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): January 9, 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) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Exchange Act:
| (Title of each class) | (Trading<br> <br>Symbol) | (Name of exchange<br> <br>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 January 9, 2023, CareDx, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the quarter and year ended December 31, 2022. 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 (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 7.01 | Regulation FD Disclosure. |
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The Company is furnishing an updated corporate presentation, attached as Exhibit 99.2 to this Current Report on Form 8-K (the “Corporate Presentation”), which the Company intends to post on the Company’s website. The Corporate Presentation is current as of January 9, 2023, and the Company disclaims any obligation to update this material in the future.
The information in this Item 7.01, including the Corporate Presentation attached hereto as Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of 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 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. |
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(d) Exhibits.
| Exhibit<br> <br>No. | Description |
|---|---|
| 99.1 | Press Release issued by CareDx, Inc., dated January 9, 2023. |
| 99.2 | Corporate Presentation of CareDx, Inc., dated January 2023. |
| 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: January 9, 2023 | CAREDX, INC. | |
|---|---|---|
| By: | /s/ Abhishek Jain | |
| Abhishek Jain | ||
| Chief Financial Officer |
EX-99.1
Exhibit 99.1
CareDx Reports Preliminary Revenue Results for Fourth Quarter and Full Year 2022
BRISBANE, Calif., January 9, 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 preliminary financial results for the fourth quarter and full year ended December 31, 2022.
Fourth Quarter Highlights
| • | Delivered record revenues; expected to be between $81.9 million to $82.2 million, representing<br>year-over-year growth of approximately 4% |
|---|---|
| • | Achieved highest ever cash collections at 110% of revenue for testing services, representing an approximately 10%<br>year-over-year increase demonstrating strong operational progress on this key initiative |
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| • | Grew patient test results approximately 14% year-over-year with approximately 47,700 tests. Q4 test volume<br>included approximately 2,300 tests for AlloSure^®^ Lung |
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| • | Announcement of the new International Society of Heart and Lung Transplantation (ISHLT) guidelines supported the<br>expanded use of CareDx’s HeartCare solutions, AlloMap^®^ and now AlloSure, in routine monitoring of heart transplant patients |
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| • | Commenced authorized share buyback program of up to $50 million. Program demonstrates Board of<br>Directors’ and management’s confidence in the business, cash position and long-term growth opportunities. |
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| • | Maintained strong balance sheet with approximately $292 million cash, cash equivalents, and marketable<br>securities, and no debt |
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Full Year 2022 Highlights
| • | Revenue expected to be in the range of $321.3 million to $321.6 million representing year-over-growth<br>of approximately 8% |
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Preliminary revenue for the three months ended December 31, 2022, is expected to be between $81.9 million and $82.2 million, an increase of approximately 4% compared with $79.2 million in the fourth quarter of 2021. Testing services revenue for the quarter is expected to be between $64.9 million to $65.2 million, compared with $68.6 million in the same period in 2021. Total AlloSure and AlloMap patient results provided in the quarter were approximately 47,700, including approximately 2,300 AlloSure Lung patient results. Product revenue in the three months ended December 31, 2022, is expected to be $8.5 million, compared to $7.7 million in the same period in 2021. Patient and digital solutions revenue in the fourth quarter of 2022 is expected to be $8.5 million, compared to $2.9 million in the same period in 2021.
Preliminary revenue for the full year ended December 31, 2022, is expected to be between $321.3 million and $321.6 million, an increase of approximately 8% compared with $296.4 million in 2021. Testing services revenue for the year ended December 31, 2022, is expected to be between $263.2 million to $263.5 million, compared with $259.3 million in 2021. Product revenue for the full year 2022 is expected to be $29.3 million, compared to $26.8 million in 2021. Patient and digital solutions revenue for the full year 2022 is expected to be $28.8 million, compared to $10.3 million in 2021.
Preliminary cash, cash equivalents, and marketable securities were approximately $292 million as of December 31, 2022.
“We are excited by the year ahead, as we ended the year with our highest ever revenue quarter and are on track towards delivering adjusted EBITDA profitability in H1, 2023,” said Reg Seeto, CEO and President of CareDx. “We also ended the year with strong testing volumes, a record collections quarter for testing services in Q4 at 110% of its revenues, and will build on this momentum in 2023 as we focus on driving growth through the 3 C’s – pipeline catalysts, increased collections, and expansion of coverage across the portfolio.”
The preliminary financial information presented in this press release is based on CareDx’s current expectations and may be adjusted as a result of, among other things, the completion of customary annual audit procedures. CareDx will report fourth quarter and full year 2022 financial results and anticipates providing 2023 financial guidance on its February 2023 earnings call.
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, including expectations regarding CareDx’s fourth quarter and full year 2022 revenue, number of patient results, and cash, cash equivalents, and marketable securities as of December 31, 2022, achievement of its financial and operational goals, its prospects in 2023, and its anticipation to report 2022 financial results and provide 2023 financial guidance on its February 2023 earnings call. 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 the completion of the audit of CareDx’s 2022 financial statements, 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 the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed by CareDx with the SEC on February 24, 2022,
the quarterly report on Form 10-Q for the first quarter of 2022 ended on March 31, 2022 filed by CareDx with the SEC on May 5, 2022, the quarterly report on Form 10-Q for the second quarter of 2022 ended on June 30, 2022 filed by CareDx with the SEC on August 4, 2022, the quarterly report on Form 10-Q for the third quarter of 2022 ended on September 30, 2022, filed by CareDx with the SEC on November 3, 2022, and other reports that CareDx has 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.
CONTACTS:
CareDx, Inc. Media Relations
Anna Czene
818-731-2203
aczene@caredx.com
Investor Relations
Ian Cooney
(415) 722-4563
investor@CareDx.com
EX-99.2
Focused on improving care across the entire transplant patient journey The Transplant Company™ Corporate Presentation: January 2023 Exhibit 99.2
Safe Harbor Statement These slides and the accompanying oral presentation contain forward-looking statements. 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, including 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. 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.
Our Mission We are committed to improving long-term outcomes by providing innovative solutions throughout the entire transplant patient journey Our Vision The leading partner for the transplant ecosystem Your Partner in Transplant Care
Vision: The Leading Partner Across Transplant Centers Example: US Centers Clinical Partnerships** Deep Center Penetration* Leadership Indicators** KIDNEY 70+ KOAR/OKRA Centers 75%+ Centers Using AlloSure 1 in 3 Newly Transplanted Patients HEART 60+ SHORE Centers 90%+ Centers Using HeartCare > 1 in 2 Newly Transplanted Patients * Center penetration based on UNOS listed transplant centers in 2022; does not include non-transplant hospitals: **Data on file. 15+ ALAMO Centers/ Investigator Initiated Trials >60% Centers Using AlloSure 1 in 4 Newly Transplanted Patients LUNG
Mission: Connecting the Transplant Patient Journey Example: Kidney Patient Pre-Transplant Dialysis Referral / Waitlist for Tx High Resolution HLA matching Digital Products Peri-Tx Products Post-Transplant Surveillance “Liquid Biopsy” dd-cfDNA “AI” Risk Prediction Gene Expression Profiling (GEP) In Development Testing Services Digital Offerings Electronic Medical Records Quality Management Patient Care Medication Key Products # of Centers >90 >40 >100 Digital Platform Source: Data on file.
Strategy 1: Build Deep Ecosystem Moat Around Transplant Centers TRANSPLANT CENTERS TRANSPLANT ECOSYSTEM RemoTraC® Phlebotomy Field Lab Service Team (FLSR) 3 Community Nephrology Team Transplant Account Specialists (TAS) 2 “We are 100% Transplant Focused. Always. ” Transplant Coordinator Assistants Patient Care Management Team 6 Transplant Account Manager (TAM) Medical Science Liaison (MSL) 1 1 5 Connecting with dialysis centers EMR Solutions 4
Post Transplant Biomarkers1 Strategy 2: Build Leadership in the Ecosystem Building Blocks 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 number of centers using NGS; 6. Based on number of centers with TransChart and OTTR EMRs; 7. Based on number of referrals in the system.
Grow Testing Services Business $4B+ (Kidney, Heart), $1B+ (Liver, Lung) ~$5B+ TAM* Expand Testing Products Business AlloSeq (cfDNA, Tx17, HCT) franchise ~$1B+ TAM* Establish the Digital Business AlloCare®, MedActionPlan®, Ottr®, XynQAPI®, XynCare®, TransChart®, Tx Access™, TxHero ~$1B+ TAM* $12B+ TAM* ~$5B+ TAM* Build Pharma Partner Business With AlloSeq, AlloCell™, AlloHeme™… Strategy 3: Build Across Multiple Transplants TAMs Long-Term Plan * Market sizing based on CareDx internal analysis
Grow Beyond AlloMap Be All Things Transplant Develop Multiple Innovation Platforms Solid Organ Stem Cell Cell Transplant Therapy 2016 - 2020 2021 - 2025 2026 - Beyond CareDx’s Overall Strategic Roadmap: Be All Things Transplant Expand from the Center Advance Next Wave of Innovations Build other business lines
COVID Impacted Recent Market Volume Trends Source: UNOS Monthly Extended time for Recovery
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
Potential for Transplant Volume Expected to Double in 5-10 Years* Drivers of Market Growth in 5 years+ Return to historical high single digit growth post COVID Incremental drivers Increase use of high risk and marginal organs Increase organs with perfusion and improved transport and tracking Increase transplants and post transplant from new Government Kidney Initiatives across Tx Rebound in living donors which is still below pre-COVID levels in Kidney * Internal estimates based on drivers
Q4, 2022 Financial and Operational Highlights Common stock buy back started Up to $50M approved over 2 years Financial Strength 47,700 Tests Up 3% sequentially and 14% y/y Volume Growth $81.9-82.2M Up ~4% y/y Collections improving Revenues and collections ISHLT Guidelines published Support for AlloMap and AlloSure Heart Coverage AMK and ASL in MolDx process UroMap On track AI Pipeline Focus Catalysts
Continued Focus on Gross Margin Improvement Target GAAP Gross Margin: FY21 = 67%, and YTD Q3, 2022 =65% Non-GAAP Gross Margin* FY21 = 70%, and YTD Q3, 2022 =68% ~70% FY 2021 ~68% YTD Q3, 2022 75%+ Testing Volume Lab Automation Private Payer Reimbursement Multi-modality Reimbursement Tx Pharmacy Acquisition *Non-GAAP measures shown have been adjusted for certain items that are described in the Appendix
2023 Focus On The Three C’s - Catalysts, Coverage, Collections Drive Leadership into Solid Organ Transplants Pipeline Catalysts Leverage Best in Class Data and Clinical Utility and Guidelines Increasing Coverage Infrastructure built to address prior authorizations and denials/ appeals Improving Collections
Key Pipeline Catalysts Proven stable platform Signature has to be 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
Artificial Intelligence (AI) Core Part of Pipeline Development AlloView Adds Another layer of Utility to AlloSure Surveillance Prognostic algorithm (integrated >10 centers) Predictive algorithm (Integrated >10 centers) Incorporates Source: Publications and data on file
2023 Focus On The Three C’s - Catalysts, Coverage, Collections Drive Leadership into Solid Organ Transplants Pipeline Catalysts Leverage Best in Class Data and Clinical Utility and Guidelines Increasing Coverage Infrastructure built to address prior authorizations and denials/ appeals Improving Collections
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 % 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) 67% Q3, 2022 Coverage and Guidelines Discussions with MolDx Focus on ISHLT Guidelines Improve Collections
Significant Opportunity from Increased Coverage with Non-Reimbursed Tests (of > $180M*) *potential opportunity based on ASP of $2500 on all unpaid tests; ** Estimated >$180M
Strong Payor Coverage is Core Part of the Business Model 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 *Projected patient pool if covered by MolDx of 25%; ** Projected patient pool if covered by MolDx of 60%; the remainder would be commercial pool
2023 Focus On The Three C’s - Catalysts, Coverage, Collections Drive Leadership into Solid Organ Transplants Pipeline Catalysts Leverage Best in Class Data and Clinical Utility and Guidelines Increasing Coverage Infrastructure built to address prior authorizations and denials/ appeals Improving Collections
Record Cash Collection in Q4,2022 Primarily driven by Commercial Payers H1, 2022 Investments in infrastructure scale are starting to show in the cash ramp collected esp. in Q4, 2022 2022 vs 2021 2022 Improving Qtr by Qtr Scaling infrastructure
2023 Summary Potential milestones Path to adjusted EBITDA profitability in H1 Ongoing adjusted EBITDA profitability in H2 Catalysts Potential launches: AlloMap Kidney and UroMap Coverage Lung: MolDx discussions Heart: Start ISHLT guidelines pull through (H1) and ramp in H2 Kidney: Work on Kidney Guidelines, publications, data for coverage and Continue ramp of regional Kidney plans Collections Commercial Collections key focus for pull through with new coverage Commercial Collection catch up with Medicare Advantage Collections
Appendix
Reconciliation of Non-GAAP Gross Margin FY 2018 FY 2019 FY 2020 FY 2021 Q1 2022 Q2 2022 Q3 2022 Revenue 76.6 127.1 192.2 296.4 79.4 80.6 79.4 GAAP Cost of Revenue 33.0 45.5 63.1 97.4 26.9 27.5 28.3 GAAP Gross Profit 43.6 81.6 129.1 199.0 52.5 53.1 51.1 GAAP Gross Margin % 57% 64% 67% 67% 66% 66% 64% Non-GAAP Expense: Stock-based compensation expense (0.8) (2.2) (2.3) (3.7) (0.4) (1.4) (1.1) Acquisition related amortization of purchased intangibles (2.2) (2.4) (3.3) (3.9) (1.0) (1.0) (1.0) Non-GAAP Cost of Revenue 30.0 40.9 57.5 89.8 25.5 25.2 26.2 Non-GAAP Gross Profit 46.6 86.3 134.7 206.6 53.9 55.5 53.1 Non-GAAP Gross Margin % 61% 68% 70% 70% 68% 69% 67% in Millions (except %)