CareDx(US:CDNA)2025-04-30 20:18PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements The company's Q1 2025 financials show total assets of $489.6 million, a net loss of $10.4 million, and a restatement of the comparative 2024 period Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $88,745 | $114,689 | | Marketable securities | $142,172 | $145,964 | | Accounts receivable | $71,485 | $64,605 | | Total current assets | $350,239 | $351,832 | | Total assets | $489,638 | $491,050 | | Liabilities & Stockholders' Equity | | | | Accrued litigation settlement expense | $20,250 | $0 | | Total current liabilities | $85,284 | $89,371 | | Total liabilities | $110,289 | $112,617 | | Total stockholders' equity | $379,349 | $378,433 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Testing services revenue | $61,921 | $53,837 | | Product revenue | $10,810 | $8,594 | | Patient and digital solutions revenue | $11,954 | $9,618 | | Total revenue | $84,685 | $72,049 | | Total operating expenses | $98,059 | $94,615 | | Loss from operations | ($13,374) | ($22,566) | | Net loss | ($10,353) | ($19,888) | | Net loss per share (Basic & Diluted) | ($0.19) | ($0.38) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($26,584) | ($15,312) | | Net cash provided by investing activities | $1,325 | $27,660 | | Net cash used in financing activities | ($643) | ($1,275) | | Net (decrease) increase in cash | ($25,979) | $11,099 | | Cash, cash equivalents and restricted cash at end of period | $89,295 | $93,882 | Notes to Unaudited Condensed Consolidated Financial Statements Key notes detail a restatement of Q1 2024 financials, significant revenue from Medicare, a $20.25 million litigation settlement, and a new $50 million stock repurchase program - The company restated its financial statements for the three months ended March 31, 2024, which increased the previously reported net loss from $16.7 million to $19.9 million due to corrections in stock-based compensation expense2931 - Revenue from Medicare represented approximately 37% of total revenue for the three months ended March 31, 2025, up from 33% in the same period of 202437 - In the ongoing litigation with Natera, a court overturned a jury verdict against CareDx in February 2025, concluding Natera's patents were invalid, and the previously recognized $96.3 million liability was derecognized as of December 31, 202467 - The company reached an agreement-in-principle to settle a Securities Class Action lawsuit for approximately $20.25 million, recording a net litigation settlement expense of approximately $5.4 million in Q1 202577 - On February 20, 2025, the Board of Directors approved a new Stock Repurchase Program authorizing the purchase of up to $50 million in common stock over two years, with no shares repurchased as of March 31, 202597 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 revenue grew 18% year-over-year to $84.7 million, net loss improved to $10.4 million, and the company maintains a strong liquidity position with $230.9 million in cash and marketable securities Q1 2025 Financial Highlights | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Total Revenue | $84.7 million | +18% | | Testing Services Revenue | $61.9 million | +15% | | Testing Services Volume | ~47,100 | +12% | | GAAP Net Loss | ($10.4 million) | Improved from ($19.9M) | | Cash & Marketable Securities | $230.9 million | N/A | Results of Operations - Testing services revenue grew 15% YoY to $61.9 million, primarily driven by a 12% increase in testing volume across all organs128 - Product revenue increased 26% YoY to $10.8 million, mainly due to higher sales of commercial NGS-based kitted solutions129 - Patient and digital solutions revenue rose 24% YoY to $12.0 million, driven by digital solutions like Ottr software and higher pharmacy sales130 - General and administrative expenses decreased by $7.4 million (24%) YoY, primarily due to a $6.4 million reduction in stock-based compensation and a $2.0 million decrease in legal expenses136 - A litigation settlement expense of $5.4 million was recorded in Q1 2025 related to the settlement of the Securities Class Action lawsuit137 Liquidity and Capital Resources - As of March 31, 2025, the company had $230.9 million in cash, cash equivalents, and marketable securities, with no outstanding debt149 - The company has an accumulated deficit of $636.6 million as of March 31, 2025149 - Management believes existing cash and expected cash from operations will be sufficient to meet cash requirements for the next 12 months150 - A stock repurchase program, renewed in February 2025, allows for the purchase of up to $50 million in common stock, with the full amount available as of March 31, 2025152153 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate and foreign currency fluctuations, with defined potential impacts on financial statements but no current use of hedging instruments - A hypothetical 100 basis point increase or decrease in interest rates would have an approximate impact of $0.9 million on the company's financial statements160 - An unfavorable 10% change in foreign currency exchange rates would have negatively impacted product revenue by $0.4 million and the balance sheet by $0.1 million for the quarter ended March 31, 2025161 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a previously identified material weakness in internal control - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective at a reasonable assurance level162 - The ineffectiveness is due to a material weakness identified as of December 31, 2024, related to deficiencies in controls for complex and/or non-routine transactions163164 - Management is continuing its remediation plan, which includes implementing training, updating accounting policies, and enhancing controls related to stock-based compensation167169 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section references Note 8 for details on legal matters, including litigation with Natera and a securities class action settlement - The company refers to Note 8, "Commitments and Contingencies," for detailed information on its legal proceedings170 Item 1A. Risk Factors Key risks include a history of net losses, significant reliance on Medicare reimbursement, ongoing litigation, intense competition, and an unremediated material weakness in internal controls - The company has a history of substantial net losses, with an accumulated deficit of $636.6 million as of March 31, 2025, and expects to incur net losses for the next several years172 - A substantial portion of revenue comes from Medicare, which represented 51% of testing services revenue for Q1 2025, making financial performance highly sensitive to reimbursement changes175 - The company faces significant competition from established diagnostic tests, other molecular diagnostic companies like Natera and Eurofins, and new market entrants185186187 - A material weakness in internal control over financial reporting, first identified for fiscal year 2022, was not remediated as of December 31, 2024, posing a risk of inaccurate financial reporting225 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company withheld shares to satisfy employee tax obligations and approved a new $50 million stock repurchase program with no shares purchased during the quarter - A total of 137,580 shares were withheld from employees to cover tax obligations related to vested restricted stock units during the three months ended March 31, 2025232 - A new stock repurchase program for up to $50 million was approved on February 20, 2025, with no shares repurchased under this program in Q1 2025233 Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2025236 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications