CareDx, Inc. Segments Disclosure
16. SEGMENT REPORTING
Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the CODM, or decision making group, whose function is to allocate resources to and assess the performance of the operating segments. The Company has identified its CEO as the CODM. In determining its reportable segments, the Company considered the markets and types of customers served and the products or services provided in those markets.
The Company previously operated and reported its operating results in two reportable segments: Post-Transplant and Pre-Transplant. In the third quarter of 2018, the Company completed a business reorganization to support the Company’s strategy to become a global transplant care leader. The position of the head of the former Pre-Transplant segment was eliminated, and global functional leaders who report to CODM were identified to manage sales and marketing, research and development, manufacturing and quality and other global functions. These changes resulted in changes to the presentation of financial information provided to the CODM for resource allocation and management performance assessment. The CODM continues to review revenue and cost of sales by testing services and products, as reported in the consolidated statements of operations. Earnings before interests, taxes, depreciation and amortization and operating results are reviewed at the consolidated level only. Effective September 30, 2018, the Company reports a single operating segment.
As of December 31, 2018 and 2017, there are no changes to the segment financial information reporting, except that the Company does not report results of former Post and Pre-Transplant segments. Such information is no longer prepared and therefore has not been provided to the CODM since the Company completed its reorganization during the reporting period ending September 30, 2018.
Revenues by geographic regions are based upon the customers’ ship-to address for product revenue and the region of testing for testing services revenue. The following table summarizes reportable revenues by geographic regions (in thousands):
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Years Ended December 31, |
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2018 |
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2017 |
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|
2016 |
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Testing services revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
59,683 |
|
|
$ |
32,598 |
|
|
$ |
29,492 |
|
|
Rest of World |
|
|
617 |
|
|
|
508 |
|
|
|
188 |
|
|
|
|
$ |
60,300 |
|
|
$ |
33,106 |
|
|
$ |
29,680 |
|
|
Product revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
5,881 |
|
|
$ |
4,189 |
|
|
$ |
3,006 |
|
|
Europe |
|
|
7,506 |
|
|
|
7,980 |
|
|
|
6,270 |
|
|
Rest of World |
|
|
2,287 |
|
|
|
2,465 |
|
|
|
1,439 |
|
|
|
|
$ |
15,674 |
|
|
$ |
14,634 |
|
|
$ |
10,715 |
|
|
License and other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
499 |
|
|
$ |
498 |
|
|
$ |
194 |
|
|
Europe |
|
|
96 |
|
|
|
86 |
|
|
|
42 |
|
|
|
|
$ |
595 |
|
|
$ |
584 |
|
|
$ |
236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States |
|
$ |
66,063 |
|
|
$ |
37,285 |
|
|
$ |
32,692 |
|
|
Total Europe |
|
$ |
7,602 |
|
|
$ |
8,066 |
|
|
$ |
6,312 |
|
|
Total Rest of World |
|
$ |
2,904 |
|
|
$ |
2,973 |
|
|
$ |
1,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
76,569 |
|
|
$ |
48,324 |
|
|
$ |
40,631 |
|
The following table summarizes long-lived assets, consisting of property and equipment, net, by geographic regions (in thousands):
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December 31, 2018 |
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|
December 31, 2017 |
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Long-lived assets: |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
3,235 |
|
|
$ |
1,206 |
|
|
Europe |
|
|
625 |
|
|
|
776 |
|
|
Rest of World |
|
|
274 |
|
|
|
93 |
|
|
Total |
|
$ |
4,134 |
|
|
$ |
2,075 |
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About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.