantation, American Society of Transplant
Surgeons, and the International Society for Heart and Lung
Transplantation.
- Leading patient groups, including the Transplant Life
Foundation, Transplant Recipients International Organization
(TRIO), Transplant Families, and the Heart Brothers Foundation
announced in a press release the results of a survey from over
1,000 patients, as well as caregivers and family members that 95%
of patients surveyed are concerned that a new Medicare Billing
Article limits coverage of non-invasive post-transplant tests.
“The first quarter delivered strong operational execution
against our 2022 strategic plan, reflected in our record testing
services volumes, record patient and digital solutions revenue, and
second consecutive quarter of testing services cash collections
exceeding testing services revenue,” said Reg Seeto, CEO and
President of CareDx. “That said, we are currently laser focused on
the operational implementation of our plans to address the recent
MolDX Billing Article changes. I am proud to see the transplant
ecosystem coming together, including the professional and patient
associations, and healthcare providers, to support transplant
patients.”
First Quarter 2023 Financial Results
Revenue for the three months ended March 31, 2023 was $77.3
million, a decrease of 3% compared with $79.4 million in the first
quarter of 2022. Testing services revenue for the quarter was $61.8
million, compared with $66.4 million in the same period in 2022.
Total AlloSure® and AlloMap® patient results provided in the
quarter were approximately 49,900. This excludes approximately $8.9
million in revenue associated with the Impacted March Tests.
Including the revenue associated with the Impacted March Tests,
CareDx’s total revenue would have been $86.2 million and its
testing services revenue would have been $70.7 million, which would
have been the highest ever for CareDx and its Testing Services
business. Product revenue in the three months ended March 31, 2023
was $6.9 million, compared to $6.8 million in the same period in
2022. Patient and digital solutions revenue in the first quarter of
2023 was $8.6 million, compared to $6.2 million in the same period
in 2022.
For the first quarter of 2023, net loss was $23.7 million,
compared to a net loss of $19.6 million in the same period in 2022.
Basic and diluted net loss per share in the first quarter of 2023
was $0.44, compared to basic and diluted net loss per share of
$0.37 in the first quarter of 2022.
Non-GAAP net loss was $5.8 million in the first quarter of 2023,
compared to a non-GAAP net loss of $6.8 million in the first
quarter of 2022. Basic and diluted non-GAAP net loss per share was
$0.11 in the first quarter of 2023, compared to a basic and diluted
non-GAAP net loss per share of $0.13 in the first quarter of
2022.
Adjusted EBITDA for the first quarter of 2023 was a loss of $6.4
million, compared to an adjusted EBITDA loss of $5.6 million in the
first quarter of 2022. Including the $8.9 million revenue impact
associated with Impacted March Tests, the Company would have
achieved a positive adjusted EBITDA of $2.5 million.
Cash and cash equivalents and marketable securities were $285.9
million as of March 31, 2023.
2023 Guidance
CareDx is withdrawing 2023 revenue guidance at this time given a
multitude of unknown variables related to the March and May 2023
Billing Article revisions. The Company will provide additional
details during its Q1 2023 earnings call.
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 CareDx’s upcoming milestones,
vision, any revenue that the Company may or could have received
related to the Impacted March Tests and its plans to provide
additional detail regarding its 2023 revenue guidance. 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 to be filed by CareDx with the SEC on
or about May 10, 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 and adjusted EBITDA, adjusted EBITDA assuming recognition
of paused claims for the Impacted March Tests, 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 the following financial
information prepared on a non-GAAP basis that includes the $8.9
million revenue associated with the Impacted March Tests. 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 March
31,
2023
2022
Revenue:
Testing services revenue
$
61,784
$
66,444
Product revenue
6,861
6,788
Patient and digital solutions revenue
8,617
6,184
Total revenue
77,262
79,416
Operating expenses:
Cost of testing services
15,296
17,628
Cost of product
4,066
4,399
Cost of patient and digital solutions
6,604
4,855
Research and development
24,357
21,880
Sales and marketing
23,231
23,148
General and administrative
28,032
26,559
Total operating expenses
101,586
98,469
Loss from operations
(24,324
)
(19,053
)
Other income (expense):
Interest income, net
2,666
189
Change in estimated fair value of common
stock warrant liability
7
27
Other expense, net
(1,974
)
(823
)
Total other income (expense)
699
(607
)
Loss before income taxes
(23,625
)
(19,660
)
Income tax (expense) benefit
(124
)
12
Net loss
$
(23,749
)
$
(19,648
)
Net loss per share:
Basic
$
(0.44
)
$
(0.37
)
Diluted
$
(0.44
)
$
(0.37
)
Weighted-average shares used to compute
net loss per share:
Basic
53,643,216
53,015,459
Diluted
53,643,216
53,015,459
CareDx, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands)
March 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
74,660
$
89,921
Marketable securities
211,279
203,168
Accounts receivable
59,310
66,312
Inventory
18,018
19,232
Prepaid and other current assets
8,161
9,216
Total current assets
371,428
387,849
Property and equipment, net
35,506
35,529
Operating leases right-of-use assets
33,431
34,689
Intangible assets, net
45,637
43,051
Goodwill
39,615
37,523
Restricted cash
520
522
Other assets
2,080
3,828
Total assets
$
528,217
$
542,991
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
12,861
$
9,942
Accrued compensation
12,082
16,902
Accrued and other liabilities
46,885
49,131
Total current liabilities
71,828
75,975
Common stock warrant liability
25
32
Deferred payments for intangible
assets
4,089
2,418
Operating lease liability, less current
portion
32,006
33,406
Other liabilities
248
249
Total liabilities
108,196
112,080
Commitments and contingencies
Stockholders’ equity:
Common stock
52
52
Additional paid-in capital
912,291
898,806
Accumulated other comprehensive loss
(7,439
)
(7,503
)
Accumulated deficit
(484,883
)
(460,444
)
Total stockholders’ equity
420,021
430,911
Total liabilities and stockholders’
equity
$
528,217
$
542,991
CareDx, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited)
(In thousands)
Three Months Ended March
31,
2023
2022
Cost of testing services
reconciliation:
GAAP cost of testing services
$
15,296
$
17,628
Stock-based compensation expense
(479
)
(19
)
Acquisition related-amortization of
purchased intangibles
(329
)
(329
)
Non-GAAP cost of testing services
$
14,488
$
17,280
Cost of product reconciliation:
GAAP cost of product
$
4,066
$
4,399
Stock-based compensation expense
(360
)
(128
)
Acquisition related-amortization of
purchased intangibles
(418
)
(453
)
Non-GAAP cost of product
$
3,288
$
3,818
Cost of patient and digital solutions
reconciliation:
GAAP cost of patient and digital
solutions
$
6,604
$
4,855
Stock-based compensation expense
(402
)
(192
)
Acquisition related-amortization of
purchased intangibles
(248
)
(236
)
Non-GAAP cost of patient and digital
solutions
$
5,954
$
4,427
Research and development expenses
reconciliation:
GAAP research and development expenses
$
24,357
$
21,880
Stock-based compensation expense
(1,962
)
(2,190
)
Non-GAAP research and development
expenses
$
22,395
$
19,690
Sales and marketing expenses
reconciliation:
GAAP sales and marketing expenses
$
23,231
$
23,148
Stock-based compensation expense
(3,737
)
(3,123
)
Acquisition related-amortization of
purchased intangibles
(595
)
(605
)
Non-GAAP sales and marketing expenses
$
18,899
$
19,420
General and administrative expenses
reconciliation:
GAAP general and administrative
expenses
$
28,032
$
26,559
Stock-based compensation expense
(6,814
)
(4,982
)
Change in estimated fair value of
contingent consideration
(421
)
(64
)
Restructuring charges
(58
)
—
Acquisition related fees and expenses
(284
)
(143
)
Non-GAAP general and administrative
expenses
$
20,455
$
21,370
Total other income (expense)
reconciliation:
GAAP other income (expense), net
$
699
$
(607
)
Unrealized loss on long-term marketable
equity securities
905
507
Asset impairments and write-downs
1,000
—
Other charges
20
28
Non-GAAP other income (expense), net
$
2,624
$
(72
)
Income tax (expense) benefit
reconciliation:
GAAP income tax (expense) benefit
$
(124
)
$
12
Tax effect related to amortization of
purchased intangibles
(101
)
(113
)
Non-GAAP income tax expense
$
(225
)
$
(101
)
CareDx, Inc.
Reconciliation of GAAP to
Non-GAAP Gross Profit and Gross Margin
(Unaudited)
(In thousands, except
percentages)
Three Months Ended March
31,
2023
2022
Total revenue
$
77,262
$
79,416
GAAP cost of sales
25,966
26,882
GAAP gross profit
51,296
52,534
Stock-based compensation expense
1,241
339
Acquisition related-amortization of
purchased intangibles
995
1,018
Non-GAAP gross profit
$
53,532
$
53,891
Non-GAAP gross margin %
69
%
68
%
CareDx, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and
per share data)
Three Months Ended March
31,
2023
2022
GAAP net loss
$
(23,749
)
$
(19,648
)
Stock-based compensation expense
13,754
10,634
Asset impairments and write-downs
1,000
—
Unrealized loss on long-term marketable
equity securities
905
507
Acquisition related-amortization of
purchased intangibles
1,590
1,623
Acquisition related fees and expenses
284
143
Change in estimated fair value of
contingent consideration
421
64
Restructuring charges
58
—
Tax effect related to amortization of
purchased intangibles
(101
)
(113
)
Other Charges
20
28
Non-GAAP net loss
$
(5,818
)
$
(6,762
)
GAAP basic and diluted net loss per
share
$
(0.44
)
$
(0.37
)
Non-GAAP basic net loss per share
$
(0.11
)
$
(0.13
)
Non-GAAP diluted net loss per share
$
(0.11
)
$
(0.13
)
Shares used in computing non-GAAP basic
net loss per share
53,643,216
53,015,459
Shares used in computing non-GAAP diluted
net loss per share
53,643,216
53,015,459
CareDx, Inc.
Reconciliation of Non-GAAP to
Adjusted EBITDA and Adjusted EBITDA Financial Measures Assuming
Recognition of Paused Claims
(Unaudited)
(In thousands)
Three Months Ended March
31,
2023
2022
Non-GAAP net loss
$
(5,818
)
$
(6,762
)
Interest income
(2,666
)
(189
)
Income tax benefit
225
101
Depreciation expense
1,808
940
Other expense, net
36
261
Adjusted EBITDA
(6,415
)
(5,649
)
Unrecognized AlloSure Kidney Medicare
claims
8,912
—
Adjusted EBITDA assuming recognition of
paused claims
$
2,497
$
(5,649
)
CareDx, Inc.
Reconciliation of GAAP Revenue
to Adjusted Revenue
(Unaudited)
(In thousands)
Three Months Ended March 31,
2023
Testing Services
Total Revenue
GAAP revenue
$
61,784
$
77,262
Unrecognized AlloSure Kidney Medicare
claims
8,912
8,912
Total adjusted revenue
$
70,696
$
86,174
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version on businesswire.com: https://www.businesswire.com/news/home/20230510005988/en/
CareDx, Inc.
Media Relations Anna Czene 818-731-2203 aczene@caredx.com
Investor Relations Greg Chodaczek investor@caredx.com
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