CareDx, Inc. - 10-K filing on 2017-04-21

Net (Loss) Income Per Share

12 Months Ended

Dec. 31, 2016

3. NET (LOSS) INCOME PER SHARE

Basic net (loss) income per share has been computed by dividing the net (loss) income by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents.

Diluted net (loss) income per share has been computed by dividing the net (loss) income by the sum of the weighted-average number of common shares and common share equivalents outstanding during the period, to the extent that such common share equivalents are dilutive.

For the years ended December 31, 2016 and 2015, all common share equivalents have been excluded from the calculation of diluted net loss per share, as their effect would be antidilutive.

For the year ended December 31, 2014, certain common share equivalents have been included in diluted net income per share, as their effect is dilutive. For the year ended December 31, 2014, common share equivalents include: (i) options and warrants to purchase common stock; (ii) options and warrants to purchase convertible preferred stock prior to their conversion into options and warrants to purchase common stock upon the IPO; and (iii) convertible preferred stock and the subordinated convertible note prior to their conversion into common stock upon the IPO. Common share equivalents for convertible preferred stock and the subordinated convertible note are determined using the if-converted method. Common share equivalents for options and warrants are determined using the treasury-stock method.

The following tables set forth the computation of the Company’s basic and diluted net (loss) income per share (in thousands, except shares and per share data):

	Year Ended December 31,
	2016			2015			2014
Numerator:
Net (loss) income attributable to CareDx, Inc. used to compute basic net loss per share	$	(39,469	)	$	(13,707	)	$	781
Add: interest expense related to subordinated convertible note		—			—			364
Less: gain on change in fair value of derivative related to subordinated convertible note		—			—			(118	)
Less: gain on extinguishment of derivative related to subordinated convertible note		—			—			(120	)
Net (loss) income attributable to CareDx, Inc. used to compute diluted net loss per share	$	(39,469	)	$	(13,707	)	$	907
Denominator:
Weighted-average shares used to compute basic net (loss) income per share attributable to CareDx, Inc.		16,496,911			11,860,885			5,815,928
Effect of potentially dilutive securities:
Convertible preferred stock		—			—			—
Convertible preferred stock		—			—			2,972,051
Subordinated convertible note		—			—			134,341
Employee stock options		—			—			360,681
Weighted-average shares used to compute diluted net (loss) income per share attributable to CareDx, Inc.		16,496,911			11,860,885			9,283,001
Net (loss) income per share attributable to CareDx, Inc.:
Basic	$	(2.39	)	$	(1.16	)	$	0.13
Diluted	$	(2.39	)	$	(1.16	)	$	0.10

The following potentially dilutive securities have been excluded from diluted net (loss) income per share, because their effect would be antidilutive:

	Year Ended December 31,
	2016		2015		2014
Shares of common stock subject to outstanding options		1,757,309		1,577,317		539,645
Shares of common stock subject to outstanding common stock warrants		3,259,926		301,069		213,677
Restricted stock units		306,245		106,200		—
Total common stock equivalents		5,323,480		1,984,586		753,322

The Company issued 4,630,145 shares of preferred stock pursuant to the Private Placement and Subsequent Financing, which were completed on April 14, 2016 and June 15, 2016, respectively. All of the preferred stock was converted to common stock upon receipt of the Requisite Stockholder Approval on June 16, 2016. As of December 31, 2016, there was no preferred stock outstanding. On September 26, 2016, the Company completed the Public Offering pursuant to which the Company issued and sold an aggregate of 2,250,000 shares of common stock.