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): April 30, 2020
CAREDX, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-36536 | 94-3316839 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
1 Tower Place
South San Francisco, California 94080
(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 each 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 April 30, 2020, CareDx, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including the press release attached hereto as Exhibit 99.1, is 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 April 30, 2020. |
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: April 30, 2020 | CAREDX, INC. | |
|---|---|---|
| By: | /s/ Michael Bell | |
| Michael Bell | ||
| Chief Financial Officer |
Document
Exhibit 99.1
CareDx Reports First Quarter 2020 Results
Strategically positioned for long-term growth and success
SOUTH SAN FRANCISCO, CA, April 30, 2020 -- CareDx, Inc. (Nasdaq: CDNA), a leading precision medicine 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 quarter ended March 31, 2020.
First Quarter 2020 and Recent Highlights:
•Achieved total revenue of $38.4 million for the three months ended March 31, 2020, increasing 48% year-over-year
•Provided over 15,000 AlloSure Kidney and AlloMap Heart patient results
•Recorded seventh straight quarter of positive adjusted EBITDA
•Strengthened balance sheet by increasing cash to approximately $80 million
•Successfully introduced RemoTraC, a service to provide at-home blood draws for transplant patients
“We are very pleased with our first quarter results, which reflect strong execution and the continued growth and penetration of our innovative and intelligent solutions for transplant patients and caregivers,” said Peter Maag, CareDx Chief Executive Officer. “Throughout this unprecedented time, our team has shown unrelenting dedication to transforming transplant care and ensuring that foundationally we remain strong and well-positioned for continuous growth.”
First Quarter 2020 Financial Results
Revenue for the three months ended March 31, 2020 was $38.4 million, compared with $26.0 million in the first quarter of 2019. Testing services revenue for the first quarter was $31.4 million, compared with $21.5 million in the same period of 2019. Product revenue in the three months ended March 31, 2020 was $4.7 million, compared to $4.4 million in the same period of 2019. Digital and other revenue for the first quarter 2020 was $2.2 million, reflecting our acquisitions of OTTR and XynManagement.
For the first quarter of 2020, the net loss was $5.8 million compared to a net loss of $7.5 million in the same period of 2019. Basic and diluted net loss per share was $0.14 in the first quarter of 2020, compared to basic and diluted net loss per share of $0.18 in the first quarter of 2019.
Non-GAAP net income was $0.2 million in the first quarter of 2020 compared to $2.2 million non-GAAP net income in the first quarter of 2019. Basic and diluted non-GAAP net income per share was approximately $0.00 in the first quarter of 2020, compared to a basic and diluted non-GAAP net income per share of $0.05 in the first quarter of 2019.
Adjusted EBITDA for the first quarter of 2020 was a gain of $0.2 million, compared to an adjusted EBITDA gain of $1.8 million in the first quarter of 2019.
Cash and cash equivalents were $32.2 million as of March 31, 2020. During April 2020, cash increased by $48.8 million through our At-the-Market Equity Offering Program, the expanded CMS Accelerated and Advance Payment Program and the CARES Act Relief Fund for Medicare Providers.
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 GAAP to Non-GAAP Adjusted EBITDA Financial Measures” below.
2020 Guidance
Due to the continued uncertainties from the impact of COVID-19, CareDx withdrew its 2020 guidance on April 8, 2020.
About CareDx
CareDx, Inc., headquartered in South San Francisco, 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, including expectations regarding the 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, 2019 filed by CareDx with the SEC on February 28, 2020 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 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 net income, non-GAAP basic and diluted net income per share and adjusted EBITDA. We define non-GAAP net income and per share results as the GAAP net income 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.
Investor Relations Contact
Greg Chodaczek
347-620-7010
investor@caredx.com
CareDx, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Revenue: | ||||
| Testing services revenue | $ | 31,442 | $ | 21,518 |
| Product revenue | 4,695 | 4,433 | ||
| Digital and other revenue | 2,243 | 31 | ||
| Total revenue | 38,380 | 25,982 | ||
| Cost of revenue | 12,392 | 9,733 | ||
| Gross profit | 25,988 | 16,249 | ||
| Operating expenses: | ||||
| Research and development | 10,013 | 5,614 | ||
| Sales and marketing | 11,723 | 6,925 | ||
| General and administrative | 10,003 | 9,106 | ||
| Total operating expenses | 31,739 | 21,645 | ||
| Loss from operations | (5,751) | (5,396) | ||
| Other income (expense): | ||||
| Interest income, net | 96 | 342 | ||
| Change in estimated fair value of common stock warrant liability | (405) | (3,009) | ||
| Other expense, net | (63) | (74) | ||
| Total other expense | (372) | (2,741) | ||
| Loss before income taxes | (6,123) | (8,137) | ||
| Income tax benefit | 300 | 606 | ||
| Net loss | $ | (5,823) | $ | (7,531) |
| Net loss per share: | ||||
| Basic | $ | (0.14) | $ | (0.18) |
| Diluted | $ | (0.14) | $ | (0.18) |
| Weighted-average shares used to compute net loss per share: | ||||
| Basic | 42,823,427 | 41,611,399 | ||
| Diluted | 42,823,427 | 41,611,399 |
CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
| As of March 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 32,191 | $ | 38,223 |
| Accounts receivable | 22,841 | 24,057 | ||
| Inventory | 6,947 | 6,014 | ||
| Prepaid and other current assets | 4,089 | 3,628 | ||
| Total current assets | 66,068 | 71,922 | ||
| Property and equipment, net | 5,501 | 4,430 | ||
| Operating leases right-of-use assets | 17,004 | 4,730 | ||
| Intangible assets, net | 43,112 | 45,541 | ||
| Goodwill | 23,857 | 23,857 | ||
| Restricted cash | 242 | 256 | ||
| Other assets | 1,000 | 1,000 | ||
| Total assets | $ | 156,784 | $ | 151,736 |
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 6,621 | $ | 5,506 |
| Accrued compensation | 6,127 | 12,484 | ||
| Accrued and other liabilities | 15,576 | 16,838 | ||
| Total current liabilities | 28,324 | 34,828 | ||
| Deferred tax liability | 1,502 | 1,973 | ||
| Common stock warrant liability | 1,017 | 6,607 | ||
| Deferred payments for intangible assets | 5,311 | 5,207 | ||
| Operating lease liability, less current portion | 17,503 | 2,370 | ||
| Other liabilities | 1,743 | 1,751 | ||
| Total liabilities | 55,400 | 52,736 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Common stock | 42 | 42 | ||
| Additional paid-in capital | 447,888 | 437,976 | ||
| Accumulated other comprehensive loss | (6,910) | (5,205) | ||
| Accumulated deficit | (339,636) | (333,813) | ||
| Total stockholders’ equity | 101,384 | 99,000 | ||
| Total liabilities and stockholders’ equity | $ | 156,784 | $ | 151,736 |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Net loss per share | $ | (5,823) | $ | (7,531) |
| Stock-based compensation expense | 4,259 | 6,053 | ||
| Acquisition related-amortization of purchased intangibles | 1,149 | 736 | ||
| Change in estimated fair value of contingent consideration | 190 | — | ||
| Change in estimated fair value of common stock warrant liability | 405 | 3,009 | ||
| Accretion of liability | 104 | — | ||
| Tax effect related to amortization of purchased intangibles | (120) | (123) | ||
| Acquisition-related amortization of inventory valuation adjustment | — | 18 | ||
| Non-GAAP net income | $ | 164 | $ | 2,162 |
| GAAP basic and diluted net loss per share | $ | (0.14) | $ | (0.18) |
| Non-GAAP basic net income per share | $ | 0.00 | $ | 0.05 |
| Non-GAAP diluted net income per share | $ | 0.00 | $ | 0.05 |
| Shares used in computing non-GAAP basic net income per share | 42,823,427 | 41,611,399 | ||
| Shares used in computing non-GAAP diluted net income per share | 43,606,998 | 43,975,282 |
CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Non-GAAP net income | $ | 164 | $ | 2,162 |
| Interest income | (96) | (342) | ||
| Income tax benefit | (180) | (483) | ||
| Depreciation expense | 367 | 407 | ||
| Other (income) expense, net | (41) | 74 | ||
| Adjusted EBITDA | $ | 214 | $ | 1,818 |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, 2020 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue | Cost of revenue | Research and development | Sales and marketing | General and administrative | Total other income (expense) | Income tax benefit (expense) | Net income (loss) | |||||||||
| GAAP | $ | 38,380 | $ | 12,392 | $ | 10,013 | $ | 11,723 | $ | 10,003 | $ | (372) | $ | 300 | $ | (5,823) |
| Non-GAAP adjustments: | ||||||||||||||||
| Stock-based compensation expense | (365) | (810) | (971) | (2,113) | 4,259 | |||||||||||
| Acquisition related-amortization of purchased intangibles | (792) | (357) | 1,149 | |||||||||||||
| Change in estimated fair value of contingent consideration | (190) | 190 | ||||||||||||||
| Change in estimated fair value of common stock warrant liability | 405 | 405 | ||||||||||||||
| Accretion of liability | 104 | 104 | ||||||||||||||
| Tax effect related to amortization of purchased intangibles | (120) | (120) | ||||||||||||||
| Non-GAAP | $ | 38,380 | $ | 11,235 | $ | 9,203 | $ | 10,395 | $ | 7,700 | $ | 137 | $ | 180 | $ | 164 |
| Three Months Ended March 31, 2019 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Total revenue | Cost of revenue | Research and development | Sales and marketing | General and administrative | Total other income (expense) | Income tax benefit (expense) | Net income (loss) | |||||||||
| GAAP | $ | 25,982 | $ | 9,733 | $ | 5,614 | $ | 6,925 | $ | 9,106 | $ | (2,741) | $ | 606 | $ | (7,531) |
| Non-GAAP adjustments: | ||||||||||||||||
| Stock-based compensation expense | (776) | (832) | (727) | (3,718) | 6,053 | |||||||||||
| Acquisition related-amortization of purchased intangibles | (472) | (264) | 736 | |||||||||||||
| Change in estimated fair value of common stock warrant liability | 3,009 | — | 3,009 | |||||||||||||
| Tax effect related to amortization of purchased intangibles | (123) | (123) | ||||||||||||||
| Acquisition-related amortization of inventory valuation adjustment | (18) | 18 | ||||||||||||||
| Non-GAAP | $ | 25,982 | $ | 8,467 | $ | 4,782 | $ | 5,934 | $ | 5,388 | $ | 268 | $ | 483 | $ | 2,162 |