CareDx(US:CDNA)2024-07-31 20:10markdown [Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter 2024 Financial Highlights](index=1&type=section&id=Second%20Quarter%202024%20Financial%20Highlights) CareDx reported strong Q2 2024 results, featuring significant revenue growth, increased testing volumes, and a shift to positive adjusted EBITDA and non-GAAP net income Second Quarter 2024 Financial Highlights Summary (in millions, except percentages) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | Change (YoY) | | :-------------------------------- | :-------------------- | :-------------------- | :----------- | | Total Revenue | $92.3 | $70.3 | +31% | | Testing Services Volume | 43,700 tests | N/A | +17% | | GAAP Net Loss | ($1.4) | ($25.0) | -94.4% | | Non-GAAP Net Income (Loss) | $13.6 | ($9.9) | N/A (swing to profit) | | Adjusted EBITDA | $12.9 | ($10.4) | N/A (swing to profit) | | Cash from Operations | $18.9 | N/A | N/A | | Cash, Cash Equivalents, Marketable Securities | $228.9 | N/A | N/A | | Debt | $0 | N/A | N/A | [Business Highlights](index=1&type=section&id=Business%20Highlights) CareDx expanded market reach and achieved significant scientific validation for its diagnostic tools in H1 2024, reinforcing leadership in transplant care - Expanded coverage by **27 million lives nationwide** in the first half of 2024[3](index=3&type=chunk) - Published SHOREstudy data demonstrating HeartCare's **superior performance** over dd-cfDNA alone in identifying allograft rejection[3](index=3&type=chunk) - Nature Medicine publication **validated CareDx AlloView™ AI-enabled risk prediction model** and demonstrated AlloSure Kidney® **detects subclinical rejection** in stable patients[3](index=3&type=chunk) [Second Quarter 2024 Detailed Financial Results](index=1&type=section&id=Second%20Quarter%202024%20Detailed%20Financial%20Results) [Revenue Performance](index=1&type=section&id=Revenue%20Performance) CareDx achieved substantial Q2 2024 year-over-year revenue growth across all segments, primarily driven by Testing Services revenue Revenue Performance Summary (in millions, except percentages) | Revenue Stream | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change | | :------------------------------ | :-------------------- | :-------------------- | :--------- | | Total Revenue | $92.3 | $70.3 | +31% | | Testing Services Revenue | $70.9 | $53.4 | +33% | | Patient and Digital Solutions Revenue | $10.7 | $9.0 | +19% | | Product Revenue | $10.6 | $7.9 | +35% | - Testing Services revenue for Q2 2024 included **$13.2 million** for tests performed in prior periods[4](index=4&type=chunk) [Profitability and Earnings Per Share](index=1&type=section&id=Profitability%20and%20Earnings%20Per%20Share) CareDx significantly improved Q2 2024 profitability, achieving positive non-GAAP net income and adjusted EBITDA, a substantial shift from prior year's losses Profitability and Earnings Per Share Summary (in millions, except per share data and percentages) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | GAAP Net Loss | ($1.4) | ($25.0) | -94.4% | | Basic & Diluted GAAP Net Loss Per Share | ($0.03) | ($0.46) | -93.5% | | Non-GAAP Net Income (Loss) | $13.6 | ($9.9) | Swing to profit | | Diluted Non-GAAP Net Income (Loss) Per Share | $0.25 | ($0.18) | Swing to profit | | Adjusted EBITDA Income (Loss) | $12.9 | ($10.4) | Swing to profit | [2024 Financial Guidance Update](index=2&type=section&id=2024%20Financial%20Guidance%20Update) CareDx significantly raised its full-year 2024 financial guidance, reflecting increased confidence in revenue growth, improved gross margins, and projected positive adjusted EBITDA 2024 Financial Guidance Update Summary (in millions, except percentages) | Metric | New 2024 Guidance (in millions) | Prior 2024 Guidance (in millions) | Change (in millions) | | :-------------------- | :------------------------------ | :------------------------------ | :--------------------------- | | Annual Revenue | $320 - $328 | $274 - $282 | Increased by $46 - $46 | | Non-GAAP Gross Margin | 67% - 68% | 63% - 65% | Increased by 2-4 percentage points | | Adjusted EBITDA | Gain of $9 - $15 | Loss of $14 - $24 | Swing to gain of $23 - $39 | [Company Information](index=2&type=section&id=Company%20Information) [About CareDx – The Transplant Company](index=2&type=section&id=About%20CareDx%20%E2%80%93%20The%20Transplant%20Company) CareDx, Inc. is a precision medicine company providing high-value healthcare solutions for transplant patients and caregivers, including testing, products, and digital services - CareDx is a **leading precision medicine solutions company** focused on transplant patients and caregivers[7](index=7&type=chunk) - The company provides testing services, products, and digital healthcare solutions throughout the pre- and post-transplant patient journey[7](index=7&type=chunk) [Legal and Accounting Disclosures](index=2&type=section&id=Legal%20and%20Accounting%20Disclosures) [Forward Looking Statements](index=2&type=section&id=Forward%20Looking%20Statements) This section cautions that the press release contains forward-looking statements subject to numerous risks and uncertainties that could cause actual results to differ materially - The press release includes forward-looking statements regarding **2024 revenue, non-GAAP gross margin, adjusted EBITDA, company focus, and path to profitability**[8](index=8&type=chunk) - These statements are subject to numerous risks and uncertainties, many beyond the company's control, as discussed in SEC filings[8](index=8&type=chunk) - CareDx expressly disclaims any obligation to update or revise forward-looking statements, except as required by law[8](index=8&type=chunk) [Use of Non-GAAP Financial Measures](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) CareDx presents non-GAAP financial measures to offer additional insights into core operating results, used internally for planning and comparison, but not as a substitute for GAAP results - Non-GAAP net income (loss) and per share results exclude impacts of **stock-based compensation, changes in fair value of contingent consideration, acquisition-related charges, unrealized investment losses, restructuring charges, and other specific items**[10](index=10&type=chunk) - Adjusted EBITDA is defined as non-GAAP net income (loss) before **interest income, income tax expense (benefit), depreciation, and other expense, net**[10](index=10&type=chunk) - These non-GAAP measures assist investors in assessing operating results through management's perspective and for comparing core business performance over multiple periods, but are not a substitute for GAAP information[11](index=11&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Q2 2024 GAAP income statement shows a significant net loss reduction compared to Q2 2023, driven by increased revenue and decreased operating expenses Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total Revenue | $92,274 | $70,301 | | Total Operating Expenses | $96,372 | $97,925 | | Loss from Operations | ($4,098) | ($27,624) | | Total Other Income | $2,726 | $2,603 | | Loss Before Income Taxes | ($1,372) | ($25,021) | | Net Loss | ($1,394) | ($24,953) | | Basic & Diluted Net Loss Per Share | ($0.03) | ($0.46) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The June 30, 2024 balance sheet shows a stable financial position with slight increases in current assets and stockholders' equity, and decreased total liabilities Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------------------------ | :--------------------------- | :------------------------------- | | Cash and Cash Equivalents | $95,782 | $82,197 | | Marketable Securities | $133,089 | $153,221 | | Accounts Receivable | $66,161 | $51,061 | | Total Current Assets | $320,609 | $313,713 | | Total Assets | $466,777 | $466,826 | | Total Current Liabilities | $78,331 | $78,072 | | Total Liabilities | $202,108 | $205,498 | | Total Stockholders' Equity | $264,669 | $261,328 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Cost of Sales Reconciliations](index=6&type=section&id=Cost%20of%20Sales%20Reconciliations) This section reconciles GAAP to non-GAAP cost of sales for testing services, product, and digital solutions, adjusting for non-cash items like stock-based compensation and acquisition amortization Cost of Testing Services Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP cost of testing services | $14,308 | $15,324 | | Stock-based compensation expense | ($357) | ($492) | | Acquisition related-amortization of purchased intangibles | ($329) | ($329) | | Non-GAAP cost of testing services | $13,622 | $14,503 | Cost of Product Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP cost of product | $6,298 | $3,926 | | Stock-based compensation expense | ($225) | ($274) | | Acquisition related-amortization of purchased intangibles | ($411) | ($416) | | Restructuring costs | ($53) | — | | Non-GAAP cost of product | $5,609 | $3,236 | Cost of Patient and Digital Solutions Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP cost of patient and digital solutions | $7,393 | $6,651 | | Stock-based compensation expense | ($350) | ($367) | | Acquisition related-amortization of purchased intangibles | ($238) | ($255) | | Restructuring costs | — | ($14) | | Non-GAAP cost of patient and digital solutions | $6,805 | $6,015 | [Operating Expenses Reconciliations](index=6&type=section&id=Operating%20Expenses%20Reconciliations) This section details adjustments to GAAP operating expenses (R&D, S&M, G&A) for non-GAAP figures, primarily excluding stock-based compensation and other non-recurring items Research and Development Expenses Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP research and development expenses | $19,693 | $20,478 | | Stock-based compensation expense | ($1,628) | ($1,704) | | Restructuring costs | ($15) | ($245) | | Non-GAAP research and development expenses | $18,050 | $18,529 | Sales and Marketing Expenses Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP sales and marketing expenses | $21,002 | $22,178 | | Stock-based compensation expense | ($2,927) | ($2,779) | | Acquisition related-amortization of purchased intangibles | ($628) | ($606) | | Restructuring costs | — | ($548) | | Non-GAAP sales and marketing expenses | $17,447 | $18,245 | General and Administrative Expenses Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP general and administrative expenses | $27,678 | $29,368 | | Stock-based compensation expense | ($7,683) | ($7,084) | | Change in estimated fair value of contingent consideration | ($210) | ($67) | | Acquisition related fees and expenses | ($5) | — | | Restructuring costs and charges | — | ($41) | | Other (charges) income | ($44) | — | | Non-GAAP general and administrative expenses | $19,736 | $22,176 | [Gross Profit and Gross Margin Reconciliations](index=9&type=section&id=Gross%20Profit%20and%20Gross%20Margin%20Reconciliations) The reconciliation shows significant Q2 2024 non-GAAP gross profit and gross margin improvement year-over-year, after adjusting for stock-based compensation, restructuring, and acquisition amortization Gross Profit and Gross Margin Reconciliation (in thousands, except percentages) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | Total revenue | $92,274 | $70,301 | | GAAP cost of sales | $27,999 | $25,901 | | GAAP gross profit | $64,275 | $44,400 | | Stock-based compensation expense | $932 | $1,133 | | Restructuring costs | $53 | $14 | | Acquisition related-amortization of purchased intangibles | $978 | $1,000 | | Non-GAAP gross profit | $66,238 | $46,547 | | Non-GAAP gross margin % | 72% | 66% | [Net Income (Loss) and EPS Reconciliations](index=10&type=section&id=Net%20Income%20(Loss)%20and%20EPS%20Reconciliations) This reconciliation highlights the substantial difference between GAAP net loss and non-GAAP net income, showing the impact of non-cash and non-recurring adjustments on profitability and EPS Net Income (Loss) and EPS Reconciliation (in thousands, except per share data) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | GAAP net loss | ($1,394) | ($24,953) | | Stock-based compensation expense | $13,170 | $12,700 | | Acquisition related-amortization of purchased intangibles | $1,606 | $1,606 | | Change in estimated fair value of contingent consideration | $210 | $67 | | Acquisition related fees and expenses | $5 | — | | Other charges | $44 | $7 | | Restructuring costs and charges | $68 | $848 | | Tax effect related to amortization of purchased intangibles | ($98) | ($100) | | Unrealized (gain) loss on long-term marketable equity securities | — | ($53) | | Non-GAAP net income (loss) | $13,611 | ($9,878) | | GAAP basic and diluted net loss per share | ($0.03) | ($0.46) | | Non-GAAP basic net income (loss) per share | $0.26 | ($0.18) | | Non-GAAP diluted net income (loss) per share | $0.25 | ($0.18) | [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation from non-GAAP net income (loss) to Adjusted EBITDA demonstrates operational performance before interest, taxes, depreciation, and other non-operating expenses, showing a significant swing to positive EBITDA in Q2 2024 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | | Non-GAAP net income (loss) | $13,611 | ($9,878) | | Interest income | ($2,826) | ($2,871) | | Income tax expense (benefit) | $121 | $68 | | Depreciation expense | $1,937 | $2,052 | | Other expense, net | $100 | $279 | | Adjusted EBITDA | $12,943 | ($10,350) | [Company Contacts](index=11&type=section&id=Company%20Contacts) [Media and Investor Relations](index=11&type=section&id=Media%20and%20Investor%20Relations) Contact information for media and investor inquiries is provided for CareDx, Inc. - Media Relations Contact: **Anna Czene, 818-731-2203, aczene@caredx.com**[20](index=20&type=chunk) - Investor Relations Contact: **Greg Chodaczek, investor@caredx.com**[20](index=20&type=chunk)