CareDx Reports Third Quarter 2022 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 third quarter ended September 30, 2022.

Recent Highlights:

  • On track to achieve profitable growth with positive adjusted EBITDA by first half of 2023
  • Delivered 46,500 patient test results, representing growth of 15% compared to third quarter of 2021
  • Achieved revenue of $79.4 million, increasing 5% year-over-year
  • Sustained strong testing services GAAP gross margin of 73% and non-GAAP gross margin of 74%
  • Strong balance sheet with $291 million cash, cash equivalents, marketable securities, and no debt
  • Served 100,000th transplant patient, representing one out of ten patients transplanted in the U.S.

"We made significant progress during the third quarter as we worked towards delivering on our commitment to be adjusted EBITDA positive by the first half of next year,” said Reg Seeto, President and Chief Executive Officer of CareDx. "Importantly, we have many upcoming revenue growth drivers including commercial, regulatory and coverage catalysts over the next 12-18 months that will create long-term value for our stockholders while improving the lives of transplant patients."

Third Quarter 2022 Financial Results

Revenue for the three months ended September 30, 2022 was $79.4 million, an increase of 5% compared with $75.6 million in the third quarter of 2021. Testing services revenue for the third quarter of 2022 was $64.8 million, compared with $66.5 million in the same period of 2021. Product revenue in the three months ended September 30, 2022 was $7.2 million, compared to $6.5 million in the same period of 2021. Patient and digital solutions revenue for the third quarter of 2022 was $7.4 million, compared to $2.6 million in the same period of 2021.

For the third quarter of 2022, net loss was $16.9 million compared to a net loss of $11.9 million in the same period of 2021. Basic and diluted net loss per share was $0.32 in the third quarter of 2022, compared to basic and diluted net loss per share of $0.23 in the third quarter of 2021.

Non-GAAP net loss was $3.4 million in the third quarter of 2022 compared to a $4.0 million non-GAAP net income in the third quarter of 2021. Diluted non-GAAP net loss per share was $0.06 in the third quarter of 2022, compared to a diluted non-GAAP net income per share of $0.07 in the third quarter of 2021.

Adjusted EBITDA for the third quarter of 2022 was a loss of $2.5 million, compared to an adjusted EBITDA gain of $4.7 million in the third quarter of 2021.

Cash, cash equivalents and marketable securities were $291.3 million as of September 30, 2022.

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.

2022 Guidance

For the full year 2022, CareDx is revising our revenue expectations to be in the range of $320 million to $325 million due to lower Q3 revenue and a higher than anticipated shift in payer mix to commercial payors.

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, patient and digital 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 CareDx's 2022 revenue and achieving positive adjusted EBITDA by first half of 2023 and the potential for commercial, regulatory and coverage catalysts over the next 12-18 months to create long-term value for CareDx's stockholders. 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, general economic and market factors, and global economic and marketplace uncertainties related to the COVID-19 pandemic, 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, 2021 filed by CareDx with the SEC on February 24, 2022, 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 gross margin, non-GAAP net income/(loss), non-GAAP basic and diluted net income/(loss) per share and adjusted EBITDA. We define non-GAAP net income/(loss) and per share results as the GAAP net income (loss) and per share results excluding the impacts of stock-based compensation; changes in fair value of equity investments, 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 non-GAAP gross margin as total revenue less non-GAAP cost of revenue over total revenue. Cost of revenue is defined as the sum of cost of testing, cost of product and cost of patient and digital solutions. 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.

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,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Testing services revenue

$

64,751

 

 

$

66,464

 

 

$

198,330

 

 

$

190,635

 

Product revenue

 

7,194

 

 

 

6,521

 

 

 

20,696

 

 

 

19,160

 

Patient and digital solutions revenue

 

7,414

 

 

 

2,604

 

 

 

20,383

 

 

 

7,382

 

Total revenue

 

79,359

 

 

 

75,589

 

 

 

239,409

 

 

 

217,177

 

Operating expenses:

 

 

 

 

 

 

 

Cost of testing services

 

17,771

 

 

 

18,038

 

 

 

53,629

 

 

 

51,756

 

Cost of product

 

4,736

 

 

 

4,919

 

 

 

13,022

 

 

 

13,771

 

Cost of patient and digital solutions

 

5,794

 

 

 

1,879

 

 

 

16,071

 

 

 

4,861

 

Research and development

 

22,306

 

 

 

19,439

 

 

 

66,818

 

 

 

54,479

 

Sales and marketing

 

22,261

 

 

 

21,370

 

 

 

72,359

 

 

 

56,421

 

General and administrative

 

23,830

 

 

 

18,671

 

 

 

75,621

 

 

 

50,216

 

Total operating expenses

 

96,698

 

 

 

84,316

 

 

 

297,520

 

 

 

231,504

 

Loss from operations

 

(17,339

)

 

 

(8,727

)

 

 

(58,111

)

 

 

(14,327

)

Other income (expense):

 

 

 

 

 

 

 

Interest income, net

 

1,225

 

 

 

20

 

 

 

1,892

 

 

 

147

 

Change in estimated fair value of common stock warrant liability

 

14

 

 

 

88

 

 

 

89

 

 

 

50

 

Other expense, net

 

(572

)

 

 

(3,440

)

 

 

(1,948

)

 

 

(906

)

Total other income (expense)

 

667

 

 

 

(3,332

)

 

 

33

 

 

 

(709

)

Loss before income taxes

 

(16,672

)

 

 

(12,059

)

 

 

(58,078

)

 

 

(15,036

)

Income tax (expense) benefit

 

(267

)

 

 

162

 

 

 

(206

)

 

 

525

 

Net loss

$

(16,939

)

 

$

(11,897

)

 

$

(58,284

)

 

$

(14,511

)

Net loss per share:

 

 

 

 

 

 

 

Basic

$

(0.32

)

 

$

(0.23

)

 

$

(1.09

)

 

$

(0.28

)

Diluted

$

(0.32

)

 

$

(0.23

)

 

$

(1.09

)

 

$

(0.28

)

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

 

 

 

 

 

 

 

Basic

 

53,489,418

 

 

 

52,681,451

 

 

 

53,253,210

 

 

 

52,034,450

 

Diluted

 

53,489,418

 

 

 

52,681,451

 

 

 

53,253,210

 

 

 

52,034,450

 

CareDx, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

 

 

September 30, 2022

 

December 31, 2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

82,959

 

 

$

348,485

 

Marketable securities

 

208,317

 

 

 

 

Accounts receivable

 

70,425

 

 

 

59,761

 

Inventory

 

18,086

 

 

 

17,186

 

Prepaid and other current assets

 

8,370

 

 

 

7,928

 

Total current assets

 

388,157

 

 

 

433,360

 

Property and equipment, net

 

34,049

 

 

 

22,044

 

Operating leases right-of-use assets

 

35,843

 

 

 

17,993

 

Intangible assets, net

 

43,855

 

 

 

50,195

 

Goodwill

 

37,523

 

 

 

36,983

 

Restricted cash

 

198

 

 

 

211

 

Other assets

 

4,886

 

 

 

5,835

 

Total assets

$

544,511

 

 

$

566,621

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,625

 

 

$

13,337

 

Accrued compensation

 

14,312

 

 

 

26,042

 

Accrued and other liabilities

 

45,351

 

 

 

37,922

 

Total current liabilities

 

70,288

 

 

 

77,301

 

Deferred tax liability

 

13

 

 

 

415

 

Common stock warrant liability

 

50

 

 

 

139

 

Deferred payments for intangible assets

 

2,522

 

 

 

5,041

 

Operating lease liability, less current portion

 

34,708

 

 

 

17,394

 

Other liabilities

 

251

 

 

 

455

 

Total liabilities

 

107,832

 

 

 

100,745

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock

 

52

 

 

 

52

 

Additional paid-in capital

 

886,909

 

 

 

853,683

 

Accumulated other comprehensive loss

 

(8,809

)

 

 

(4,670

)

Accumulated deficit

 

(441,473

)

 

 

(383,189

)

Total stockholders’ equity

 

436,679

 

 

 

465,876

 

Total liabilities and stockholders’ equity

$

544,511

 

 

$

566,621

 

CareDx, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(In thousands)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cost of testing services reconciliation:

 

 

 

 

 

 

 

GAAP cost of testing services

$

17,771

 

 

$

18,038

 

 

$

53,629

 

 

$

51,756

 

Stock-based compensation expense

 

(470

)

 

 

(750

)

 

 

(1,055

)

 

 

(1,715

)

Acquisition related-amortization of purchased intangibles

 

(329

)

 

 

(329

)

 

 

(987

)

 

 

(987

)

Non-GAAP cost of testing services

$

16,972

 

 

$

16,959

 

 

$

51,587

 

 

$

49,054

 

Cost of product reconciliation:

 

 

 

 

 

 

 

GAAP cost of product

$

4,736

 

 

$

4,919

 

 

$

13,022

 

 

$

13,771

 

Stock-based compensation expense

 

(321

)

 

 

(156

)

 

 

(851

)

 

 

(446

)

Acquisition related-amortization of purchased intangibles

 

(416

)

 

 

(480

)

 

 

(1,305

)

 

 

(1,434

)

Non-GAAP cost of product

$

3,999

 

 

$

4,283

 

 

$

10,866

 

 

$

11,891

 

Cost of patient and digital solutions reconciliation:

 

 

 

 

 

 

 

GAAP cost of patient and digital solutions

$

5,794

 

 

$

1,879

 

 

$

16,071

 

 

$

4,861

 

Stock-based compensation expense

 

(299

)

 

 

(217

)

 

 

(882

)

 

 

(555

)

Acquisition related-amortization of purchased intangibles

 

(236

)

 

 

(209

)

 

 

(709

)

 

 

(458

)

Non-GAAP cost of patient and digital solutions

$

5,259

 

 

$

1,453

 

 

$

14,480

 

 

$

3,848

 

Research and development expenses reconciliation:

 

 

 

 

 

 

 

GAAP research and development expenses

$

22,306

 

 

$

19,439

 

 

$

66,818

 

 

$

54,479

 

Stock-based compensation expense

 

(2,058

)

 

 

(1,986

)

 

 

(6,571

)

 

 

(5,284

)

Asset impairments and write-downs

 

(340

)

 

 

 

 

 

(340

)

 

 

 

Non-GAAP research and development expenses

$

19,908

 

 

$

17,453

 

 

$

59,907

 

 

$

49,195

 

Sales and marketing expenses reconciliation:

 

 

 

 

 

 

 

GAAP sales and marketing expenses

$

22,261

 

 

$

21,370

 

 

$

72,359

 

 

$

56,421

 

Stock-based compensation expense

 

(2,672

)

 

 

(3,853

)

 

 

(9,702

)

 

 

(8,144

)

Acquisition related-amortization of purchased intangibles

 

(553

)

 

 

(502

)

 

 

(1,702

)

 

 

(1,344

)

Non-GAAP sales and marketing expenses

$

19,036

 

 

$

17,015

 

 

$

60,955

 

 

$

46,933

 

General and administrative expenses reconciliation:

 

 

 

 

 

 

 

GAAP general and administrative expenses

$

23,830

 

 

$

18,671

 

 

$

75,621

 

 

$

50,216

 

Stock-based compensation expense

 

(5,380

)

 

 

(3,677

)

 

 

(15,366

)

 

 

(10,439

)

Change in estimated fair value of contingent consideration

 

(266

)

 

 

(156

)

 

 

(830

)

 

 

35

 

Acquisition related fees and expenses

 

(58

)

 

 

(485

)

 

 

(387

)

 

 

(866

)

Non-GAAP general and administrative expenses

$

18,126

 

 

$

14,353

 

 

$

59,038

 

 

$

38,946

 

Total other income (expense) reconciliation:

 

 

 

 

 

 

 

GAAP other income (expense), net

$

667

 

 

$

(3,332

)

 

$

33

 

 

$

(709

)

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

 

(271

)

 

 

3,257

 

 

 

215

 

 

 

167

 

Investment impairment=

 

500

 

 

 

 

 

 

500

 

 

 

 

Other charges

 

14

 

 

 

(33

)

 

 

32

 

 

 

149

 

Non-GAAP other income (expense), net

$

910

 

 

$

(108

)

 

$

780

 

 

$

(393

)

Income tax benefit reconciliation:

 

 

 

 

 

 

 

GAAP income tax (expense) benefit

$

(267

)

 

$

162

 

 

$

(206

)

 

$

525

 

Tax effect related to amortization of purchased intangibles

 

(101

)

 

 

(122

)

 

 

(321

)

 

 

(373

)

Non-GAAP income tax (expense) benefit

$

(368

)

 

$

40

 

 

$

(527

)

 

$

152

 

CareDx, Inc.

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

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Testing Services Revenue

 

$

64,751

 

 

$

66,464

 

 

$

198,330

 

 

$

190,635

 

GAAP cost of testing services

 

 

(17,771

)

 

 

(18,038

)

 

 

(53,629

)

 

 

(51,756

)

GAAP testing services gross profit

 

 

46,980

 

 

 

48,426

 

 

 

144,701

 

 

 

138,879

 

Stock-based compensation expense

 

 

470

 

 

 

750

 

 

 

1,055

 

 

 

1,715

 

Amortization of intangibles

 

 

329

 

 

 

329

 

 

 

987

 

 

 

987

 

Non-GAAP testing services gross profit

 

$

47,779

 

 

$

49,505

 

 

$

146,743

 

 

$

141,581

 

Non-GAAP testing services gross margin %

 

 

74

%

 

 

74

%

 

 

74

%

 

 

74

%

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,

 

2022

 

2021

 

2022

 

2021

GAAP net loss

$

(16,939

)

 

$

(11,897

)

 

$

(58,284

)

 

$

(14,511

)

Stock-based compensation expense

 

11,200

 

 

 

10,639

 

 

 

34,427

 

 

 

26,583

 

Asset impairments and write-downs

 

840

 

 

 

 

 

 

840

 

 

 

 

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

 

(271

)

 

 

3,257

 

 

 

215

 

 

 

167

 

Acquisition related-amortization of purchased intangibles

 

1,534

 

 

 

1,520

 

 

 

4,702

 

 

 

4,223

 

Acquisition related fees and expenses

 

58

 

 

 

485

 

 

 

387

 

 

 

866

 

Change in estimated fair value of contingent consideration

 

266

 

 

 

156

 

 

 

830

 

 

 

(35

)

Other charges

 

15

 

 

 

(33

)

 

 

32

 

 

 

149

 

Tax effect related to amortization of purchased intangibles

 

(101

)

 

 

(122

)

 

 

(321

)

 

 

(373

)

Non-GAAP net (loss) income

$

(3,398

)

 

$

4,005

 

 

$

(17,172

)

 

$

17,069

 

 

 

 

 

 

 

 

 

GAAP basic and diluted net loss per share

$

(0.32

)

 

$

(0.23

)

 

$

(1.09

)

 

$

(0.28

)

 

 

 

 

 

 

 

 

Non-GAAP basic net (loss) income per share

$

(0.06

)

 

$

0.08

 

 

$

(0.32

)

 

$

0.33

 

Non-GAAP diluted net (loss) income per share

$

(0.06

)

 

$

0.07

 

 

$

(0.32

)

 

$

0.31

 

 

 

 

 

 

 

 

 

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

 

53,489,418

 

 

 

52,681,451

 

 

 

53,253,210

 

 

 

52,034,450

 

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

 

53,489,418

 

 

 

54,584,822

 

 

 

53,253,210

 

 

 

54,454,433

 

CareDx, Inc.

Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures

(Unaudited)

(In thousands)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Non-GAAP net (loss) income

$

(3,398

)

 

$

4,005

 

 

$

(17,172

)

 

$

17,069

 

Interest income

 

(1,225

)

 

 

(20

)

 

 

(1,892

)

 

 

(147

)

Income tax benefit (expense)

 

368

 

 

 

(40

)

 

 

527

 

 

 

(152

)

Depreciation expense

 

1,465

 

 

 

624

 

 

 

3,567

 

 

 

1,879

 

Other expense, net

 

314

 

 

 

128

 

 

 

1,112

 

 

 

540

 

Adjusted EBITDA

$

(2,476

)

 

$

4,697

 

 

$

(13,858

)

 

$

19,189

 

 

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