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, 2023.
Third Quarter 2023 Highlights
- Reported revenue of $67.2 million, an increase of 7% over the
second quarter of 2023, excluding approximately $7.8 million
related to Medicare claims billing that were held over from the
first quarter of 2023 and recognized in second quarter 2023
revenue.
- Grew Testing Services patient results to 38,400, an increase of
2% compared to the second quarter of 2023.
- Achieved revenue of $9.9 million for Digital Solutions and $9.5
million for Products, representing year-over-year growth of 33% for
both businesses.
- Achieved the fourth consecutive quarter of collections at over
100% of revenue for Testing Services; collected over $22 million in
incremental cash in the past four quarters.
- Maintained a strong balance sheet, with $268.2 million in cash
and cash equivalents, and marketable securities, with no debt.
- Received Medicare coverage for HeartCare™ and AlloSure®
Lung.
- Raised revenue guidance to $274 to $278 million for the full
year 2023.
- SEC has concluded its inquiry and does not intend to recommend
an enforcement action against the Company.
“CareDx continues to be well-placed in the transplant market. We
are pleased to see a baseline being set in the Testing Services
business in Q3 as patient testing volumes appear to have
stabilized,” said Alex Johnson, President of Patient and Testing
Services, and member of the Office of the CEO at CareDx. “We remain
committed to bringing high impact innovation to the transplant
clinic, while accelerating our path back to profitability.”
Third Quarter 2023 Financial Results
Revenue for the three months ended September 30, 2023, was $67.2
million, a decrease of 15% compared with $79.4 million in the third
quarter of 2022, and an increase of 7% compared with $62.5 million
in the second quarter of 2023, excluding approximately $7.8 million
related to Medicare claims billing that were held over from the
first quarter of 2023 and recognized in second quarter 2023
revenue. Testing services revenue for the quarter was $47.8
million, compared with $64.8 million in the same period in
2022.
Approximately 38,400 AlloSure® and AlloMap® patient results were
provided in the quarter, representing a decrease of 18% as compared
to the same quarter a year ago, and an increase of 2% compared to
the second quarter of 2023.
For the third quarter of 2023, net loss was $23.5 million,
compared to a net loss of $16.9 million in the same period of 2022.
Basic and diluted net loss per share in the third quarter of 2023
was $0.43, compared to basic and diluted net loss per share of
$0.32 in the third quarter of 2022.
Non-GAAP net loss was $9.6 million in the third quarter of 2023,
compared to a non-GAAP net loss of $3.4 million in the third
quarter of 2022. Basic and diluted non-GAAP net loss per share was
$0.18 in the third quarter of 2023, compared to a basic and diluted
non-GAAP net loss per share of $0.06 in the third quarter of
2022.
Adjusted EBITDA for the third quarter of 2023 was a loss of
$10.9 million, compared to an adjusted EBITDA loss of $2.5 million
in the third quarter of 2022.
Cash and cash equivalents and marketable securities were $268.2
million as of September 30, 2023.
2023 Guidance
For the full year 2023, CareDx expects revenue to be in the
range of $274 to $278 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,
including statements regarding CareDx’s 2023 revenue expectations
and the company’s path towards growth. All statements other than
statements of historical fact contained in this press release,
including statements regarding the future financial position of
CareDx, including financial expectations, 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, the
quarterly report on Form 10-Q for the quarter ended June 30, 2023
filed by CareDx with the SEC on August 8, 2023, and the quarterly
report on Form 10-Q for the quarter ended September 30, 2023 to be
filed by CareDx with the SEC on or about November 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, 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, normalized revenue after adjustment of
Impacted March Tests (As defined below¹), normalized revenue for
testing services after adjustment of Impacted March Tests,
normalized non-GAAP gross margin for testing services after
adjustment of Impacted March Tests, and normalized EBITDA after
adjustment of Impacted March Tests.
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) expense, depreciation and
other expense, net.
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.
¹ Impacted March Tests represent $7.8 million related to
Medicare claims billing that were held over from the first quarter
of 2023 and recognized in second quarter 2023 revenue.
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,
2023
2022
2023
2022
Revenue:
Testing services revenue
$
47,784
$
64,751
$
162,982
$
198,330
Product revenue
9,536
7,194
24,273
20,696
Patient and digital solutions revenue
9,872
7,414
27,500
20,383
Total revenue
67,192
79,359
214,755
239,409
Operating expenses:
Cost of testing services
13,217
17,771
43,837
53,629
Cost of product
4,750
4,736
12,742
13,022
Cost of patient and digital solutions
6,566
5,794
19,807
16,071
Research and development
19,000
22,306
63,590
66,818
Sales and marketing
18,474
22,261
63,335
72,359
General and administrative
33,968
23,830
91,327
75,621
Restructuring costs
—
—
848
—
Total operating expenses
95,975
96,698
295,486
297,520
Loss from operations
(28,783
)
(17,339
)
(80,731
)
(58,111
)
Other income (expense):
Interest income, net
3,171
1,225
8,708
1,892
Change in estimated fair value of common
stock warrant liability
—
14
10
89
Other income (expense), net
2,047
(572
)
(198
)
(1,948
)
Total other income
5,218
667
8,520
33
Loss before income taxes
(23,565
)
(16,672
)
(72,211
)
(58,078
)
Income tax benefit (expense)
80
(267
)
24
(206
)
Net loss
$
(23,485
)
$
(16,939
)
$
(72,187
)
$
(58,284
)
Net loss per share:
Basic
$
(0.43
)
$
(0.32
)
$
(1.34
)
$
(1.09
)
Diluted
$
(0.43
)
$
(0.32
)
$
(1.34
)
$
(1.09
)
Weighted-average shares used to compute
net loss per share:
Basic
54,178,759
53,489,418
53,891,374
53,253,210
Diluted
54,178,759
53,489,418
53,891,374
53,253,210
CareDx, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
75,980
$
89,921
Marketable securities
192,204
203,168
Accounts receivable
51,694
66,312
Inventory
17,978
19,232
Prepaid and other current assets
7,310
9,216
Total current assets
345,166
387,849
Property and equipment, net
35,355
35,529
Operating leases right-of-use assets
30,973
34,689
Intangible assets, net
46,455
43,051
Goodwill
40,208
37,523
Restricted cash
582
522
Other assets
2,441
3,828
Total assets
$
501,180
$
542,991
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
8,972
$
9,942
Accrued compensation
16,664
16,902
Accrued and other liabilities
47,038
49,131
Total current liabilities
72,674
75,975
Deferred tax liability
140
—
Common stock warrant liability
—
32
Deferred payments for intangible
assets
4,735
2,418
Operating lease liability, less current
portion
29,252
33,406
Other liabilities
245
249
Total liabilities
107,046
112,080
Commitments and contingencies
Stockholders’ equity:
Common stock
52
52
Additional paid-in capital
936,954
898,806
Accumulated other comprehensive loss
(8,670
)
(7,503
)
Accumulated deficit
(534,202
)
(460,444
)
Total stockholders’ equity
394,134
430,911
Total liabilities and stockholders’
equity
$
501,180
$
542,991
CareDx, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Measures
(Unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of testing services
reconciliation:
GAAP cost of testing services
$
13,217
$
17,771
$
43,837
$
53,629
Stock-based compensation expense
(496
)
(470
)
(1,467
)
(1,055
)
Acquisition related-amortization of
purchased intangibles
(329
)
(329
)
(987
)
(987
)
Non-GAAP cost of testing services
$
12,392
$
16,972
$
41,383
$
51,587
Cost of product reconciliation:
GAAP cost of product
$
4,750
$
4,736
$
12,742
$
13,022
Stock-based compensation expense
(301
)
(321
)
(935
)
(851
)
Acquisition related-amortization of
purchased intangibles
(408
)
(416
)
(1,242
)
(1,305
)
Non-GAAP cost of product
$
4,041
$
3,999
$
10,565
$
10,866
Cost of patient and digital solutions
reconciliation:
GAAP cost of patient and digital
solutions
$
6,566
$
5,794
$
19,821
$
16,071
Stock-based compensation expense
(297
)
(299
)
(1,066
)
(882
)
Acquisition related-amortization of
purchased intangibles
(265
)
(236
)
(768
)
(709
)
Restructuring costs
—
—
(14
)
—
Non-GAAP cost of patient and digital
solutions
$
6,004
$
5,259
$
17,973
$
14,480
Research and development expenses
reconciliation:
GAAP research and development expenses
$
19,000
$
22,306
$
63,835
$
66,818
Stock-based compensation expense
(1,491
)
(2,058
)
(5,157
)
(6,571
)
Asset impairments and write-downs
—
(340
)
—
(340
)
Restructuring costs
—
—
(245
)
—
Non-GAAP research and development
expenses
$
17,509
$
19,908
$
58,433
$
59,907
Sales and marketing expenses
reconciliation:
GAAP sales and marketing expenses
$
18,474
$
22,261
$
63,883
$
72,359
Stock-based compensation expense
(3,041
)
(2,672
)
(9,557
)
(9,702
)
Acquisition related-amortization of
purchased intangibles
(616
)
(553
)
(1,817
)
(1,702
)
Restructuring costs
—
—
(548
)
—
Non-GAAP sales and marketing expenses
$
14,817
$
19,036
$
51,961
$
60,955
General and administrative expenses
reconciliation:
GAAP general and administrative
expenses
$
33,968
$
23,830
$
91,368
$
75,621
Stock-based compensation expense
(7,045
)
(5,380
)
(20,943
)
(15,366
)
Change in estimated fair value of
contingent consideration
(1,243
)
(266
)
(1,731
)
(830
)
Acquisition related fees and expenses
(253
)
(58
)
(537
)
(387
)
Restructuring costs
—
—
(41
)
—
Other charges
(6
)
—
(64
)
—
Non-GAAP general and administrative
expenses
$
25,421
$
18,126
$
68,052
$
59,038
Total other income (expense)
reconciliation:
GAAP other income, net
$
5,218
$
667
$
8,520
$
33
Unrealized loss (gain) on long-term
marketable equity securities
333
(271
)
1,190
215
Asset impairments and write-downs
—
500
1,000
500
Other (income) charges
(2,109
)
14
(2,081
)
32
Non-GAAP other income, net
$
3,442
$
910
$
8,629
$
780
Income tax benefit (expense)
reconciliation:
GAAP income tax benefit (expense)
$
80
$
(267
)
$
24
$
(206
)
Tax effect related to amortization of
purchased intangibles
(98
)
(101
)
(299
)
(321
)
Non-GAAP income tax expense
$
(18
)
$
(368
)
$
(275
)
$
(527
)
CareDx, Inc.
Reconciliation of GAAP to
Non-GAAP Gross Profit and Gross Margin
(Unaudited)
(In thousands, except
percentages)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Total revenue
$
67,192
$
79,359
$
214,755
$
239,409
GAAP cost of sales
24,533
28,301
76,400
82,722
GAAP gross profit
42,659
51,058
138,355
156,687
Stock-based compensation expense
1,094
1,090
3,468
2,788
Restructuring costs
—
—
14
—
Acquisition related-amortization of
purchased intangibles
1,002
981
2,997
3,001
Non-GAAP gross profit
$
44,755
$
53,129
$
144,834
$
162,476
Non-GAAP gross margin %
67
%
67
%
67
%
68
%
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,
2023
2022
2023
2022
GAAP net loss
$
(23,485
)
$
(16,939
)
$
(72,187
)
$
(58,284
)
Stock-based compensation expense
12,671
11,200
39,125
34,427
Asset impairments and write-downs
—
840
1,000
840
Unrealized loss (gain) on long-term
marketable equity securities
333
(271
)
1,190
215
Acquisition related-amortization of
purchased intangibles
1,618
1,534
4,814
4,702
Acquisition related fees and expenses
253
58
537
387
Change in estimated fair value of
contingent consideration
1,243
266
1,731
830
Restructuring costs and charges
6
—
912
—
Tax effect related to amortization of
purchased intangibles
(98
)
(101
)
(299
)
(321
)
Other (gains) charges
(2,109
)
15
(2,081
)
32
Non-GAAP net loss
$
(9,568
)
$
(3,398
)
$
(25,258
)
$
(17,172
)
GAAP basic and diluted net loss per
share
$
(0.43
)
$
(0.32
)
$
(1.34
)
$
(1.09
)
Non-GAAP basic net loss per share
$
(0.18
)
$
(0.06
)
$
(0.47
)
$
(0.32
)
Non-GAAP diluted net loss per share
$
(0.18
)
$
(0.06
)
$
(0.47
)
$
(0.32
)
Shares used in computing non-GAAP basic
net loss per share
54,178,759
53,489,418
53,891,374
53,253,210
Shares used in computing non-GAAP diluted
net loss per share
54,178,759
53,489,418
53,891,374
53,253,210
CareDx, Inc.
Reconciliation of Non-GAAP to
Adjusted EBITDA
(Unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Non-GAAP net loss
$
(9,568
)
$
(3,398
)
$
(25,258
)
$
(17,172
)
Interest income
(3,171
)
(1,225
)
(8,708
)
(1,892
)
Income tax (benefit) expense
(214
)
368
275
527
Depreciation expense
2,044
1,465
5,904
3,567
Other (income) expense, net
(40
)
314
79
1,112
Adjusted EBITDA
$
(10,949
)
$
(2,476
)
$
(27,708
)
$
(13,858
)
CareDx, Inc.
Reconciliation of GAAP Revenue
to Normalized Revenue After Adjustment of Impacted March
Tests
(Unaudited)
(In thousands)
Three Months Ended
June 30, 2023
September 30, 2023
GAAP revenue
$
70,301
$
67,192
AlloSure Kidney Medicare claims (Impacted
March Tests)
(7,771
)
—
Normalized revenue after adjustment of
Impacted March Tests
$
62,530
$
67,192
CareDx, Inc.
Reconciliation of GAAP Revenue
for Testing Services to Normalized Revenue for Testing Services
After Adjustment of Impacted March Tests and
Reconciliation of
Non-GAAP Gross Margin (%) for Testing Services to Normalized
Non-GAAP Gross Margin (%) for Testing Services After Adjustment of
Impacted March Tests
(Unaudited)
(In thousands)
Three Months Ended
June 30, 2023
September 30, 2023
GAAP revenue
$
53,414
$
47,784
AlloSure Kidney Medicare claims (Impacted
March Tests)
(7,771
)
—
Normalized revenue for testing services
after adjustment of Impacted March Tests
$
45,643
$
47,784
Non-GAAP cost of testing services
$
14,503
$
12,392
Non-GAAP gross margin for testing
services
73
%
74
%
AlloSure Kidney Medicare claims (Impacted
March Tests)
5
%
—
%
Normalized non-GAAP gross margin for
testing services (%) after adjustment of Impacted March Tests
68
%
74
%
CareDx, Inc.
Reconciliation of Adjusted
EBITDA to Normalized EBITDA After Adjustment of Impacted March
Tests
(Unaudited)
(In thousands)
Three Months Ended
June 30, 2023
September 30, 2023
Adjusted EBITDA
$
(10,350
)
$
(10,949
)
AlloSure Kidney Medicare claims (Impacted
March Tests)
(7,771
)
—
Normalized EBITDA after adjustment of
Impacted March Tests
$
(18,121
)
$
(10,949
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108247428/en/
CareDx, Inc.
Media Relations Anna Czene 818-731-2203
aczene@caredx.com
Investor Relations Greg Chodaczek investor@caredx.com
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