NEW YORK (GenomeWeb) – CareDx reported on Friday that its first quarter revenues sank 8 percent year over year.
For the three months ended March 31, the molecular diagnostics company reported revenues of $6.6 million, down from $7.2 million in Q1 2015. The firm missed the Wall Street estimate for revenues of $7.0 million for the quarter.
The company said test volume increased approximately 8 percent in Q1, but that the lower revenues reflect a lag in collections, which impacted revenue recognized on a cash basis following the transition of billings and collections from an outside vendor to an in-house team.
On a conference call with analysts following the release of the results, CEO Peter Maag said that although he’s pleased with the overall trends in completed tests, he is "disappointed about the conversion of ordered tests into revenue.” However, he added, the issue of collections is being addressed.
CareDx CFO Charles Constanti, who replaced Ken Ludlum in the position at the beginning of April, added that “collections are a top priority.” The company is bringing in a temporary team of trained collectors and adding new people to the collections team. CareDx is also planning an immediate ramp up to catch up on collections, and will focus on accounts that can bring in the most cash quickly. The firm is confident that there are no uncollectable amounts, Constanti said. However, Maag added, “Collections will take some time. This will not happen within a quarter or so.” The firm believes it will take until the end of the year to work through the backlog.
CareDx’s net loss also widened significantly in Q1 to $9.8 million, or $.81 per share, from $2.3 million, or $.19 per share in the year-ago period. On an adjusted basis, the company reported a loss per share of $.37, missing analysts’ estimate for a loss of $.31 per share. The wider net loss reflects costs related to the company’s recently completed acquisition of Allenex AB, as well as costs related to continuing investment in the development of AlloSure, a next-generation sequencing-based test to detect donor-derived cell-free DNA after transplantation.
Maag said he is excited about the Allenex acquisition and believes it will establish the combined company as a leader in both pre- and post-transplant diagnostics. In addition to CareDx’s two core products — the AlloMap test for acute cellular rejection in heart transplant patients, and the Olerup SSP HLA typing kit — the firm has two new products nearing launch. These include AlloSure and Olerup Qtype, which will provide rapid HLA typing results on existing RT-PCR platforms and the AccuTyper, a PCR instrument CareDx is currently developing.
R&D costs more than doubled to $3.2 million from $1.4 million in Q1 2015, and SG&A costs rose 57 percent to $7.4 million from $4.7 million. Higher R&D expenses were expected as CareDx invests more resources into its cell-free DNA program, Constanti said. The firm reduced its marketing spending, but that was offset by increased costs from the Allenex acquisition, as well as increased spending on legal expenses, consultants, and additional personnel.
Maag added that the company continues to enroll participants in its DART trial to study the clinical utility of circulating cell-free DNA in detecting clinical and sub-clinical rejection in kidney allograft recipients. It is also continuing to add participating centers and enroll patients for the OAR study, correlating AlloMap scores with cardiac dysfunction and biopsy-proven rejection in heart transplant recipients.
The firm ended the quarter with $23.8 million in cash and cash equivalents.
For the full year 2016, CareDx said it expects revenues of $40 million to $42 million. Analysts, on average, expect revenues of $37.9 million for the year.