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): November 3, 2022
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 November 3, 2022, CareDx, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 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 November 3, 2022. |
| 99.2 | Q3 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: November 3, 2022 | CAREDX, INC. | |
|---|---|---|
| By: | /s/ Abhishek Jain | |
| Abhishek Jain | ||
| Chief Financial Officer |
Document
Exhibit 99.1
CareDx Reports Third Quarter 2022 Results
BRISBANE, Calif., November 3, 2022 -- 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 third quarter ended September 30, 2022.
Recent Highlights:
•On track to achieve profitable growth with positive adjusted EBITDA by first half of 2023
•Delivered 46,500 patient test results, representing growth of 15% compared to third quarter of 2021
•Achieved revenue of $79.4 million, increasing 5% year-over-year
•Sustained strong testing services GAAP gross margin of 73% and non-GAAP gross margin of 74%
•Strong balance sheet with $291 million cash, cash equivalents, marketable securities, and no debt
•Served 100,000th transplant patient, representing one out of ten patients transplanted in the U.S.
"We made significant progress during the third quarter as we worked towards delivering on our commitment to be adjusted EBITDA positive by the first half of next year,” said Reg Seeto, President and Chief Executive Officer of CareDx. "Importantly, we have many upcoming revenue growth drivers including commercial, regulatory and coverage catalysts over the next 12-18 months that will create long-term value for our stockholders while improving the lives of transplant patients."
Third Quarter 2022 Financial Results
Revenue for the three months ended September 30, 2022 was $79.4 million, an increase of 5% compared with $75.6 million in the third quarter of 2021. Testing services revenue for the third quarter of 2022 was $64.8 million, compared with $66.5 million in the same period of 2021. Product revenue in the three months ended September 30, 2022 was $7.2 million, compared to $6.5 million in the same period of 2021. Patient and digital solutions revenue for the third quarter of 2022 was $7.4 million, compared to $2.6 million in the same period of 2021.
For the third quarter of 2022, net loss was $16.9 million compared to a net loss of $11.9 million in the same period of 2021. Basic and diluted net loss per share was $0.32 in the third quarter of 2022, compared to basic and diluted net loss per share of $0.23 in the third quarter of 2021.
Non-GAAP net loss was $3.4 million in the third quarter of 2022 compared to a $4.0 million non-GAAP net income in the third quarter of 2021. Diluted non-GAAP net loss per share was $0.06 in the third quarter of 2022, compared to a diluted non-GAAP net income per share of $0.07 in the third quarter of 2021.
Adjusted EBITDA for the third quarter of 2022 was a loss of $2.5 million, compared to an adjusted EBITDA gain of $4.7 million in the third quarter of 2021.
Cash, cash equivalents and marketable securities were $291.3 million as of September 30, 2022.
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.
2022 Guidance
For the full year 2022, CareDx is revising our revenue expectations to be in the range of $320 million to $325 million due to lower Q3 revenue and a higher than anticipated shift in payer mix to commercial payors.
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, patient and digital 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 2022 revenue and achieving positive adjusted EBITDA by first half of 2023 and the potential for commercial, regulatory and coverage catalysts over the next 12-18 months to create long-term value for CareDx's stockholders. 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, 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 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, 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 gross margin, non-GAAP net income/(loss), non-GAAP basic and diluted net income/(loss) per share and adjusted EBITDA. We define non-GAAP net income/(loss) and per share results as the GAAP net income (loss) and per share results excluding the impacts of stock-based compensation; changes in fair value of equity investments, 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 non-GAAP gross margin as total revenue less non-GAAP cost of revenue over total revenue. Cost of revenue is defined as the sum of cost of testing, cost of product and cost of patient and digital solutions. We define adjusted EBITDA as non-GAAP net income/(loss) before net interest income/(expense), income tax benefit, depreciation and amortization, and other income and expense. We are presenting these non-GAAP financial measures to assist investors in assessing our operating results through the eyes of management and because we believe that these measures provide an additional tool for investors to use in comparing our core business operating results over multiple periods. Management believes this non-GAAP information is useful for investors, when considered in conjunction with CareDx’s GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of CareDx’s operating results as reported under GAAP. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not necessarily comparable to similarly-titled measures presented by other companies. A reconciliation between GAAP and non-GAAP financial information is provided immediately following the financial tables.
Contacts
Investor Relations
Ian Cooney
415-722-4563
investor@CareDx.com
CareDx, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenue: | ||||||||
| Testing services revenue | $ | 64,751 | $ | 66,464 | $ | 198,330 | $ | 190,635 |
| Product revenue | 7,194 | 6,521 | 20,696 | 19,160 | ||||
| Patient and digital solutions revenue | 7,414 | 2,604 | 20,383 | 7,382 | ||||
| Total revenue | 79,359 | 75,589 | 239,409 | 217,177 | ||||
| Operating expenses: | ||||||||
| Cost of testing services | 17,771 | 18,038 | 53,629 | 51,756 | ||||
| Cost of product | 4,736 | 4,919 | 13,022 | 13,771 | ||||
| Cost of patient and digital solutions | 5,794 | 1,879 | 16,071 | 4,861 | ||||
| Research and development | 22,306 | 19,439 | 66,818 | 54,479 | ||||
| Sales and marketing | 22,261 | 21,370 | 72,359 | 56,421 | ||||
| General and administrative | 23,830 | 18,671 | 75,621 | 50,216 | ||||
| Total operating expenses | 96,698 | 84,316 | 297,520 | 231,504 | ||||
| Loss from operations | (17,339) | (8,727) | (58,111) | (14,327) | ||||
| Other income (expense): | ||||||||
| Interest income, net | 1,225 | 20 | 1,892 | 147 | ||||
| Change in estimated fair value of common stock warrant liability | 14 | 88 | 89 | 50 | ||||
| Other expense, net | (572) | (3,440) | (1,948) | (906) | ||||
| Total other income (expense) | 667 | (3,332) | 33 | (709) | ||||
| Loss before income taxes | (16,672) | (12,059) | (58,078) | (15,036) | ||||
| Income tax (expense) benefit | (267) | 162 | (206) | 525 | ||||
| Net loss | $ | (16,939) | $ | (11,897) | $ | (58,284) | $ | (14,511) |
| Net loss per share: | ||||||||
| Basic | $ | (0.32) | $ | (0.23) | $ | (1.09) | $ | (0.28) |
| Diluted | $ | (0.32) | $ | (0.23) | $ | (1.09) | $ | (0.28) |
| Weighted-average shares used to compute net loss per share: | ||||||||
| Basic | 53,489,418 | 52,681,451 | 53,253,210 | 52,034,450 | ||||
| Diluted | 53,489,418 | 52,681,451 | 53,253,210 | 52,034,450 |
CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
| September 30, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 82,959 | $ | 348,485 |
| Marketable securities | 208,317 | — | ||
| Accounts receivable | 70,425 | 59,761 | ||
| Inventory | 18,086 | 17,186 | ||
| Prepaid and other current assets | 8,370 | 7,928 | ||
| Total current assets | 388,157 | 433,360 | ||
| Property and equipment, net | 34,049 | 22,044 | ||
| Operating leases right-of-use assets | 35,843 | 17,993 | ||
| Intangible assets, net | 43,855 | 50,195 | ||
| Goodwill | 37,523 | 36,983 | ||
| Restricted cash | 198 | 211 | ||
| Other assets | 4,886 | 5,835 | ||
| Total assets | $ | 544,511 | $ | 566,621 |
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 10,625 | $ | 13,337 |
| Accrued compensation | 14,312 | 26,042 | ||
| Accrued and other liabilities | 45,351 | 37,922 | ||
| Total current liabilities | 70,288 | 77,301 | ||
| Deferred tax liability | 13 | 415 | ||
| Common stock warrant liability | 50 | 139 | ||
| Deferred payments for intangible assets | 2,522 | 5,041 | ||
| Operating lease liability, less current portion | 34,708 | 17,394 | ||
| Other liabilities | 251 | 455 | ||
| Total liabilities | 107,832 | 100,745 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Common stock | 52 | 52 | ||
| Additional paid-in capital | 886,909 | 853,683 | ||
| Accumulated other comprehensive loss | (8,809) | (4,670) | ||
| Accumulated deficit | (441,473) | (383,189) | ||
| Total stockholders’ equity | 436,679 | 465,876 | ||
| Total liabilities and stockholders’ equity | $ | 544,511 | $ | 566,621 |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands)
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Cost of testing services reconciliation: | ||||||||
| GAAP cost of testing services | $ | 17,771 | $ | 18,038 | $ | 53,629 | $ | 51,756 |
| Stock-based compensation expense | (470) | (750) | (1,055) | (1,715) | ||||
| Acquisition related-amortization of purchased intangibles | (329) | (329) | (987) | (987) | ||||
| Non-GAAP cost of testing services | $ | 16,972 | $ | 16,959 | $ | 51,587 | $ | 49,054 |
| Cost of product reconciliation: | ||||||||
| GAAP cost of product | $ | 4,736 | $ | 4,919 | $ | 13,022 | $ | 13,771 |
| Stock-based compensation expense | (321) | (156) | (851) | (446) | ||||
| Acquisition related-amortization of purchased intangibles | (416) | (480) | (1,305) | (1,434) | ||||
| Non-GAAP cost of product | $ | 3,999 | $ | 4,283 | $ | 10,866 | $ | 11,891 |
| Cost of patient and digital solutions reconciliation: | ||||||||
| GAAP cost of patient and digital solutions | $ | 5,794 | $ | 1,879 | $ | 16,071 | $ | 4,861 |
| Stock-based compensation expense | (299) | (217) | (882) | (555) | ||||
| Acquisition related-amortization of purchased intangibles | (236) | (209) | (709) | (458) | ||||
| Non-GAAP cost of patient and digital solutions | $ | 5,259 | $ | 1,453 | $ | 14,480 | $ | 3,848 |
| Research and development expenses reconciliation: | ||||||||
| GAAP research and development expenses | $ | 22,306 | $ | 19,439 | $ | 66,818 | $ | 54,479 |
| Stock-based compensation expense | (2,058) | (1,986) | (6,571) | (5,284) | ||||
| Asset impairments and write-downs | (340) | — | (340) | — | ||||
| Non-GAAP research and development expenses | $ | 19,908 | $ | 17,453 | $ | 59,907 | $ | 49,195 |
| Sales and marketing expenses reconciliation: | ||||||||
| GAAP sales and marketing expenses | $ | 22,261 | $ | 21,370 | $ | 72,359 | $ | 56,421 |
| Stock-based compensation expense | (2,672) | (3,853) | (9,702) | (8,144) | ||||
| Acquisition related-amortization of purchased intangibles | (553) | (502) | (1,702) | (1,344) | ||||
| Non-GAAP sales and marketing expenses | $ | 19,036 | $ | 17,015 | $ | 60,955 | $ | 46,933 |
| General and administrative expenses reconciliation: | ||||||||
| GAAP general and administrative expenses | $ | 23,830 | $ | 18,671 | $ | 75,621 | $ | 50,216 |
| Stock-based compensation expense | (5,380) | (3,677) | (15,366) | (10,439) | ||||
| Change in estimated fair value of contingent consideration | (266) | (156) | (830) | 35 | ||||
| Acquisition related fees and expenses | (58) | (485) | (387) | (866) | ||||
| Non-GAAP general and administrative expenses | $ | 18,126 | $ | 14,353 | $ | 59,038 | $ | 38,946 |
| Total other income (expense) reconciliation: | ||||||||
| GAAP other income (expense), net | $ | 667 | $ | (3,332) | $ | 33 | $ | (709) |
| Unrealized (gain) loss on long-term marketable equity securities | (271) | 3,257 | 215 | 167 | ||||
| Investment impairment | 500 | — | 500 | — | ||||
| Other charges | 14 | (33) | 32 | 149 | ||||
| Non-GAAP other income (expense), net | $ | 910 | $ | (108) | $ | 780 | $ | (393) |
| Income tax benefit reconciliation: | ||||||||
| GAAP income tax (expense) benefit | $ | (267) | $ | 162 | $ | (206) | $ | 525 |
| Tax effect related to amortization of purchased intangibles | (101) | (122) | (321) | (373) | ||||
| Non-GAAP income tax (expense) benefit | $ | (368) | $ | 40 | $ | (527) | $ | 152 |
CareDx, Inc.
Reconciliation of Testing Services GAAP to Non-GAAP Gross Profit and Gross Margin
(Unaudited)
(In thousands)
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Testing Services Revenue | $ | 64,751 | $ | 66,464 | $ | 198,330 | $ | 190,635 | ||||
| GAAP cost of testing services | (17,771) | (18,038) | (53,629) | (51,756) | ||||||||
| GAAP testing services gross profit | 46,980 | 48,426 | 144,701 | 138,879 | ||||||||
| Stock-based compensation expense | 470 | 750 | 1,055 | 1,715 | ||||||||
| Amortization of intangibles | 329 | 329 | 987 | 987 | ||||||||
| Non-GAAP testing services gross profit | $ | 47,779 | $ | 49,505 | $ | 146,743 | $ | 141,581 | ||||
| Non-GAAP testing services gross margin % | 74 | % | 74 | % | 74 | % | 74 | % |
CareDx, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| GAAP net loss | $ | (16,939) | $ | (11,897) | $ | (58,284) | $ | (14,511) |
| Stock-based compensation expense | 11,200 | 10,639 | 34,427 | 26,583 | ||||
| Asset impairments and write-downs | 840 | — | 840 | — | ||||
| Unrealized (gain) loss on long-term marketable equity securities | (271) | 3,257 | 215 | 167 | ||||
| Acquisition related-amortization of purchased intangibles | 1,534 | 1,520 | 4,702 | 4,223 | ||||
| Acquisition related fees and expenses | 58 | 485 | 387 | 866 | ||||
| Change in estimated fair value of contingent consideration | 266 | 156 | 830 | (35) | ||||
| Other charges | 15 | (33) | 32 | 149 | ||||
| Tax effect related to amortization of purchased intangibles | (101) | (122) | (321) | (373) | ||||
| Non-GAAP net (loss) income | $ | (3,398) | $ | 4,005 | $ | (17,172) | $ | 17,069 |
| GAAP basic and diluted net loss per share | $ | (0.32) | $ | (0.23) | $ | (1.09) | $ | (0.28) |
| Non-GAAP basic net (loss) income per share | $ | (0.06) | $ | 0.08 | $ | (0.32) | $ | 0.33 |
| Non-GAAP diluted net (loss) income per share | $ | (0.06) | $ | 0.07 | $ | (0.32) | $ | 0.31 |
| Shares used in computing non-GAAP basic net loss/income per share | 53,489,418 | 52,681,451 | 53,253,210 | 52,034,450 | ||||
| Shares used in computing non-GAAP diluted net loss/income per share | 53,489,418 | 54,584,822 | 53,253,210 | 54,454,433 |
CareDx, Inc.
Reconciliation of Non-GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
(In thousands)
| Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Non-GAAP net (loss) income | $ | (3,398) | $ | 4,005 | $ | (17,172) | $ | 17,069 |
| Interest income | (1,225) | (20) | (1,892) | (147) | ||||
| Income tax benefit (expense) | 368 | (40) | 527 | (152) | ||||
| Depreciation expense | 1,465 | 624 | 3,567 | 1,879 | ||||
| Other expense, net | 314 | 128 | 1,112 | 540 | ||||
| Adjusted EBITDA | $ | (2,476) | $ | 4,697 | $ | (13,858) | $ | 19,189 |
cdnaq32022earningspresen
Leslie M, Kidney Transplant Recipient Focused on improving care across the entire transplant patient journey The Transplant Company™ Earnings Presentation Q3 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 2022 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, 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. 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
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
Q3 Earnings: Key Topics for Discussion 4 • Differentiated financial profile • Driving future growth through the 3 C’s – Catalysts, Collections, Coverage • Building leadership in the transplant ecosystem
Q3 Financial and Operational Highlights 5 $291M Cash & equivalents No near-term cash needs Balance Sheet1 64% GAAP 67% Adjusted 74% Testing services2 Gross Margin2 46,500 Tests Up 3% sequentially and 15% y/y Volume Growth $79.4M Up 5% y/y Revenue Net loss ($16.9M) Adjusted EBITDA ($2.5M) Profitability2,3 (1) As of 9/30/22 (2) 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 (3) adjusted EBITDA = non-GAAP net income/(loss) before net interest income/(expense), income tax benefit, depreciation and amortization, and other income and expense.
Kidney, Heart and Lung Transplant Volume Trends 6 Source: UNOS Monthly Kidney/Heart/Lung Single Organ Transplants 6977 7976 7357 7119 7118 7568 7870 4000 5000 6000 7000 8000 9000 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Quarterly Transplant Volumes -1% 14% -8% -3% 0% 6% 4% -10% -5% 0% 5% 10% 15% 20% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Transplant Volume % Growth – Quarter-over-Quarter Extended Recovery 3Q22 Growth Slowdown
Extending Leadership in Transplant Strong Progress Across All Organs 7 >90% Center penetration >95% HeartCare attach rate Heart Testing Services Launched 2005 >75% Center penetration >100 Protocols Kidney Testing Services Launched 2017 60% Center penetration >2,000 Tests Lung Testing Services Launched Q4 2021 Source: data on file as of 9/30/22
Upcoming Growth Drivers – Catalysts, Collections, Coverage 8 •AlloMap Kidney Launch •UroMap Submission to CMS and eventual launch Pipeline Catalysts • Increase Medicare Advantage collection efficiency •Scaled up infrastructure Improving Collections •cfDNA in ISHLT Guidelines •AlloSure Lung CMS •AlloMap Kidney CMS •Broaden commercial coverage Increased Coverage
9 ASP on Reimbursed Tests $- $1,000 $2,000 $3,000 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 All Paid Test ASP Trend (Testing Qtr) FLAT Source: data on file as of 9/30/22
Post Transplant Biomarkers Our Vision: The Leader in The Transplant Ecosystem 11 Leadership across the patient journey Electronic Medical Records Quality & Analytics Transplant focused App Medication Discharge 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 Typing CareDx is #1 Transplant Patient Referrals CareDx is #1
15
Appendix 16
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 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 86.2 134.7 206.6 53.9 55.5 53.1 Non-GAAP Gross Margin % 61% 68% 70% 70% 68% 69% 67% in Millions (except %)
Reconciliation of Adjusted EBITDA FY 2018 FY 2019 FY 2020 FY 2021 Q1 2022 Q2 2022 Q3 2022 GAAP Net Loss (46.8) (22.0) (18.7) (30.7) (19.6) (21.7) (16.9) Stock-based compensation expense 7.1 22.4 23.4 36.1 10.6 12.6 11.2 Impairments & Write-downs - 0.2 - 2.4 - - 0.8 Unrealized gain on investments - - - 1.7 0.5 (0.0) (0.3) Acquisition related amortization of purchased intangibles 3.0 3.6 4.8 5.8 1.6 1.5 1.5 Acquisition related amortization of inventory valuation adjustment 0.3 - - - - - - Acquisition related fees and expenses - 0.7 0.1 1.1 0.1 0.2 0.1 Change in estimated fair value of contingent consideration 1.0 0.2 0.3 (0.6) 0.1 0.5 0.3 Change in estimated fair value of warrant & derivative liabilities 23.0 (0.3) 1.5 (0.1) 0.0 (0.0) (0.0) Amortization of debt discount 2.1 - - - - - - Debt extinguishment 3.0 - - - - - - Loss on conversion from debt to equity 2.8 - - - - - - Accretion of liability - 0.3 0.4 0.3 0.0 0.0 0.0 Tax effect related to amortization of purchased intangibles (0.8) (0.5) (0.5) (0.5) (0.1) (0.1) (0.1) Non–GAAP Net Income (Loss) (5.3) 4.6 11.3 15.5 (6.8) (7.0) (3.4) Interest income 1.6 (1.0) (0.3) (0.1) (0.2) (0.5) (1.2) Income tax benefit (0.6) (1.5) (0.5) (0.9) 0.1 0.1 0.4 Depreciation expense 1.2 1.6 1.9 2.7 1.0 1.2 1.5 Other expense, net 0.2 0.4 (4.4) 0.6 0.3 0.5 0.3 Net loss attributable to noncontrolling interest (0.0) - - - - - - Adjusted EBITDA (3.0) 4.2 8.0 17.8 (5.6) (5.7) (2.5) in Millions