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CareDx Q4 Revenues Increase 88 Percent

NEW YORK (GenomeWeb) – CareDx reported after the close of the market on Wednesday that its fourth quarter revenues rose 88 percent year over year, thanks largely to a 120 percent increase in testing services revenues.

For the three months ended Dec. 31, 2018 the transplant diagnostics company reported total revenues of $23.5 million, up from $12.5 million a year earlier, and beat the average Wall Street analyst estimate of $23.0 million.

Testing services revenues rose to $18.9 million from $8.6 million while product revenues rose 24 percent to $4.6 million from $3.7 million in Q4 2017. However, collaboration and license revenues fell 62 percent to $63,000 from $164,000.

The company also reported that 100 US transplant centers provided 4,575 AlloSure kidney transplant tests to approximately 3,400 patients during the quarter, and that it provided 4,057 AlloMap heart transplant test results in Q4.

"The CareDx team delivered another consecutive record quarter, including 88 percent year-over-year revenue growth," CareDx CEO Peter Maag said in a statement. "We achieved positive adjusted EBITDA and operating cash flow results for the second straight quarter. We strengthened our first-mover advantage as the strong clinical value of AlloSure continues to resonate with the transplant community and, just over a year into the launch, we are 3 percent penetrated into this patient population. CareDx is making tremendous strides fortifying its position as the leading provider of genomics-based information in transplantation, with the goal to leverage these insights to improve long-term patient outcomes."

On a conference call with analysts following the release of the earnings, Maag added that while the company is in the early stages of penetrating the $2 billion transplantation diagnostics market opportunity, the initial uptake of AlloSure confirmed CareDx's belief that there is "a significant need to improve graft survival for kidney transplant patients through surveillance."

He also noted that AlloSure is the biggest contributor to CareDx's growth, and that the pace of penetration of transplant centers is continuing ahead of the company's plans.

"AlloSure's positioning and market acceptance is gaining momentum and positions CareDx to deliver continued growth in the quarters and years ahead," Maag said. "During the fourth quarter, 100 centers provided AlloSure results to their transplant patients. We estimate these 100 centers account for approximately 60 percent of the transplant volume in the United States." Further, since AlloSure's launch in October 2017, CareDx has provided results to more than 60,000 patients, which represents about 3 percent of the total number of living kidney transplantation patients.

Overall reimbursement in Q4 was consistent with previous quarters, with 70 percent to 80 percent of AlloSure volume attributed to Medicare patients, Maag said.

The company is also focused on driving adherence to the AlloSure routine testing schedule protocol, he added. CareDx finished Q4 with 3,190 surveillance patients, defined as patients who are managed by CareDx on a predefined transplant center testing protocol. "These 3,190 surveillance patients help build the recurring revenue effect of AlloSure," Maag said.

For AlloMap, testing volume in Q4 increased 6 percent year over year, consistent with the company's expectations for growth in the mid-single digits, Maag noted. And the increase in product revenues for the quarter was driven by increased demand for the Olerup QType HLA typing kit, as well as sales of the Illumina TruSight HLA ultra-high-resolution human leukocyte antigen typing product, which CareDx now distributes.

CareDx's Q4 net loss narrowed to $3.8 million, or $.09 per share, from $31.7 million, or $1.13 per share, a year earlier. On an adjusted basis, the company reported income of $.01 per share, beating Wall Street's break-even expectation.

The company's R&D costs for the quarter rose 27 percent to $3.8 million from $3.0 million in the year-ago quarter while its SG&A expenses rose 60 percent to $11.7 million from $7.3 million.

For full-year 2018, CareDx reported that total revenues rose 59 percent to $76.6 million from $48.3 million in 2017, beating the average Wall Street analyst estimate of $76.1 million.

Testing services revenues rose 82 percent to $60.3 million from $33.1 million while product revenues rose 8 percent to $15.7 million from $14.6 million in 2017. Collaboration and license revenues rose 2 percent to $595,000 from $584,000.

The company's net loss narrowed to $46.8 million, or $1.31 per share, from $55.5 million, or $2.38 per share, a year earlier. On an adjusted basis, the company reported a loss of $.15 per share, beating Wall Street's estimate for a loss of $.17 per share.

CareDx's 2018 R&D costs rose 17 percent to $14.5 million from $12.4 million a year ago while its SG&A expenses rose 38 percent to $43.7 million from $31.7 million.

The company ended the year with $64.6 million in cash and cash equivalents.

For full-year 2019, CareDx is expecting revenues of $105 million to $107 million. Analysts are expecting revenues of $103.6 million. On the call with analysts, CareDx CFO Michael Bell noted that within that guidance for 2019, the company is expecting product revenues to grow approximately 20 percent, AlloMap volume to grow in the mid-single digits, and AlloSure revenues to "more or less" double.

On the call with analysts, Maag also noted that CareDx is on schedule to launch the three new AlloSeq next-generation sequencing products it announced plans for last May: AlloSeq HLA, the AlloSeq cell-free DNA kit, and AlloSeq BMT.

The firm's shares rose a fraction of a percent to $31.01 in Thursday morning trading on the Nasdaq.