AP NEWS

CareDx Reports Third Quarter Results

November 8, 2018

AlloSure launch momentum drives 74% revenue growth

BRISBANE, Calif., Nov. 08, 2018 (GLOBE NEWSWIRE) -- 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, 2018.

Recent highlights:

-- Continued the acceleration of AlloSure penetration o In the twelve months since launch, 96 U.S. transplant centers have provided AlloSure testing to over 4,000 patients, representing approximately 2% of all U.S. living kidney transplant patients. The number of standing order patients has increased to 2,736, cumulatively o Continued progress in AlloSure Registry (K-OAR) enrollment, with 40 centers initiated and 480 patients enrolled as of September 30, 2018 -- Achieved total revenue of $21.2 million for the third quarter of 2018, increasing 74% year-over-year o Testing services revenue of $16.8 million, with 3,708 AlloSure and 4,080 AlloMap patient results provided o Product revenue of $4.2 million -- Announced details of new testing services and future product offerings o Launched the Surveillance HeartCare® Outcomes Registry (SHORE) during the 22nd Annual Scientific Meeting of the Heart Failure Society of America (HFSA) o Profiled the new AlloSeq suite of next generation sequencing based transplant laboratory products, to be launched in 2019, at the American Society of Histocompatability and Immunogenetics (ASHI)

“The CareDx team delivered another record quarter, including 74% year-over-year revenue growth. We achieved positive adjusted EBITDA and operating cash flow results one quarter ahead of our initial expectations. The strong clinical value of AlloSure continues to resonate with the transplant community and, a year into the launch, we are 2% penetrated into this patient population,” said Peter Maag, CareDx President and Chief Executive Officer. “Our success to date positions CareDx as the leading provider of genomics-based information in transplantation, with the goal to leverage insights into the transplantome to benefit patients and improve their long-term outcomes.”

Third Quarter 2018 Financial Results

Revenue for the three months ended September 30, 2018 was $21.2 million, compared with $12.2 million in the third quarter of 2017. Testing services revenue for the third quarter was $16.8 million compared with $8.2 million in the same period of 2017. Product revenue in the three months ended September 30, 2018 was $4.2 million, compared to $3.9 million in the same period of 2017.

For the third quarter of 2018, the net loss was $20.0 million compared to a net loss of $14.3 million in the same period of 2017. Basic and diluted net loss per share was $0.54 in the third quarter of 2018, compared to basic and diluted net loss per share of $0.63 in the third quarter of 2017.

Non-GAAP net loss was $0.6 million in the third quarter of 2018 compared to $3.3 million in the third quarter of 2017. Basic and diluted non-GAAP net loss per share was $0.01 in the third quarter of 2018, compared to $0.15 in the third quarter of 2017.

Adjusted EBITDA for the third quarter of 2018 was a gain of $0.2 million, compared to a loss of $1.7 million in the third quarter of 2017.

Net cash provided by operating activities in the third quarter of 2018 was $0.4 million compared with $2.2 million net cash used in operations in the comparative 2017 period. Cash and cash equivalents were $26.2 million as of September 30, 2018.

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.

2018 Guidance For the full year 2018, CareDx expects revenue to be in the range of $74 million to $75 million (previously $68 million to $70 million).

About CareDx CareDx, Inc., headquartered in Brisbane, California, is a molecular diagnostics company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant recipients. CareDx offers products along the pre- and post-transplant testing continuum.

For more information, please visit: www.CareDx.com.

Forward Looking Statements This press release includes forward-looking statements, including expectations regarding the Company’s fiscal 2018 revenue, achievement of our financial and operational goals and our prospects. 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, including general economic and market factors, 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, 2017 filed by CareDx with the SEC on March 22, 2018 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 MeasuresCareDx 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 net loss, non-GAAP basic and diluted net loss per share and adjusted EBITDA. 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, 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 adjusted EBITDA as non-GAAP net loss before net interest expense, income tax expense, depreciation and amortization, other expense, and net loss attributable to noncontrolling interest. 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. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) Three Months Ended September Nine Months Ended September 30, 30, ------------------------------ ------------------------------ 2018 2017 2018 2017 - ---------- - - ---------- - - ---------- - - ---------- - Revenue: Testing services revenue $ 16,847 $ 8,163 $ 41,448 $ 24,485 Product revenue 4,223 3,872 11,080 10,916 Collaboration and license revenue 114 156 532 420 Total revenue 21,184 12,191 53,060 35,821 Operating expenses: Cost of testing services 5,752 3,156 14,432 9,224 Cost of product 3,135 2,053 8,046 6,558 Research and development 3,868 2,959 10,732 9,360 Sales and marketing 5,971 3,255 15,916 9,747 General and administrative 5,177 4,038 16,080 14,672 Goodwill impairment - - - 1,958 Change in estimated fair value of contingent - 594 1,017 309 consideration Total operating expenses 23,903 16,055 66,223 51,828 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (2,719 ) (3,864 ) (13,163 ) (16,007 ) Interest expense (408 ) (1,685 ) (3,527 ) (4,166 ) Other expense, net (40 ) (317 ) (2,891 ) (1,191 ) Change in estimated fair value of common stock (17,093 ) (8,599 ) (24,540 ) (3,404 ) warrant liability and derivative liability - ---------- - - ---------- - - ---------- - - ---------- - Loss before income taxes (20,260 ) (14,465 ) (44,121 ) (24,768 ) Income tax benefit 290 178 1,095 837 - ---------- - - ---------- - - ---------- - - ---------- - Net loss (19,970 ) (14,287 ) (43,026 ) (23,931 ) Net loss attributable to noncontrolling — (19 ) (25 ) (133 ) interest - ---------- - Net loss attributable to CareDx, Inc. $ (19,970 ) $ (14,268 ) $ (43,001 ) $ (23,798 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share attributable to CareDx, Inc.: Basic $ (0.54 ) $ (0.63 ) $ (1.26 ) $ (1.09 ) - ---------- - - ---------- - - ---------- - - ---------- - Diluted $ (0.54 ) $ (0.63 ) $ (1.26 ) $ (1.09 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted average shares used to compute net loss per share attributable to CareDx, Inc.: Basic 37,154,293 22,526,615 34,134,138 21,765,292 - ---------- - - ---------- - - ---------- - - ---------- - Diluted 37,154,293 22,526,615 34,134,138 21,765,292 - ---------- - - ---------- - - ---------- - - ---------- -

CareDx, Inc. Condensed Consolidated Balance Sheets (In thousands) September December 31, 30, 2018 2017 (1) ------------ ------------ Assets Current assets: Cash and cash equivalents $ 26,202 $ 16,895 Accounts receivable 9,641 2,991 Inventory 4,621 5,529 Prepaid and other assets 1,479 1,352 Total current assets 41,943 26,767 Property and equipment, net 3,022 2,075 Intangible assets, net 34,284 33,139 Goodwill 12,005 12,005 Restricted cash 192 9,579 Total assets $ 91,446 $ 83,565 - -------- - - -------- - Liabilities and stockholders’ (deficit) equity Current liabilities: Accounts payable $ 2,676 $ 3,391 Accrued payroll liabilities 8,017 5,013 Accrued and other liabilities 4,718 3,735 Deferred revenue 39 39 Deferred purchase consideration 367 407 Derivative liability - 14,600 Current debt - 15,721 - -------- - - -------- - Total current liabilities 15,817 42,906 Deferred rent, net of current portion 579 913 Deferred revenue, net of current portion 701 730 Deferred tax liability 3,447 4,933 Long-term debt, net of current portion 13,384 18,338 Contingent consideration - 1,672 Common stock warrant liability 11,612 18,712 Other liabilities 1,518 1,315 Total liabilities 47,058 89,519 Stockholders’ equity: Common stock 39 29 Additional paid-in capital 356,427 264,204 Accumulated other comprehensive loss (3,988 ) (2,345 ) Accumulated deficit (308,090 ) (268,022 ) Total CareDx, Inc. stockholders’ equity (deficit) 44,388 (6,134 ) Noncontrolling interest - 180 Total stockholders’ equity (deficit) 44,388 (5,954 ) - -------- - - -------- - Total liabilities and stockholders’ equity $ 91,446 $ 83,565 - -------- - - -------- - (1) The condensed balance sheets at December 31, 2017 have 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 Nine Months Ended September 30, 30, ------------------------------ ------------------------------ 2018 2017 2018 2017 - ---------- - - ---------- - - ---------- - - ---------- - GAAP net loss $ (19,970 ) $ (14,268 ) $ (43,001 ) $ (23,798 ) Stock-based compensation expense 1,861 430 5,078 1,316 Acquisition related-amortization of purchased 740 637 2,238 1,812 intangibles Change in estimated fair value of contingent - 594 1,017 309 consideration Amortization of debt discount 70 650 2,048 1,367 Debt financing related fees and expenses - - - 309 Loss on conversion from debt to equity - - 2,806 - Change in estimated fair value of common stock 17,093 8,599 24,540 3,404 warrant and derivative liabilities Tax effect related to amortization of (384 ) (199 ) (616 ) (535 ) purchased intangibles Acquisition-related amortization of inventory 35 250 224 420 valuation adjustment Goodwill impairment - - - 1,958 - ---------- - Non-GAAP net loss $ (555 ) $ (3,307 ) $ (5,666 ) $ (13,438 ) - ---------- - - ---------- - - ---------- - - ---------- - GAAP basic and diluted net loss per share $ (0.54 ) $ (0.63 ) $ (1.26 ) $ (1.09 ) attributable to CareDx Non-GAAP basic and diluted net loss per share $ (0.01 ) $ (0.15 ) $ (0.17 ) $ (0.62 ) attributable to CareDx Shares used in computing basic and diluted net 37,154,293 22,526,615 34,134,138 21,765,292 losses per share

CareDx, Inc. Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures (Unaudited) (In thousands) Three Months Ended Nine Months Ended September 30, September 30, -------------------- ----------------------- 2018 2017 2018 2017 - ---- - - ------ - - ------ - - ------- - Non-GAAP net loss $ (555 ) $ (3,307 ) $ (5,666 ) $ (13,438 ) Interest expense 338 1,035 1,479 2,799 Income tax (benefit) expense 94 21 (479 ) (302 ) Depreciation expense 274 283 800 929 Other expense 40 317 85 882 Net loss attributable to noncontrolling interest - (19 ) (25 ) (133 ) - ---- - - ------ - - ------ - - ------- - Adjusted EBITDA $ 191 $ (1,670 ) $ (3,806 ) $ (9,263 ) - ---- - - ------ - - ------ - - ------- -

CONTACTS: CareDx, Inc. Sasha King Chief Commercial Officer 415-287-2393 sking@caredx.com

Investor RelationsDavid ClairIntegrated Corporate Relations, Inc.646-277-1266 david.clair@icrinc.com

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