AlloSure launch momentum drives 48% revenue growth

BRISBANE, Calif., Aug. 09, 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 second quarter ended June 30, 2018.

Recent highlights:

-- Accelerated AlloSure penetration in key kidney transplant centers o Less than 9 months into AlloSure launch, CareDx supports approximately 1% of the U.S. living kidney transplant patient population o As of June 30, 2018, 76 U.S. transplant centers have provided AlloSure testing o Continued progress in AlloSure Registry (K-OAR) enrollment, with 27 centers initiated as of June 30, 2018 and 237 K-OAR patients enrolled o Notable presence at the 2018 American Transplant Congress including a standing room only symposium on clinical experiences with AlloSure -- Achieved total revenue of $17.8 million for the second quarter of 2018, increasing 48% year-over-year o Testing services revenue of $14.0 million, with 2,300 AlloSure and 4,132 AlloMap patient results provided o Product revenue of $3.6 million. -- Broadened testing services and product offerings o Entered into partnership with Illumina to develop and sell Next Generation Sequencing transplant products o Launched HeartCare, a comprehensive diagnostic solution for surveillance of heart transplant patients, combining AlloMap with AlloSure-Heart o Validated Olerup QTYPE on multiple platforms and received CE mark certification -- Announced the addition of Amy Abernethy, MD, PhD, Flatiron Health’s Chief Medical Officer and Chief Science Officer, to our Board of Directors.

“The CareDx team delivered a record quarter, including 48% year-over-year revenue growth. The rapid clinical adoption of AlloSure demonstrates the medical need and the potential for better surveillance in this patient population. We are executing well on our strategy to focus on peer-reviewed published clinical and analytical validation data and Medicare reimbursement,” said Peter Maag, CareDx President and Chief Executive Officer. “Our sole focus on transplantation sets us apart and creates a genomic informatics platform for future innovations and partnerships in transplant patient care.”

Second Quarter 2018 Financial Results

Revenue for the three months ended June 30, 2018 was $17.8 million, an increase of 48% compared with $12.0 million in the second quarter of 2017. Testing services revenue for the second quarter was $14.0 million compared with $8.4 million in the same period of 2017. Product revenue in the three months ended June 30, 2018 was $3.6 million, compared to $3.4 million in the same period of 2017.

For the second quarter of 2018, the net loss was $14.1 million compared to a net loss of $4.0 million in the same period of 2017. Basic and diluted net loss per share was $0.40 in the second quarter of 2018, compared to basic and diluted net loss per share of $0.19 in the second quarter of 2017.

Non-GAAP net loss was $1.3 million in the second quarter of 2018 compared to $3.6 million in the second quarter of 2017. Basic and diluted non-GAAP net loss per share was $0.04 in the second quarter of 2018, compared to $0.17 in the second quarter of 2017.

Adjusted EBITDA for the second quarter of 2018 was a loss of $0.8 million, compared to a loss of $2.1 million in the second quarter of 2017.

Net cash used in operating activities in the second quarter of 2018 was $1.9 million compared with $3.2 million in the comparative 2017 period. Cash and cash equivalents were $16.2 million as of June 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 $68 million to $70 million (previously $64 million to $66 million), with adjusted EBITDA profitability expected during the current half of the year.

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, timing for adjusted EBITDA profitability and achievement of our financial and operational goals and 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.

CONTACTS:

CareDx, Inc.Sasha KingChief Commercial Officer415-287-2393 sking@caredx.com

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

CareDx, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 2018 2017 2018 2017 -------------- -------------- -------------- -------------- Revenue: Testing services revenue $ 13,997 $ 8,420 $ 24,601 $ 16,322 Product revenue 3,550 3,376 6,857 7,043 Collaboration and license revenue 276 250 418 265 Total revenue 17,823 12,046 31,876 23,630 Operating expenses: Cost of testing services 4,568 3,011 8,680 6,068 Cost of product 2,639 2,178 4,911 4,505 Research and development 3,496 3,118 6,864 6,401 Sales and marketing 5,860 3,270 9,945 6,492 General and administrative 5,596 4,132 10,903 10,634 Goodwill impairment - - - 1,958 Change in estimated fair value of contingent 873 (64 ) 1,017 (285 ) consideration Total operating expenses 23,032 15,645 42,320 35,773 - ---------- - - ---------- - - ---------- - - ---------- - Loss from operations (5,209 ) (3,599 ) (10,444 ) (12,143 ) Interest expense (424 ) (1,691 ) (3,119 ) (2,481 ) Other expense, net (42 ) (188 ) (2,851 ) (874 ) Change in estimated fair value of common stock (8,768 ) 1,067 (7,447 ) 5,195 warrant liability and derivative liability - ---------- - - ---------- - - ---------- - - ---------- - Loss before income taxes (14,443 ) (4,411 ) (23,861 ) (10,303 ) Income tax benefit 381 376 805 659 - ---------- - - ---------- - - ---------- - - ---------- - Net loss (14,062 ) (4,035 ) (23,056 ) (9,644 ) Net loss attributable to noncontrolling — (67 ) (25 ) (114 ) interest - ---------- - Net loss attributable to CareDx, Inc. $ (14,062 ) $ (3,968 ) $ (23,031 ) $ (9,530 ) - ---------- - - ---------- - - ---------- - - ---------- - Net loss per share attributable to CareDx, Inc.: Basic $ (0.40 ) $ (0.19 ) $ (0.71 ) $ (0.45 ) - ---------- - - ---------- - - ---------- - - ---------- - Diluted $ (0.40 ) $ (0.19 ) $ (0.71 ) $ (0.45 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted average shares used to compute net loss per share attributable to CareDx, Inc.: Basic 35,549,837 21,412,480 32,599,032 21,378,321 - ---------- - - ---------- - - ---------- - - ---------- - Diluted 35,549,837 21,412,480 32,599,032 21,378,321 - ---------- - - ---------- - - ---------- - - ---------- -

CareDx, Inc. Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 2018 2017 (1) ------------ ------------ Assets Current assets: Cash and cash equivalents $ 16,246 $ 16,895 Accounts receivable 8,072 2,991 Inventory 4,666 5,529 Prepaid and other assets 1,593 1,352 Total current assets 30,577 26,767 Property and equipment, net 2,360 2,075 Intangible assets, net 34,760 33,139 Goodwill 12,005 12,005 Restricted cash 177 9,579 Total assets $ 79,879 $ 83,565 - -------- - - -------- - Liabilities and stockholders’ (deficit) equity Current liabilities: Accounts payable $ 3,480 $ 3,391 Accrued payroll liabilities 5,576 5,013 Accrued and other liabilities 4,703 3,735 Deferred revenue 39 39 Deferred purchase consideration 378 407 Derivative liability - 14,600 Current debt - 15,721 - -------- - - -------- - Total current liabilities 14,176 42,906 Deferred rent, net of current portion 686 913 Deferred revenue, net of current portion 711 730 Deferred tax liability 3,693 4,933 Long-term debt, net of current portion 13,337 18,338 Contingent consideration - 1,672 Common stock warrant liability 16,800 18,712 Other liabilities 1,524 1,315 Total liabilities 50,927 89,519 Stockholders’ equity: Common stock 36 29 Additional paid-in capital 321,144 264,204 Accumulated other comprehensive loss (4,108 ) (2,345 ) Accumulated deficit (288,120 ) (268,022 ) Total CareDx, Inc. stockholders' equity (deficit) 28,952 (6,134 ) Noncontrolling interest - 180 Total stockholders' equity (deficit) 28,952 (5,954 ) - -------- - - -------- - Total liabilities and stockholders’ equity $ 79,879 $ 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 June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 2018 2017 2018 2017 -------------- -------------- -------------- -------------- GAAP net loss $ (14,062 ) $ (3,968 ) $ (23,031 ) $ (9,530 ) Stock-based compensation expense 2,512 495 3,217 886 Acquisition related-amortization of purchased 734 587 1,498 1,175 intangibles Change in estimated fair value of contingent 873 (64 ) 1,017 (285 ) consideration Amortization of debt discount 55 606 1,978 717 Debt financing related fees and expenses - (125 ) - 309 Loss on conversion from debt to equity - - 2,806 - Change in estimated fair value of common stock 8,768 (1,067 ) 7,447 (5,195 ) warrant and derivative liabilities Tax effect related to amortization of (190 ) (181 ) (422 ) (336 ) purchased intangibles Acquisition related-amortization of inventory 25 138 189 170 valuation adjustment Goodwill impairment - - - 1,958 - ---------- - - ---------- - - ---------- - Non-GAAP net loss $ (1,285 ) $ (3,579 ) $ (5,301 ) $ (10,131 ) - ---------- - - ---------- - - ---------- - - ---------- - GAAP basic and diluted net loss per share $ (0.40 ) $ (0.19 ) $ (0.71 ) $ (0.45 ) attributable to CareDx Non-GAAP basic and diluted net loss per share $ (0.04 ) $ (0.17 ) $ (0.16 ) $ (0.47 ) attributable to CareDx Shares used in computing basic and diluted not 35,549,837 21,412,480 32,599,032 21,378,321 losses per share

CareDx, Inc. Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures (Unaudited) (In thousands, except share and per share data) Three Months Ended Six Months Ended June June 30, 30, ---------------------- ----------------------- 2018 2017 2018 2017 ---------- ---------- ---------- ----------- Non-GAAP net loss $ (1,285 ) $ (3,579 ) $ (5,301 ) $ (10,131 ) Interest expense 369 1,085 1,141 1,764 Income tax benefit (191 ) (195 ) (383 ) (323 ) Depreciation expense 248 300 526 646 Other expense 42 313 45 565 Net loss attributable to noncontrolling interest - (67 ) (25 ) (114 ) - ------ - - ------ - - ------ - - ------- - Adjusted EBITDA $ (817 ) $ (2,143 ) $ (3,997 ) $ (7,593 ) - ------ - - ------ - - ------ - - ------- -