8-K
CareDx, Inc. (CDNA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 27, 2023
CAREDX, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-36536 | 94-3316839 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
8000 Marina Boulevard
Brisbane, California 94005
(Address of Principal Executive Offices) (Zip Code)
(415) 287-2300
Registrant’s telephone number, including area code
N/A
(Former Name, or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| (Title of each class) | (Trading Symbol) | (Name of exchange on which registered) |
|---|---|---|
| Common Stock, $0.001 Par Value | CDNA | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 27, 2023, CareDx, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended December 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the earnings presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The information in this Item 2.02, including the press release attached hereto as Exhibit 99.1 and the earnings presentation attached hereto as Exhibit 99.2, are intended to be furnished under Item 2.02 and Item 9.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release issued by CareDx, Inc., dated February 27, 2023. |
| 99.2 | Q4 and FY 2022 Earnings Presentation |
| 104 | Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 27, 2023 | CAREDX, INC. | |
|---|---|---|
| By: | /s/ Abhishek Jain | |
| Abhishek Jain | ||
| Chief Financial Officer |
Document
Exhibit 99.1
CareDx Reports Fourth Quarter and Full Year 2022 Results
BRISBANE, Calif., February 27, 2023 -- 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 fourth quarter and full year ended December 31, 2022.
Recent Highlights
•Achieved full year revenue of $321.8 million, an increase of 9% compared with full year 2021 revenue. Highest ever Q4 revenue of $82.4 million, representing year-over-year growth of 4%.
•Full year 2022 AlloMap® and AlloSure® testing volumes grew year-over-year by 19% to approximately 182,000 tests. Provided approximately 47,700 AlloMap and AlloSure patient results in the fourth quarter, growing 14% year-over-year. Q4 test volume included 2,300 AlloSure Lung tests.
•Achieved highest ever cash collections in Q4 at 110% of revenue for testing services, representing an approximately 10% year-over-year increase demonstrating strong operational progress on this key initiative.
•New International Society of Heart and Lung Transplantation (ISHLT) guidelines were published, supporting the expanded use of CareDx’s HeartCare solutions, AlloMap and now AlloSure, in routine monitoring of heart transplant patients.
•Commenced authorized share buyback program of up to $50 million and in Q4 repurchased common stock for approximately $0.6 million. Program demonstrates Board of Directors’ and management’s confidence in the business, cash position and long-term growth opportunities.
•Maintained strong balance sheet with $293 million cash and cash equivalents, and marketable securities, with no debt.
“In 2023 we plan to build on the 3 C’s – catalysts in the pipeline, collections improvements and coverage expansion across the portfolio. We were thrilled to see the first of the C’s make significant progress in Q4, where we achieved our highest ever collections quarter, delivering collections at 110% of testing service revenues,” said Reg Seeto, CEO and President of CareDx. “As we continue to build through the 3 C’s, we remain focused on delivering on adjusted EBITDA profitability in the first half of 2023.”
Q4 2022 Financial Results:
Revenue for the three months ended December 31, 2022 was $82.4 million, an increase of 4% compared with $79.2 million in the fourth quarter of 2021. Testing services revenue for the quarter was $65.4 million, compared with $68.7 million in the same period in 2021. Total AlloSure® and AlloMap® patient results provided in the quarter were 47,700, including 2,300 AlloSure® Lung patient results. Product revenue in the three months ended December 31, 2022 was $8.6 million, compared to $7.7 million in the same period in 2021. Patient and digital solutions revenue in the fourth quarter of 2022 was $8.4 million, compared to $2.9 million in the same period in 2021.
For the fourth quarter of 2022, net loss was $18.3 million, compared to a net loss of $16.2 million in the same period in 2021. Basic and diluted net loss per share in the fourth quarter of 2022 was $0.34, compared to basic and diluted net loss per share of $0.31 in the fourth quarter of 2021.
Non-GAAP net loss was $3.7 million in the fourth quarter of 2022, compared to a non-GAAP net loss of $1.5 million in the fourth quarter of 2021. Basic and diluted non-GAAP net loss per share was $0.07 in the fourth quarter of 2022, compared to a basic and diluted non-GAAP net loss per share of $0.03 in the fourth quarter of 2021.
Adjusted EBITDA for the fourth quarter of 2022 was a loss of $3.7 million, compared to an adjusted EBITDA loss of $1.4 million in the fourth quarter of 2021.
Cash and cash equivalents, and marketable securities was $293 million as of December 31, 2022.
Full Year 2022 Financial Results
Revenue for the full year ended December 31, 2022, was $321.8 million, an increase of 9% compared with $296.4 million in 2021. Testing services revenue for the full year ended December 31, 2022 was $263.7 million, compared with $259.3 million in 2021. Product revenue for the full year ended December 31, 2022 was $29.3 million, compared to $26.8 million in 2021. Patient and digital solutions revenue for the full year 2022 was $28.8 million, compared to $10.3 million in 2021.
Net loss for the full year ended December 31, 2022 was $76.6 million, compared to a net loss of $30.7 million in 2021. Basic and diluted net loss per share for the full year ended December 31, 2022 was $1.44, compared to basic and diluted net loss per share of $0.59 in the full year ended December 31, 2021.
Non-GAAP net loss was $20.9 million for the full year ended December 31, 2022, compared to a non-GAAP net income of $15.5 million for the full year ended December 31, 2021. Basic and diluted non-GAAP net loss per share was $0.39 in the full year of 2022, compared to a basic and diluted non-GAAP net income per share of $0.30 and $0.29, respectively, in the full year of 2021.
Adjusted EBITDA for the full year of 2022 was a loss of $17.5 million, compared to an adjusted EBITDA gain of $17.8 million for the full year of 2021.
For additional information regarding non-GAAP financial measures discussed herein, please see “Use of Non-GAAP Financial Measures,” “Reconciliation of GAAP to Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures” below.
2023 Guidance
For the full year 2023, CareDx expects revenue to be in the range of $328 million to $338 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 with respect to expectations regarding CareDx’s upcoming milestones, vision and 2023 revenue guidance. All statements other than statements of historical fact contained in this press release, including statements regarding the future financial position of CareDx, including financial targets, 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 related to the COVID-19 pandemic, 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 to be filed by CareDx with the SEC on or about February 27, 2023. 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 (expense), net, non-GAAP income tax (expense) benefit, non-GAAP gross profit, non-GAAP gross margin (%), non-GAAP net (loss) income, non-GAAP basic and diluted net (loss) income per share and adjusted EBITDA. We define non-GAAP net (loss) income 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; and certain other charges. We define adjusted EBITDA as non-GAAP net (loss) income before net interest income, income tax expense (benefit), depreciation and other (income) 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.
CONTACTS:
CareDx, Inc.
Media Relations
Anna Czene
818-731-2203
aczene@caredx.com
Investor Relations
Greg Chodaczek
investor@caredx.com
CareDx, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenue: | ||||||||
| Testing services revenue | $ | 65,418 | $ | 68,650 | $ | 263,748 | $ | 259,285 |
| Product revenue | 8,555 | 7,672 | 29,251 | 26,832 | ||||
| Patient and digital solutions | 8,411 | 2,898 | 28,794 | 10,280 | ||||
| Total revenue | 82,384 | 79,220 | 321,793 | 296,397 | ||||
| Operating expenses: | ||||||||
| Cost of testing services | 18,657 | 19,495 | 72,286 | 71,251 | ||||
| Cost of product | 4,617 | 5,159 | 17,639 | 18,930 | ||||
| Cost of patient and digital solutions | 6,216 | 2,347 | 22,287 | 7,208 | ||||
| Research and development | 23,570 | 22,046 | 90,388 | 76,525 | ||||
| Sales and marketing | 23,668 | 20,824 | 96,027 | 77,245 | ||||
| General and administrative | 24,776 | 24,748 | 100,397 | 74,964 | ||||
| Total operating expenses | 101,504 | 94,619 | 399,024 | 326,123 | ||||
| Loss from operations | (19,120) | (15,399) | (77,231) | (29,726) | ||||
| Other income (expense): | ||||||||
| Interest income, net | 1,870 | 13 | 3,762 | 160 | ||||
| Change in estimated fair value of common stock warrant liability | 18 | 56 | 107 | 106 | ||||
| Other expense, net | (924) | (1,722) | (2,872) | (2,628) | ||||
| Total other income (expense) | 964 | (1,653) | 997 | (2,362) | ||||
| Loss before income taxes | (18,156) | (17,052) | (76,234) | (32,088) | ||||
| Income tax (expense) benefit | (173) | 901 | (379) | 1,426 | ||||
| Net loss | $ | (18,329) | $ | (16,151) | $ | (76,613) | $ | (30,662) |
| Net loss per share: | ||||||||
| Basic | $ | (0.34) | $ | (0.31) | $ | (1.44) | $ | (0.59) |
| Diluted | $ | (0.34) | $ | (0.31) | $ | (1.44) | $ | (0.59) |
| Weighted-average shares used to compute net loss per share: | ||||||||
| Basic | 53,524,637 | 52,854,216 | 53,321,625 | 52,241,076 | ||||
| Diluted | 53,524,637 | 52,854,216 | 53,321,625 | 52,241,076 |
CareDx, Inc.
Consolidated Balance Sheets
(In thousands)
| As of December 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 89,921 | $ | 348,485 |
| Marketable securities | 203,168 | — | ||
| Accounts receivable | 66,312 | 59,761 | ||
| Inventory | 19,232 | 17,186 | ||
| Prepaid and other current assets | 9,216 | 7,928 | ||
| Total current assets | 387,849 | 433,360 | ||
| Property and equipment, net | 35,529 | 22,044 | ||
| Operating leases right-of-use assets | 34,689 | 17,993 | ||
| Intangible assets, net | 43,051 | 50,195 | ||
| Goodwill | 37,523 | 36,983 | ||
| Restricted cash | 522 | 211 | ||
| Other assets | 3,828 | 5,835 | ||
| Total assets | $ | 542,991 | $ | 566,621 |
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 9,942 | $ | 13,337 |
| Accrued compensation | 16,902 | 26,042 | ||
| Accrued and other liabilities | 49,131 | 37,922 | ||
| Total current liabilities | 75,975 | 77,301 | ||
| Deferred tax liability | — | 415 | ||
| Common stock warrant liability | 32 | 139 | ||
| Deferred payments for intangible assets | 2,418 | 5,041 | ||
| Operating lease liability, less current portion | 33,406 | 17,394 | ||
| Other liabilities | 249 | 455 | ||
| Total liabilities | 112,080 | 100,745 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Common stock | 52 | 52 | ||
| Additional paid-in capital | 898,806 | 853,683 | ||
| Accumulated other comprehensive loss | (7,503) | (4,670) | ||
| Accumulated deficit | (460,444) | (383,189) | ||
| Total stockholders’ equity | 430,911 | 465,876 | ||
| Total liabilities and stockholders’ equity | $ | 542,991 | $ | 566,621 |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Cost of testing services reconciliation: | ||||||||
| GAAP cost of testing services | $ | 18,657 | $ | 19,495 | $ | 72,286 | $ | 71,251 |
| Stock-based compensation expense | (474) | (643) | (1,529) | (2,358) | ||||
| Acquisition related-amortization of purchased intangibles | (329) | (329) | (1,316) | (1,316) | ||||
| Non-GAAP cost of testing services | $ | 17,854 | $ | 18,523 | $ | 69,441 | $ | 67,577 |
| Cost of product reconciliation: | ||||||||
| GAAP cost of product | $ | 4,617 | $ | 5,159 | $ | 17,639 | $ | 18,930 |
| Stock-based compensation expense | (269) | (133) | (1,120) | (579) | ||||
| Acquisition related-amortization of purchased intangibles | (411) | (471) | (1,716) | (1,905) | ||||
| Non-GAAP cost of product | $ | 3,937 | $ | 4,555 | $ | 14,803 | $ | 16,446 |
| Cost of patient and digital solutions reconciliation: | ||||||||
| GAAP cost of patient and digital solutions | $ | 6,216 | $ | 2,347 | $ | 22,287 | $ | 7,208 |
| Stock-based compensation expense | (449) | (173) | (1,331) | (728) | ||||
| Acquisition related-amortization of purchased intangibles | (236) | (226) | (945) | (684) | ||||
| Non-GAAP cost of patient and digital solutions | $ | 5,531 | $ | 1,948 | $ | 20,011 | $ | 5,796 |
| Research and development expenses reconciliation: | ||||||||
| GAAP research and development expenses | $ | 23,570 | $ | 22,046 | $ | 90,388 | $ | 76,525 |
| Stock-based compensation expense | (820) | (1,842) | (7,391) | (7,126) | ||||
| Asset impairments and write-downs | — | (2,418) | (340) | (2,418) | ||||
| Non-GAAP research and development expenses | $ | 22,750 | $ | 17,786 | $ | 82,657 | $ | 66,981 |
| Sales and marketing expenses reconciliation: | ||||||||
| GAAP sales and marketing expenses | $ | 23,668 | $ | 20,824 | $ | 96,027 | $ | 77,245 |
| Stock-based compensation expense | (4,701) | (2,743) | (14,403) | (10,887) | ||||
| Acquisition related-amortization of purchased intangibles | (550) | (547) | (2,252) | (1,891) | ||||
| Non-GAAP sales and marketing expenses | $ | 18,417 | $ | 17,534 | $ | 79,372 | $ | 64,467 |
| General and administrative expenses reconciliation: | ||||||||
| GAAP general and administrative expenses | $ | 24,776 | $ | 24,748 | $ | 100,397 | $ | 74,964 |
| Stock-based compensation expense | (5,413) | (3,964) | (20,779) | (14,403) | ||||
| Change in estimated fair value of contingent consideration | 103 | 574 | (727) | 609 | ||||
| Acquisition related fees and expenses | (212) | (262) | (599) | (1,127) | ||||
| Non-GAAP general and administrative expenses | $ | 19,254 | $ | 21,096 | $ | 78,292 | $ | 60,043 |
| Total other income (expense) reconciliation: | ||||||||
| GAAP other income (expense), net | $ | 964 | $ | (1,653) | $ | 997 | $ | (2,362) |
| Unrealized loss on investments | 965 | 1,576 | 1,181 | 1,743 | ||||
| Investment impairment | — | — | 500 | — | ||||
| Other charges | 11 | (1) | 43 | 148 | ||||
| Non-GAAP other income (expense), net | $ | 1,940 | $ | (78) | $ | 2,721 | $ | (471) |
| Income tax (expense) benefit reconciliation: | ||||||||
| GAAP income tax (expense) benefit | $ | (173) | $ | 901 | $ | (379) | $ | 1,426 |
| Tax effect related to amortization of purchased intangibles | (98) | (120) | (419) | (493) | ||||
| Non-GAAP income tax (expense) benefit | $ | (271) | $ | 781 | $ | (798) | $ | 933 |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Gross Profit and Gross Margin
(Unaudited)
(In thousands, except percentages)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Total revenue | $ | 82,384 | $ | 79,220 | $ | 321,793 | $ | 296,397 | ||||
| GAAP cost of sales | 29,490 | 27,001 | 112,212 | 97,389 | ||||||||
| GAAP gross profit | 52,894 | 52,219 | 209,581 | 199,008 | ||||||||
| Stock-based compensation expense | 1,192 | 949 | 3,980 | 3,665 | ||||||||
| Acquisition related-amortization of purchased intangibles | 976 | 1,026 | 3,977 | 3,905 | ||||||||
| Non-GAAP gross profit | $ | 55,062 | $ | 54,194 | $ | 217,538 | $ | 206,578 | ||||
| Non-GAAP gross margin % | 67 | % | 68 | % | 68 | % | 70 | % |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| GAAP net loss | $ | (18,329) | $ | (16,151) | $ | (76,613) | $ | (30,662) |
| Stock-based compensation expense | 12,126 | 9,498 | 46,553 | 36,081 | ||||
| Unrealized loss on investments | 965 | 1,576 | 1,181 | 1,743 | ||||
| Acquisition related-amortization of purchased intangibles | 1,526 | 1,573 | 6,229 | 5,796 | ||||
| Acquisition related fees and expenses | 212 | 262 | 599 | 1,127 | ||||
| Change in estimated fair value of contingent consideration | (103) | (574) | 727 | (609) | ||||
| Tax effect related to amortization of purchased intangibles | (98) | (120) | (419) | (493) | ||||
| Asset impairments and write-downs | — | 2,418 | 840 | 2,418 | ||||
| Other Charges | 11 | (1) | 43 | 148 | ||||
| Non-GAAP net (loss) income | $ | (3,690) | $ | (1,519) | $ | (20,860) | $ | 15,549 |
| GAAP basic and diluted net loss per share | $ | (0.34) | $ | (0.31) | $ | (1.44) | $ | (0.59) |
| Non-GAAP basic net (loss) income per share | $ | (0.07) | $ | (0.03) | $ | (0.39) | $ | 0.30 |
| Non-GAAP diluted net (loss) income per share | $ | (0.07) | $ | (0.03) | $ | (0.39) | $ | 0.29 |
| Shares used in computing non-GAAP basic net loss/income per share | 53,524,637 | 52,854,216 | 53,321,625 | 52,241,076 | ||||
| Shares used in computing non-GAAP diluted net loss/income per share | 53,524,637 | 52,854,216 | 53,321,625 | 54,410,979 |
CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Non-GAAP net (loss) income | $ | (3,690) | $ | (1,519) | $ | (20,860) | $ | 15,549 |
| Interest income | (1,870) | (13) | (3,762) | (160) | ||||
| Income tax expense (benefit) | 272 | (781) | 798 | (933) | ||||
| Depreciation expense | 1,682 | 860 | 5,248 | 2,739 | ||||
| Other (income) expense, net | (70) | 95 | 1,041 | 632 | ||||
| Adjusted EBITDA | $ | (3,676) | $ | (1,358) | $ | (17,535) | $ | 17,827 |
cdnaq4andfy2022earningsp
Leslie M, Kidney Transplant Recipient Focused on improving care across the entire transplant patient journey The Transplant Company™ Earnings Presentation Q4 and FY 2022
These slides and the accompanying oral presentation contain forward-looking statements, including statements with respect to expectations regarding CareDx’s upcoming milestones, vision and 2023 revenue guidance. All statements other than statements of historical fact contained in this presentation, including statements regarding the future financial position of CareDx, Inc. (together with its subsidiaries, “CareDx” or the “Company”), including financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. CareDx has based these forward- looking statements on its estimates and assumptions and its current expectations and projections about future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, all of which are difficult to predict and many of which are beyond the Company's control, including general economic and market factors, global economic and marketplace uncertainties related to the COVID-19 pandemic and those contained in the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that the Company has filed or may subsequently file with the U.S. Securities and Exchange Commission (the “SEC”). In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. CareDx undertakes no obligation to update publicly or revise any forward-looking statements for any reason after the date of this presentation or to conform these statements to actual results or to changes in CareDx’s expectations. These slides and the accompanying oral presentation contain certain non-GAAP financial measures, which are provided to assist in an understanding of the business and performance of CareDx. These measures should always be considered only as a supplement to, and not as superior to, financial measures prepared in accordance with GAAP. These non-GAAP financial measures are not necessarily comparable to similarly-titled measures presented by other companies. Please refer to the Appendix included in these slides for a reconciliation of the non-GAAP financial measures included in these slides and the accompanying oral presentation to the most directly comparable financial measures prepared in accordance with GAAP. Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data or undertakes any obligation to update such data after the date of this presentation. Such data involves risks and uncertainties and is subject to change based on various factors. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company. Safe Harbor Statement 2
Q4 Financial and Operational Highlights 3 (1) Shown on Non-GAAP basis, closest GAAP equivalents provided. Please refer to the Appendix included in these slides for a reconciliation of the non-GAAP financial measures included in these slides and the accompanying oral presentation to the most directly comparable financial measures prepared in accordance with GAAP. (2) Adjusted EBITDA = non-GAAP net income/(loss) before net interest income/(expense), income tax benefit, depreciation and amortization, and other income and expense. $293M Cash & Equivalents and Marketable Securities $7m Net cash provided by operating activities Authorized $50M Share Buyback Balance Sheet $82.4M Up 4% y/y $65.4M Testing Services $8.6M Products $8.4M Digital and Patient Solutions Revenue 47,700 Tests Up 2% sequentially and 14% y/y Volume Growth 64% GAAP 67% Adjusted1 73% Testing Services1 54% Products1 34% Digital and Patient Solutions1 Gross Margin Net Loss ($18.3M) Adjusted EBITDA ($3.7M) Profitability1,2
Infrastructure Built to Address Prior Authorizations and Denials/Appeals 2023 Focus On The Three C’s - Catalysts, Coverage, Collections 4 Drive Leadership into Solid Organ Transplants Pipeline Catalysts Leverage Best in Class Data and Clinical Utility and Guidelines Increasing Coverage Improving Collections
Key Pipeline Catalysts Proven stable platform Signature has not changed since discovery and NEJM. Other unstable approaches need to modify algorithm to fit current data Differentiated utility Rejection + BK Nephropathy Robust validation Clinical validation in multiple publications with NEJM as cornerstone Clinical value Complete solution for TCMR; early detection probability/ BKVN assessment Urine Tests Proven platform Built upon proven FDA cleared transplant gene-expression platform Differentiated utility Quantified result (versus yes/no) enables longitudinal use Robust validations Validated in multiple peer-reviewed publications Clinical value Results replicated in two independent large multi-center studies Immune Status Gene-Expression Source: Publications and data on file. 5
Artificial Intelligence (AI) Core Part of Pipeline Development AlloView Adds Another Layer of Utility to AlloSure Surveillance Prognostic algorithm Predictive algorithm Incorporates Source: Publications and data on file. 6
Strong Payor Coverage is Core Part of the Business Model 7 Patient Coverage Total Launch CMS Commercial (inc. MA) Current Coverage Strong Payor Coverage* AlloMap Heart 2005 ~25% >50% >75% AlloSure Kidney 2017 ~60% >10% >70% Early in Coverage Cycle* AlloSure Heart 2020 ~25% 1-5% ~25-30% AlloSure Lung 2021 NA** 1-5% ~1-5% Upcoming Catalysts AlloMap Kidney Pipeline NA*** NA NA UroMap Pipeline NA*** NA NA *Data on file, **Projected patient pool if covered by MolDx of 25%; *** Projected patient pool if covered by MolDx of 60%
Major Payor Coverage Opportunity in Heart: ISHLT Guidelines 8 AlloMap Heart AlloSure Heart HeartCare Earlier use from 6 months to 2 months Surveillance part of standard/routine testing Recognition of clinical studies New technology recognition Surveillance part of standard/routine testing Benefits vs biopsies Examples during COVID and beyond Source: ISHLT Guidelines; Team analysis
Record Cash Collection in Q4 2022 9 H1 2022 Investments in infrastructure scale are starting to show in the cash ramp collected especially in Q4 2022 2022 vs 2021 2022 Improving Qtr by Qtr Scaling infrastructure
Post Transplant Biomarkers1 Driving Leadership in the Ecosystem Building Blocks 10 Leadership across the patient journey Electronic Medical Records6 Quality & Analytics3 Transplant focused App4 Medication Discharge2 CareDx is #1 CareDx is #1 CareDx is #1 CareDx is #2 CareDx is #2 Over 100,000 transplant patients have received a CareDx post-transplant surveillance test NGS HLA Typing5 CareDx is #1 Transplant Patient Referrals7 CareDx is #1 1. 100K patients with CareDx biomarkers; 2. Based on number of centers with MAP; 3. Based on number of centers using XYN; 4. Based on number of downloads; 5. Data on file based on NGS revenue; 6. Based on number of centers with TransChart and OTTR EMRs; 7. Based on number of referrals in the system. >70K Patient Referrals >90 Tx Centers Highest NGS Typing Revenue Tx Centers >100K Patients Served >45 Tx Centers >65K Patient Downloads >90 SOT Tx Centers
-10% -5% 0% 5% 10% 15% 20% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23TD Transplant Volume % Growth - Quarter-over-Quarter 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Quarterly Transplant Volumes - Kidney/Heart/Lung COVID Impacted Recent Market Volume Trends Source: UNOS Monthly Extended time for Recovery 11
0 1000 2000 3000 4000 5000 6000 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 LD DD Kidney Transplant Recovery Driven by Deceased Donors Source: UNOS Weekly Pre-COVID up to Q1, 2020 COVID no Vaccines (Vx) Vx to Omicron Early Recovery Stages 12
Potential for Transplant Volume Expected to Double in 5-10 Years* Increased use of high-risk organs Increased and expanded use of organs through perfusion and improved transport Increased transplantation and post-transplant monitoring from the Advancing American Kidney Health Initiative across Tx Rebound in living donors which is still below pre-COVID levels in kidney New organ supply from xenotransplantation and re-cellularized organs Incremental Drivers of Market Growth in 5 Years+ 1 2 Return to historical high single digit growth post COVID 3 4 5 * Internal estimates based on drivers 13
14 Record Cash Collection in Q4 2022 H1 2022 Investments in infrastructure scale are starting to show in the cash ramp collected especially in Q4 2022 2022 vs 2021 2022 Improving Qtr by Qtr Scaling infrastructure
$- $1,000 $2,000 $3,000 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 All Paid Test ASP Trend (Testing Qtr) 15 Testing Services – ASP has not changed on Reimbursed Tests FLAT
Testing Services Payor Strategy to Increase Reimbursement Situation: Increasing mix of Commercial Patients from New Launches Strategy 16 % Commercial Volume Increase in payer mix + CN expansion + AlloSure Lung (ASL) ASH MA 52% End 2020 62% End 2021 2023 Plan+ AlloSure Heart (ASH) + Medicare Advantage (MA) 68% End 2022 Coverage and Guidelines Discussions with MolDx Focus on ISHLT Guidelines Improve Collections
Opportunity of >$20M Through Collections for Medicare Advantage Claims 17 Medicare Advantage Claims Opportunity (unpaid claims) as Collections Improve. No Coverage Needed. $- $10.0 $20.0 $30.0 FY20 FY21 FY22 Medicare Advantage - Potential Revenue/Cash Revenue potential @$2500 ASP
2023 Revenue Guidance of $328-$338 Million* 18 2023 Guidance Assumptions 1. No contribution from catalysts 2. No new major payor coverage 3. No change in reimbursement on paid tests of ~$2,500 4. Low teens Testing Services volume growth 5. Low double-digit decline in overall ASP *As of February 27, 2023.
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Appendix 20
Reconciliation of Non-GAAP Gross Margin FY 2018 FY 2019 FY 2020 FY 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Revenue 76.6 127.1 192.2 296.4 79.2 79.4 80.6 79.4 82.4 321.8 GAAP Cost of Revenue 33.0 45.5 63.1 97.4 27.0 26.9 27.5 28.3 29.5 112.2 GAAP Gross Profit 43.6 81.6 129.1 199.0 52.2 52.5 53.1 51.1 52.9 209.6 GAAP Gross Margin % 57% 64% 67% 67% 66% 66% 66% 64% 64% 65% Non-GAAP Expense: Stock-based compensation expense (0.8) (2.2) (2.3) (3.7) (0.9) (0.4) (1.4) (1.1) (1.2) (4.0) Acquisition related amortization of purchased intangibles (2.2) (2.4) (3.3) (3.9) (1.0) (1.0) (1.0) (1.0) (1.0) (4.0) Non-GAAP Cost of Revenue 30.0 40.9 57.5 89.8 25.0 25.5 25.2 26.2 27.3 104.3 Non-GAAP Gross Profit 46.6 86.3 134.7 206.6 54.2 53.9 55.5 53.1 55.1 217.5 Non-GAAP Gross Margin % 61% 68% 70% 70% 68% 68% 69% 67% 67% 68% in Millions (except %)
Reconciliation of Adjusted EBITDA