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8-K - 8-K - CareDx, Inc. | d282078d8k.htm |
Exhibit 99.1
CareDx Reports Third Quarter 2016 Financial Results
BRISBANE, CA, November 9, 2016: 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, 2016.
Recent highlights:
| Achieved total revenue for the third quarter of 2016 of $12.5M, up 74% year-over-year |
○ | AlloMap® revenues were $8.6M in the quarter, with US tests volume up by 6% year-over-year |
○ | Olerup® revenues contributed $3.8M in the third quarter |
| Launched Olerup QTYPE, the Companys real-time q-PCR based HLA typing solution |
| Further advanced AlloSure, a clinical grade NGS test to measure donor organ injury featured in the Journal of Molecular Diagnostics |
We continue to execute on our growth strategy, with a successful first full quarter of integration of the Olerup products and further development of our pipeline products, most importantly AlloSure, said Peter Maag, CareDx President and Chief Executive Officer. The reimbursement team has also made significant progress in catching up on collections.
Third Quarter Financial Results
Revenue for the three months ended September 30, 2016 increased to $12.5 million, up from $7.2 million in the same period in 2015, reflecting the contribution of Olerup sales following the acquisition. Pro forma revenue growth was 13% year-over-year. The revenue trend also reflects $0.9 million of catch up revenue from progress in cash collections.
For the third quarter of 2016, net loss was $3.8 million compared to net loss of $3.5 million in the third quarter of 2015. Diluted net loss per share were $0.26 in the third quarter of 2016, compared to diluted net loss per share of $0.29 in the third quarter of 2015.
For the third quarter of 2016, non-GAAP net loss was $2.9 million compared to non-GAAP net loss of $3.5 million in the third quarter of 2015. Non-GAAP basic and diluted net loss per share were $0.15 in the third quarter of 2016, compared to non-GAAP basic and diluted net loss per share of $0.29 in the third quarter of 2015. 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.
Cash and cash equivalents were $22.3 million as of September 30, 2016.
For more information regarding our results, please see Purchase Accounting below.
2016 Guidance
For the full year 2016, we are narrowing our revenue guidance to the high end of our previously stated range. We expect fiscal 2016 revenue to grow by low- to mid-single digits on a pro forma basis over fiscal 2015 revenue, assuming that the Allenex acquisition closed on January 1, 2016. Actual reported results will only include Allenex results subsequent to the close of the acquisition on April 14, 2016, and we expect reported revenue for the full year 2016 to be in the range of $41 million to $42 million.
Purchase Accounting
The Company has accounted for the acquisition of Allenex as a business combination. Under business combination accounting, the total purchase price was allocated to Allenexs net tangible and identifiable intangible assets based on their estimated fair values as of April 14, 2016, the closing date, which are reflected in our Condensed Consolidated Balance Sheet on a preliminary basis as of September 30, 2016 as set forth herein. The excess of the purchase price over the preliminary net tangible and identifiable intangible assets was recorded as goodwill. The preliminary allocation of the purchase price was based upon a third-party valuation and our estimates and assumptions, which are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to valuation of acquired inventory, income and non-income based taxes and residual goodwill. In addition, upon the finalization of the combined companys legal entity structure, additional adjustments to deferred taxes may be required. The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP, as additional information is obtained about the facts and circumstances that existed as of the acquisition closing date. Any potential adjustments made could be material in relation to the amounts presented in our financial statements.
Conference Call
Management will host a conference call today beginning at 1:30 pm PT/4:30 pm ET. Individuals interested in listening to the conference call may do so by dialing (855) 420-0616 for domestic callers or (678) 304-6848 for international callers. Please reference Conference ID: 7448753. To listen to a live webcast, please visit the investor relations section of CareDxs website at: www.CareDx.com.
A replay of the call will be available beginning November 9, 2016 at 4:30 pm PT/7:30 pm ET through 4:30 pm PT/7:30 pm ET on November 10, 2016. To access the replay, dial (855) 859-2056 or (404) 537-3406 and reference Conference ID: 7448753. The webcast will also be available on CareDxs website for one year following the completion of the call.
About CareDx
CareDx, Inc., headquartered in Brisbane, California, is a global molecular diagnostics company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients. CareDx offers AlloMap®, a gene expression test that aids clinicians in identifying heart transplant patients with stable graft function who have a low probability of moderate to severe acute cellular rejection (ACR). CareDx is developing additional products for transplant monitoring using a variety of technologies, including AlloSure®, a proprietary next-generation sequencing-based test to detect donor-derived cell-free DNA (dd-cfDNA) after transplantation.
CareDx, with its presence through Olerup, also develops, manufactures, markets and sells high quality products that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. Olerup SSP® is a set of HLA typing products used prior to hematopoietic stem cell/bone marrow transplantation and organ transplantation. XM-ONE® is the first standardized test that quickly identifies a patients antigens against HLA Class I, Class II or antibodies against a donors endothelium. For more information, please visit: www.CareDx.com.
Forward Looking Statements
In addition to historical information, this press release contains forward-looking statements with respect to our business, research, development and commercialization efforts and anticipated future financial results, including our guidance for full fiscal 2016 revenue and statements regarding the potential adjustment of the purchase accounting for the Companys acquisition of Allenex on April 14, 2016. These forward-looking statements are based upon information that is currently available to us and our current expectations, speak only as of the date hereof, and are subject to numerous risks and uncertainties, including risks related to our ability to complete diagnostic studies, including obtaining sufficient clinical samples and participation of clinical investigators in such studies, the timeline for completion of research efforts, development and commercialization of additional diagnostic solutions including cell-free DNA, which is a lengthy and complex process that may not be successful, our dependence on Medicare for a substantial portion of our revenue, and our dependence on health insurers and other third-party payers to provide coverage for our current test and future tests, if any, completion of managements and our independent registered public accounting firms review of our financial statements as of and for the period ended September 30, 2016, obtaining additional information about the fair values of certain assets and liabilities of Allenex that existed as of the April 14, 2016 acquisition date and finalization of the combined companys legal entity structure. These factors, together with those that are described in our filings with the SEC, including the Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, and the Annual Report on Form 10-K for the year ended December 31, 2015 as filed by us with the SEC, may cause our actual results, performance or achievements to differ materially and adversely from those anticipated or implied by our forward-looking statements. We expressly disclaim 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 and contingent consideration; acquisition related amortization of intangible assets, purchase accounting adjustments and related tax effects, costs involved with completing an acquisition, and certain 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 CareDxs 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 CareDxs 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.
Investor Contact
Jamar Ismail, Vice President
Westwicke Partners, LLC
T: +1 415-513-1282
E: jamar.ismail@westwicke.com
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, |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue: |
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Testing revenue |
$ | 8,613 | $ | 7,007 | $ | 22,317 | $ | 21,147 | ||||||||
Product revenue |
3,754 | | 7,228 | | ||||||||||||
Collaboration, license and other revenue |
108 | 144 | 226 | 349 | ||||||||||||
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Total revenue |
12,475 | 7,151 | 29,771 | 21,496 | ||||||||||||
Operating expenses: |
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Cost of testing |
2,604 | 2,568 | 8,228 | 7,786 | ||||||||||||
Cost of product |
3,355 | | 6,411 | | ||||||||||||
Research and development |
2,930 | 2,698 | 9,231 | 6,629 | ||||||||||||
Sales and marketing |
3,451 | 2,062 | 8,544 | 6,453 | ||||||||||||
General and administrative |
5,180 | 3,361 | 16,250 | 8,553 | ||||||||||||
Change in estimated fair value of contingent consideration |
(112 | ) | (345 | ) | (422 | ) | (456 | ) | ||||||||
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Total operating expenses |
17,408 | 10,344 | 48,242 | 28,965 | ||||||||||||
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Loss from operations |
(4,933 | ) | (3,193 | ) | (18,471 | ) | (7,469 | ) | ||||||||
Interest expense |
(568 | ) | (251 | ) | (1,351 | ) | (1,334 | ) | ||||||||
Other expense |
(133 | ) | (45 | ) | (3,334 | ) | (142 | ) | ||||||||
Change in estimated fair value of common stock warrant liability |
1,386 | | (1,779 | ) | | |||||||||||
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Loss before income taxes |
(4,248 | ) | (3,489 | ) | (24,935 | ) | (8,945 | ) | ||||||||
Income tax benefit |
449 | | 888 | | ||||||||||||
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Net loss |
(3,799 | ) | (3,489 | ) | (24,047 | ) | (8,945 | ) | ||||||||
Net loss attributable to noncontrolling interest |
35 | | 58 | | ||||||||||||
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Net loss attributable to CareDx, Inc. |
$ | (3,764 | ) | $ | (3,489 | ) | $ | (23,989 | ) | $ | (8,945 | ) | ||||
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Net loss per share attributable to CareDx, Inc.: |
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Diluted |
$ | (0.26 | ) | $ | (0.29 | ) | $ | (1.61 | ) | $ | (0.76 | ) | ||||
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Weighted average shares used to compute net loss per share attributable to CareDx, Inc.: |
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Diluted |
19,481,424 | 11,890,057 | 14,894,218 | 11,846,921 | ||||||||||||
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CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amount and par value)
September 30, 2016 |
December 31, 2015 (1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 22,265 | $ | 29,888 | ||||
Accounts receivable |
4,568 | 2,367 | ||||||
Inventory |
7,444 | 766 | ||||||
Prepaid and other assets |
846 | 1,341 | ||||||
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Total current assets |
35,123 | 34,362 | ||||||
Property and equipment, net |
3,305 | 2,425 | ||||||
Intangible assets, net |
35,444 | 6,650 | ||||||
Goodwill |
28,047 | 12,005 | ||||||
Restricted cash |
143 | 147 | ||||||
Other noncurrent assets |
30 | 49 | ||||||
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Total assets |
$ | 102,092 | $ | 55,638 | ||||
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Liabilities and stockholders equity |
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Current liabilities: |
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Accounts payable |
$ | 3,464 | $ | 1,644 | ||||
Accrued payroll liabilities |
3,725 | 2,366 | ||||||
Accrued and other liabilities |
8,204 | 2,892 | ||||||
Accrued royalties |
310 | 242 | ||||||
Deferred revenue |
58 | 142 | ||||||
Deferred purchase consideration |
5,942 | | ||||||
Current portion of long-term debt |
17,902 | 2,866 | ||||||
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Total current liabilities |
39,605 | 10,152 | ||||||
Deferred rent, net of current portion |
1,190 | 1,426 | ||||||
Deferred revenue, net of current portion |
744 | 703 | ||||||
Deferred tax liability |
6,896 | | ||||||
Long-term debt, net of current portion |
8,496 | 12,887 | ||||||
Contingent consideration |
526 | 948 | ||||||
Common stock warrant liability |
6,736 | | ||||||
Other liabilities |
1,119 | 28 | ||||||
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Total liabilities |
65,312 | 26,144 | ||||||
Stockholders equity: |
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Common stock |
21 | 12 | ||||||
Additional paid-in capital |
235,087 | 202,564 | ||||||
Accumulated other comprehensive loss |
(1,831 | ) | | |||||
Accumulated deficit |
(197,071 | ) | (173,082 | ) | ||||
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Total CareDx Inc. stockholders equity |
36,206 | 29,494 | ||||||
Noncontrolling interest |
574 | | ||||||
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Total stockholders equity |
36,780 | 29,494 | ||||||
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Total liabilities and stockholders equity |
$ | 102,092 | $ | 55,638 | ||||
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(1) | The condensed balance sheet at December 31, 2015 has been derived from audited financial statements. |
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, |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Cost of testing reconciliation: |
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GAAP cost of testing |
$ | 2,604 | $ | 2,568 | $ | 8,228 | $ | 7,786 | ||||||||
Stock-based compensation expense |
(38 | ) | (23 | ) | (105 | ) | (91 | ) | ||||||||
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Non-GAAP cost of testing |
$ | 2,566 | $ | 2,545 | $ | 8,123 | $ | 7,695 | ||||||||
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Cost of product reconciliation: |
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GAAP cost of product |
$ | 3,355 | $ | | $ | 6,411 | $ | | ||||||||
Acquisition related-amortization of purchased intangibles |
(343 | ) | | (646 | ) | | ||||||||||
Acquisition related-amortization of inventory valuation adjustment |
(1,273 | ) | | (2,438 | ) | | ||||||||||
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Non-GAAP cost of product |
$ | 1,739 | $ | | $ | 3,327 | $ | | ||||||||
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Research and development expenses reconciliation: |
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GAAP research and development expenses |
$ | 2,930 | $ | 2,698 | $ | 9,231 | $ | 6,629 | ||||||||
Stock-based compensation expense |
(47 | ) | (80 | ) | (118 | ) | (215 | ) | ||||||||
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Non-GAAP research and development expenses |
$ | 2,883 | $ | 2,618 | $ | 9,113 | $ | 6,414 | ||||||||
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Sales and marketing expenses reconciliation: |
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GAAP sales and marketing expenses |
$ | 3,451 | $ | 2,062 | $ | 8,544 | $ | 6,453 | ||||||||
Acquisition related-amortization of purchased intangibles |
(241 | ) | | (454 | ) | | ||||||||||
Stock-based compensation expense |
(109 | ) | (37 | ) | (321 | ) | (93 | ) | ||||||||
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Non-GAAP sales and marketing expenses |
$ | 3,101 | $ | 2,025 | $ | 7,769 | $ | 6,360 | ||||||||
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General and administrative expenses reconciliation: |
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GAAP general and administrative expenses |
$ | 5,180 | $ | 3,361 | $ | 16,250 | $ | 8,553 | ||||||||
Acquisition related fees and expenses |
(458 | ) | | (4,298 | ) | | ||||||||||
Stock-based compensation expense |
(261 | ) | (198 | ) | (723 | ) | (628 | ) | ||||||||
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Non-GAAP general and administrative expenses |
$ | 4,461 | $ | 3,163 | $ | 11,229 | $ | 7,925 | ||||||||
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Contingent consideration remeasurement reconciliation: |
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GAAP contingent consideration remeasurement |
$ | (112 | ) | $ | (345 | ) | $ | (422 | ) | $ | (456 | ) | ||||
Contingent consideration remeasurement |
112 | 345 | 422 | 456 | ||||||||||||
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Non-GAAP contingent consideration remeasurement |
$ | | $ | | $ | | $ | | ||||||||
Change in estimated fair value of common stock warrant liability reconciliation: |
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GAAP change in estimated fair value of common stock warrant liability |
$ | 1,386 | $ | | $ | (1,779 | ) | $ | | |||||||
Change in estimated fair value of common stock warrant liability |
(1,386 | ) | | 1,779 | | |||||||||||
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Non-GAAP change in estimated fair value of common stock warrant liability |
$ | | $ | | $ | | $ | | ||||||||
Other expense, net reconciliation: |
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GAAP other expense, net |
$ | (133 | ) | $ | (45 | ) | $ | (3,334 | ) | $ | (142 | ) | ||||
Debt financing related fees and expenses |
| | 2,939 | | ||||||||||||
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Non-GAAP other expense, net |
$ | (133 | ) | $ | (45 | ) | $ | (395 | ) | $ | (142 | ) | ||||
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Income tax benefit reconciliation: |
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GAAP income tax benefit |
$ | 449 | $ | | $ | 888 | $ | | ||||||||
Tax effect related to amortization of purchased intangibles |
(427 | ) | | (807 | ) | | ||||||||||
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Non-GAAP income tax benefit, net |
$ | 22 | $ | | $ | 81 | $ | | ||||||||
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Net loss reconciliation: |
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GAAP net loss attributable to CareDx |
$ | (3,764 | ) | $ | (3,489 | ) | $ | (23,989 | ) | $ | (8,945 | ) | ||||
Acquisition related-amortization of purchased intangibles |
584 | | 1,100 | | ||||||||||||
Acquisition related-amortization of inventory valuation adjustment |
1,273 | | 2,438 | | ||||||||||||
Tax effect related to amortization of purchased intangibles |
(427 | ) | | 807 | | |||||||||||
Acquisition related fees and expenses |
458 | | 4,298 | | ||||||||||||
Debt financing related fees and expenses |
| | 2,939 | | ||||||||||||
Stock-based compensation expenses |
455 | 338 | 1,267 | 1,027 | ||||||||||||
Contingent consideration remeasurement |
(112 | ) | (345 | ) | (422 | ) | (456 | ) | ||||||||
Warrant liability remeasurement |
(1,386 | ) | | 1,779 | | |||||||||||
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Non-GAAP net loss |
$ | (2,919 | ) | $ | (3,496 | ) | $ | (9,783 | ) | $ | (8,374 | ) | ||||
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Basic and diluted net loss per share reconciliation: |
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GAAP basic and diluted net loss per share attributable to CareDx |
$ | (0.20 | ) | $ | (0.29 | ) | $ | (1.61 | ) | $ | (0.76 | ) | ||||
Acquisition related-amortization of purchased intangibles |
0.03 | | 0.07 | | ||||||||||||
Acquisition related-amortization of inventory valuation adjustment |
0.07 | | 0.16 | | ||||||||||||
Tax effect related to amortization purchased intangibles |
(0.02 | ) | | 0.05 | | |||||||||||
Acquisition related fees and expenses |
0.02 | | 0.29 | | ||||||||||||
Debt financing related fees and expenses |
| | 0.20 | | ||||||||||||
Stock-based compensation expenses |
0.02 | 0.03 | 0.09 | 0.09 | ||||||||||||
Contingent consideration remeasurement |
(0.01 | ) | (0.03 | ) | (0.03 | ) | (0.04 | ) | ||||||||
Warrant liability remeasurement |
(0.07 | ) | | 0.12 | | |||||||||||
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Non-GAAP basic and diluted net loss per share attributable to CareDx |
$ | (0.15 | ) | $ | (0.29 | ) | $ | (0.66 | ) | $ | (0.71 | ) | ||||
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Non-GAAP adjustment summary: |
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Cost of testing adjustments |
$ | 38 | $ | 23 | $ | 105 | $ | 91 | ||||||||
Cost of sales adjustments |
1,616 | | 3,084 | | ||||||||||||
Research and development expenses adjustments |
47 | 80 | 118 | 215 | ||||||||||||
Sales and marketing expenses adjustments |
350 | 37 | 775 | 93 | ||||||||||||
General and administrative expenses adjustments |
719 | 198 | 5,021 | 628 | ||||||||||||
Contingent consideration remeasurement |
(112 | ) | (345 | ) | (422 | ) | (456 | ) | ||||||||
Other expense adjustments |
| | 2,939 | | ||||||||||||
Warrant liability remeasurement |
(1,386 | ) | | 1,779 | | |||||||||||
Tax effect related to amortization of purchased intangibles |
(427 | ) | | 807 | | |||||||||||
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Total Non-GAAP adjustment summary: |
$ | 845 | $ | (7 | ) | $ | 14,206 | $ | 571 | |||||||
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