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PRESS RELEASE from provider: Globe Newswire
This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

CareDx Reports Fourth Quarter and FY 2018 Results

March 6, 2019

BRISBANE, Calif., March 06, 2019 (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 fourth quarter and full year ended December 31, 2018.

Recent highlights:

-- Continued the acceleration of AlloSure penetration o In the fourth quarter of 2018, 100 U.S. transplant centers provided 4,575 AlloSure tests to approximately 3,400 patients o Continued progress in AlloSure Registry (K-OAR) enrollment, with 47 centers initiated and 748 patients enrolled as of December 31, 2018 -- Achieved total revenue of $23.5 million for the fourth quarter of 2018, increasing 88% year-over-year o Testing services revenue of $18.9 million, with 4,575 AlloSure and 4,057 AlloMap patient results provided o Product revenue of $4.6 million -- Generated a net loss of $3.8 million, positive adjusted EBITDA of $0.8 million and positive net cash from operations of $2.0 million in the fourth quarter of 2018 -- Strengthened balance sheet through public equity offering and repayment of all outstanding debt o Cash and cash equivalents of $64.6 million at December 31, 2018

“The CareDx team delivered another consecutive record quarter, including 88% year-over-year revenue growth. We achieved positive adjusted EBITDA and operating cash flow results for the second straight quarter. We strengthened our first mover advantage as the strong clinical value of AlloSure continues to resonate with the transplant community and, just over a year into the launch, we are 3% penetrated into this patient population,” said Peter Maag, CareDx Chief Executive Officer. “CareDx is making tremendous strides fortifying its position as the leading provider of genomics-based information in transplantation, with the goal to leverage these insights to improve long-term patient outcomes. I am very proud of CareDx’s accomplishments in 2018, which sets the stage for another year of strong growth in 2019 and beyond.”

Fourth Quarter 2018 Financial Results

Revenue for the three months ended December 31, 2018 was $23.5 million, compared with $12.5 million in the fourth quarter of 2017. Testing services revenue for the fourth quarter was $18.9 million compared with $8.6 million in the same period of 2017. Product revenue in the three months ended December 31, 2018 was $4.6 million, compared to $3.7 million in the same period of 2017.

For the fourth quarter of 2018, the net loss was $3.8 million compared to a net loss of $31.7 million in the same period of 2017. The fourth quarter 2018 net loss included $3.0 million of debt extinguishment expenses and a $1.6 million benefit from the change in estimated fair value of common stock warrant and derivative liabilities. Basic and diluted net loss per share was $0.09 in the fourth quarter of 2018, compared to basic and diluted net loss per share of $1.13 in the fourth quarter of 2017.

Non-GAAP net income was $0.3 million in the fourth quarter of 2018 compared to a $2.6 million net loss in the fourth quarter of 2017. Basic and diluted non-GAAP net income per share was $0.01 in the fourth quarter of 2018, compared to a net loss per share of $0.09 in the fourth quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2018 was a gain of $0.8 million, compared to a loss of $2.0 million in the fourth quarter of 2017.

Net cash provided by operating activities in the fourth quarter of 2018 was $2.0 million compared with $2.2 million net cash used in operations in the comparative 2017 period. Cash and cash equivalents were $64.6 million as of December 31, 2018.

Full Year 2018 Financial Results

Revenue for the full year ended December 31, 2018 was $76.6 million, an increase of 58% compared with $48.3 million in full year 2017 revenue. Testing revenue for the year ended December 31, 2018 was $60.3 million, compared with $33.1 million in the same period in 2017. Product revenue for the full year 2018 was $15.7 million, compared to $14.6 million in 2017.

Net loss for the full year ended December 31, 2018 was $46.8 million compared with a net loss of $55.5 million in 2017. The full year 2018 net loss includes charges totaling $28.8 million for debt extinguishment expenses and changes in the estimated fair values of warrant and derivative liabilities, which compares to $30.1 million in such charges in 2017. Basic and diluted net loss per share for the full year ended December 31, 2018 were $1.31 compared to $2.38 in the full year 2017.

Non-GAAP net loss was $5.3 million for the full year ended December 31, 2018 compared to $16.1 million in 2017. Non-GAAP basic and diluted net loss per share were $0.15 in the full year 2018, compared to basic and diluted net loss per share of $0.69 in 2017.

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.

2019 Guidance For the full year 2019, CareDx expects revenue to be in the range of $105 million to $107 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 2019 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 income, non-GAAP net loss, non-GAAP basic and diluted net income and net loss per share and adjusted EBITDA. We define non-GAAP net income and non-GAAP net loss and per share results as the GAAP net income or 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 income/(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.

CONTACTS:

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

CareDx, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) Three Months Ended December 12 Months Ended December 31, 31, ------------------------------ ------------------------------ 2018 2017 2018 2017 - ---------- - - ---------- - - ---------- - - ---------- - Revenue: Testing services revenue $ 18,852 $ 8,621 $ 60,300 $ 33,106 Product revenue 4,594 3,718 15,674 14,634 Collaboration and license revenue 63 164 595 584 Total revenue 23,509 12,503 76,569 48,324 Operating expenses: Cost of testing services 7,024 3,121 21,456 12,345 Cost of product 3,485 2,468 11,531 9,026 Research and development 3,782 3,028 14,514 12,388 Sales and marketing 5,754 3,061 21,670 12,808 General and administrative 5,879 4,241 21,959 18,913 Goodwill impairment - - - 1,958 Change in estimated fair value of contingent - 871 1,017 1,180 consideration Total operating expenses 25,924 16,790 92,147 68,618 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (2,415 ) (4,287 ) (15,578 ) (20,294 ) Interest expense (174 ) (1,708 ) (3,701 ) (5,863 ) Debt extinguishment expenses (2,974 ) (274 ) (5,780 ) (459 ) Other expense, net (93 ) (14 ) (178 ) (1,031 ) Change in estimated fair value of common stock warrant liability and derivative 1,562 (26,218 ) (22,978 ) (29,622 ) liability - ---------- - - ---------- - - ---------- - - ---------- - Loss before income taxes (4,094 ) (32,501 ) (48,215 ) (57,269 ) Income tax benefit 339 872 1,434 1,709 - ---------- - - ---------- - - ---------- - - ---------- - Net loss (3,755 ) (31,629 ) (46,781 ) (55,560 ) Net loss attributable to noncontrolling — 42 (25 ) (91 ) interest - ---------- - Net loss attributable to CareDx, Inc. $ (3,755 ) $ (31,671 ) $ (46,756 ) $ (55,469 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share attributable to CareDx, Inc.: Basic $ (0.09 ) $ (1.13 ) $ (1.31 ) $ (2.38 ) - ---------- - - ---------- - - ---------- - - ---------- - Diluted $ (0.09 ) $ (1.13 ) $ (1.31 ) $ (2.38 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted average shares used to compute net loss per share attributable to CareDx, Inc.: Basic 40,104,341 27,983,033 35,638,956 23,332,503 - ---------- - - ---------- - - ---------- - - ---------- - Diluted 40,104,341 27,983,033 35,638,956 23,332,503 - ---------- - - ---------- - - ---------- - - ---------- -

CareDx, Inc. Condensed Consolidated Balance Sheets (In thousands) December 31, December 31, 2018 2017 ------------ ------------ Assets Current assets: Cash and cash equivalents $ 64,616 $ 16,895 Accounts receivable 9,760 2,991 Inventory 4,943 5,529 Prepaid and other assets 1,795 1,352 Total current assets 81,114 26,767 Property and equipment, net 4,134 2,075 Intangible assets, net 33,252 33,139 Goodwill 12,005 12,005 Restricted cash 192 9,579 Total assets $ 130,697 $ 83,565 - -------- - - -------- - Liabilities and stockholders’ (deficit) equity Current liabilities: Accounts payable $ 4,711 $ 3,391 Accrued compensation 9,156 5,013 Accrued and other liabilities 5,408 3,735 Deferred revenue 39 39 Deferred purchase consideration 190 407 Derivative liability - 14,600 Current debt - 15,721 - -------- - - -------- - Total current liabilities 19,504 42,906 Deferred rent, net of current portion 470 913 Deferred revenue, net of current portion 691 730 Deferred tax liability 2,968 4,933 Long-term debt, net of current portion - 18,338 Contingent consideration - 1,672 Common stock warrant liability 10,003 18,712 Other liabilities 1,133 1,315 Total liabilities 34,769 89,519 Stockholders’ equity: Common stock 41 29 Additional paid-in capital 412,010 264,204 Accumulated other comprehensive loss (4,278 ) (2,345 ) Accumulated deficit (311,845 ) (268,022 ) Total CareDx, Inc. stockholders’ equity (deficit) 95,928 (6,134 ) Noncontrolling interest - 180 Total stockholders’ equity (deficit) 95,928 (5,954 ) - -------- - - -------- - Total liabilities and stockholders’ equity $ 130,697 $ 83,565 - -------- - - -------- -

CareDx, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data) Three Months Ended December Twelve Months Ended December 31, 31, ------------------------------ ------------------------------ 2018 2017 2018 2017 - ---------- - - ---------- - - ---------- - - ---------- - GAAP net loss $ (3,755 ) $ (31,671 ) $ (46,756 ) $ (55,469 ) Stock-based compensation expense 2,060 428 7,138 1,744 Acquisition related-amortization of purchased 735 621 2,973 2,433 intangibles Change in estimated fair value of contingent - 871 1,017 1,180 consideration Amortization of debt discount 47 731 2,095 2,098 Debt financing related fees and expenses 2,974 - 2,974 309 Loss on conversion from debt to equity - 278 2,806 278 Change in estimated fair value of common stock (1,562 ) 26,218 22,978 29,622 warrant and derivative liabilities Tax effect related to amortization of (195 ) (200 ) (811 ) (735 ) purchased intangibles Acquisition-related amortization of inventory 44 89 268 509 valuation adjustment Goodwill impairment - - - 1,958 - ---------- - Non-GAAP net income (loss) $ 348 $ (2,635 ) $ (5,318 ) $ (16,073 ) - ---------- - - ---------- - - ---------- - - ---------- - GAAP basic and diluted net loss per share $ (0.09 ) $ (1.13 ) $ (1.31 ) $ (2.38 ) attributable to CareDx Non-GAAP basic and diluted net income (loss) $ 0.01 $ (0.09 ) $ (0.15 ) $ (0.69 ) per share attributable to CareDx Shares used in computing non-GAAP basic net 40,104,341 27,983,033 35,638,956 23,332,503 income (loss) per share Shares used in computing non-GAAP diluted net 41,270,703 27,983,033 35,638,956 23,332,503 income (loss) per share

CareDx, Inc. Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures (Unaudited) (In thousands) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- ----------------------- 2018 2017 2018 2017 - ---- - - ------ - - ------ - - ------- - Non-GAAP net income (loss) $ 348 $ (2,635 ) $ (5,318 ) $ (16,073 ) Interest expense 127 977 1,606 3,765 Income tax benefit (144 ) (672 ) (623 ) (974 ) Depreciation expense 355 283 1,155 929 Other expense 93 10 178 903 Net loss attributable to noncontrolling interest - 42 (25 ) (91 ) - ---- - - ------ - - ------ - - ------- - Adjusted EBITDA $ 779 $ (1,995 ) $ (3,027 ) $ (11,541 ) - ---- - - ------ - - ------ - - ------- -