NEW YORK – CareDx reported after the close of the market on Thursday that its first quarter revenues rose 48 percent year over year, thanks largely to a 46 percent increase in testing services revenues.
For the three months ended March 31, the molecular diagnostics company reported total revenues of $38.4 million, up from $26.0 million during the same period a year earlier, beating the average Wall Street estimate of $38.0 million, and in line with its own preliminary Q1 revenue report.
Testing services revenues rose to $31.4 million from $21.5 million in the prior-year quarter, and product revenues rose 7 percent to $4.7 million from $4.4 million. Digital and other revenues rose to $2.2 million from $31,000 in Q1 2019, reflecting the company's acquisitions of OTTR and XynManagement.
CareDx also said it returned more than 15,000 results from its AlloSure blood-based, donor-derived, cell-free DNA test for organ transplant rejection and AlloMap heart transplant test to patients in Q1, an increase of 50 percent from the prior-year period.
"The arrival of COVID-19 in the US has affected everyone and everything. The healthcare sector is no exception as hospitals have become the frontline of this battle," CareDx CEO Peter Maag said on a conference call with analysts following the release of the earnings. "With hospitals increasingly caring for COVID-19 patients, hospital administrators have chosen to limit or even defer non-emergency visits and procedures. Immunosuppressed transplant patients either decided on their own or were asked to avoid transplant centers and caregiver visits."
Given the decrease in transplant surveillance visits, CareDx experienced a slowdown in testing services volume in the final week of the first quarter, Maag said, adding that the firm was on track to exceed $40 million in total revenues until COVID-19 affected the quarterly results.
In order to mitigate the impact of the pandemic on its business and on transplant patients, CareDx launched a service in early April called RemoTraC to provide blood draws of routine transplant tests at home. To date, Maag said, more than 150 transplant centers are offering RemoTraC to their patients, and approximately 2,000 kidney, heart, and lung transplant patients have enrolled for the service.
"As RemoTraC starts to take effect and as some transplant centers begin to return to normal operating capacity, I'm very pleased to share that in the last week, we have almost returned to pre-COVID volume of AlloSure and AlloMap," he added. "It remains to be seen if this will continue and whether we can return to linear growth at any time soon."
The firm's Q1 net loss narrowed to $5.8 million, or $.14 per share, from $7.5 million, or $.18 per share, in Q1 2019. On an adjusted basis, the company reported break-even for the quarter, missing analysts' consensus expectation for EPS of $.03.
CareDx's Q1 R&D costs rose 79 percent to $10.0 million from $5.6 million in the year-ago quarter, and its SG&A expenses rose 36 percent to $21.7 million from $16.0 million.
The company ended the quarter with $32.2 million in cash and cash equivalents, and $242,000 in restricted cash. During April, the company said its cash increased by $48.8 million through its at-the-market equity offering program, the expanded CMS accelerated and advance payment program, and the CARES Act Relief Fund for Medicare providers.
On the conference call, CFO Michael Bell said the firm's at-the-market program generated net proceeds of $23.5 million through the issuance and sale of 1 million shares. CareDx also received $20.5 million from CMS through an advanced payment program that allows Medicare providers to request an advance of up to three months' worth of expected payments from CMS. The agency will start to recoup that amount between August and November.
"We also received an initial distribution of $4.8 million from the CARES Act Provider Relief Fund to support healthcare related expenses and loss revenue attributable to COVID-19," Bell added. "Note that we did not participate in the Federal Paycheck Protection Program, also known as PPP. Based on our current improved cash position, and our cash flow forecast, we feel CareDx continues to be well positioned for the foreseeable future."
Due to the continued uncertainties from the impact of the COVID-19 pandemic, CareDx withdrew its 2020 guidance on April 8. Maag noted that while test volumes have almost returned to normal, the firm is still expecting an adverse impact to Q2 revenues from the pandemic.