What changed in this filing

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Item 9A. Controls and Procedures

2024-02-28 compared with 2023-02-27 · 64 added, 48 removed, 152 unchanged (42% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as such terms are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of December 31, 2022.

Management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as such terms are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of December 31, 2023.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, in light of the material weaknesses identified in our internal control over financial reporting, our disclosure controls and procedures were not effective at the reasonable assurance level and are not effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act, is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Based on such evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2023, in light of the material weaknesses identified in our internal control over financial reporting, our disclosure controls and procedures were not effective at the reasonable assurance level and are not effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act, is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate to allow timely discussion regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting.

Management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting.

Our internal control system was designed to provide reasonable assurance regarding the preparation and fair presentation of published consolidated financial statements in accordance with accounting principles generally accepted in the United States.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in the 2013 Internal Control-Integrated Framework.

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generally accepted accounting principles, or GAAP, our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with GAAP.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As of December 31, 2023, the following material weaknesses have been identified:

General Information Technology Controls.

The Company did not design and maintain effective general information technology controls (“GITCs”), for information systems and applications that are relevant to the preparation of the consolidated financial statements.

Specifically, the Company did not design and maintain:

We did not design and maintain effective general information technology controls, or GITCs, for information systems and applications that are relevant to the preparation of the consolidated financial statements.

Specifically, we did not design and maintain:

(i) sufficient user access controls to ensure appropriate segregation of duties, logical access controls to prevent unauthorized user access and adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel;

(ii) program change management controls to ensure that information technology (“IT”), program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately with appropriate segregation of duties;

(ii) program change management controls to ensure that information technology, or IT, program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately with appropriate segregation of duties;

and (iii) computer and network operations controls to ensure that batch and interface jobs are monitored and privileges are appropriately granted, authorized and monitored.

1 unchanged sentence

Purchase Order Approval Workflow.

The Company did not design and maintain effective process-level control activities related to procurement to ensure appropriate approval of purchase orders, which could affect the amount and classification of costs capitalized or expensed.

We did not design and maintain effective process-level control activities related to procurement to ensure appropriate approval of purchase orders, which could affect the amount and classification of costs capitalized or expensed.

COSO Framework.

The Company did not fully maintain components of the COSO framework, including elements of the control environment, information and communication, and control activities and monitoring activities components, relating to:

(i) sufficiency of competent personnel to perform internal control activities and support the achievement of the Company’s

internal control objectives;

(ii) enforcing accountability of personnel for the performance of their internal control responsibilities across the organization in the pursuit of objectives;

(iii) designing and maintaining general control activities over technology to support the achievement of the Company’s internal control objectives;

We did not fully maintain components of the COSO framework, including elements of the control environment, information and communication, and control activities and monitoring activities components, relating to:

(i) sufficiency of competent personnel to perform internal control activities and support the achievement of our internal control objectives;

(ii) enforcing accountability of personnel for the performance of their internal control responsibilities across the

organization in the pursuit of objectives;

(iii) designing and maintaining general control activities over technology to support the achievement of our internal control objectives;

(iv) performing control activities in accordance with established policies in a timely manner;

and (v) performing sufficient reviews of information to assess its relevance, accuracy, and completeness in supporting the internal control components.

As such, the Company’s management concluded that the Company did not have an adequate process in place to complete its assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner.

Management’s Plan to Remediate the Material Weaknesses

Our management has been engaged in developing and implementing remediation plans to address the material weaknesses described above.

These remediation efforts are ongoing and are expected to include the following:

• Enhancing the design and control procedures of the GITCs to ensure that the control activities related to GITCs are functioning appropriately;

• Improving the control environment in relation to personnel training and accountability of Sarbanes-Oxley Act of 2002 control activities;

• Hiring additional personnel in the IT and Finance and Accounting departments with an appropriate level of knowledge and experience to effectively execute our processes and procedures;

• Expanding controls and/or applying appropriate procedures to address the design and operation of internal controls related to the procure-to-pay process.

We are committed to continuing to implement a strong system of controls and believe that our ongoing remediation efforts particularly in the improvement of our control environment will result in significant improvements to our system of controls and that we believe will remediate the material weaknesses.

As such, our management concluded that we did not have an adequate process in place to complete its assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner.

Remediation of Prior Year Material Weaknesses

As disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023, we previously identified material weaknesses related to GITCs, purchase order approval workflow and the COSO framework.

During the fiscal year ended December 31, 2023, we implemented an intensive program to remediate the previously identified material weaknesses, which included expanding resources, including hiring a Chief Information and Security Officer in the third quarter of 2023, enhancing our control activities for key systems and business processes, and providing training.

In addition, we performed manual procedures to validate the completeness and accuracy of the reports generated from the systems that are relevant to the preparation of the consolidated financial statements that did not have effective GITCs.

While we believe that we have completed updates to the control design for the majority of our systems and purchase order approval workflow in response to the identified material weaknesses, the redesigned controls did not operate for a sufficient period of time for management to reach a conclusion regarding the operating effectiveness of the controls that were redesigned in the fiscal year ended December 31, 2023.

However, our management concluded these material weaknesses did not result in any material misstatement in our financial statements or disclosures for the fiscal year ended December 31, 2023.

Our management is committed to maintaining a strong internal control environment.

In response to the material weaknesses described above, our management is continuing to take actions to remediate the material weaknesses in internal control over financial reporting, which include but are not limited to the following:

• Continuing to enhance the design and control procedures of the GITCs to ensure that the control activities related to GITCs are functioning appropriately.

• Continuing to implement training to ensure a clear understanding of risk assessment, control execution, and monitoring activities related to financial reporting and continue driving accountability of Sarbanes-Oxley Act of 2002 control activities.

• Continuing to focus on controls execution and monitoring activities of internal controls related to the procure-to-pay process.

• Continuing to expand the available resources at the Company with experience designing and implementing control activities, including GITCs, through hiring and use of third-party consultants and specialists.

We are committed to continuing to implement a strong system of controls and believe that our ongoing remediation efforts, particularly in the improvement of our control environment, will result in significant improvements to our system of controls that we believe will remediate the material weaknesses.

However, material weaknesses are not considered remediated until the new controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.

This remediation process will require resources and time to implement.

This remediation process may require additional resources and will require time to implement.

We will continue to monitor the effectiveness of these remediation measures, and we will make any changes to the design of our remediation plans and take such other actions that we deem appropriate given the circumstances.

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OTHER INFORMATION

During the fiscal quarter ended December 31, 2023, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

34 unchanged sentences

8-K 001-36536 3.1 6/21/2021

3.3 Amended and Restated Bylaws of the Registrant.

3.3 Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated June 16, 2023.

8-K 001-36536 3.1 6/20/2023

3.4 Amended and Restated Bylaws of CareDx, Inc., effective as of March 24, 2023.

8-K 001-36536 3.1 3/28/2023

4.1 Form of Registrant’s common stock certificate.

8 unchanged sentences

10-Q 333-211538 4.5 7/29/2021

4.6 Form of Warrant.

8-K 001-36536 10.3 4/14/2016

2019 Inducement Equity Incentive Plan.

1 unchanged sentence

Description of Securities of CareDx, Inc.

10.1# Offer Letter, dated November 13, 2018, between the Registrant and Reginald Seeto, MBBS.

8-K 001-36536 10.1 11/26/2018

Form of Change of Control and Severance Agreement between the Registrant and each of its executive officers.

S-1 333-196494 10.11 6/3/2014

10.3# Amendment to Change of Control and Severance Agreement, dated October 29, 2020, by and between the Registrant and Reginald Seeto, MBBS.

8-K 001-36536 10.1 10/29/2020

Promotion Letter, dated May 21, 2022, by and between the Registrant and Abhishek Jain.

10-Q 001-36536 10.3 8/14/2022

10.5 Consulting Agreement, dated May 20, 2022, by and between the Registrant and Ankur Dhingra.

10-Q 001-36536 10.2 8/14/2022

Promotion Letter, dated July 12, 2021, between the Registrant and Alex Johnson.

4 unchanged sentences

10-K 001-36536 10.19 3/31/2015

10.9# Outside Director Compensation Policy.

10-K 001-36536 10.10 2/28/2020

Outside Director Compensation Policy, last amended December 21, 2023.

001-36536 10.1 12/22/2023

Lease, dated April 27, 2006, as amended on November 10, 2010, by and between the Registrant and BMR-Bayshore Boulevard LLC, for office and laboratory space located at 3260 Bayshore Boulevard, Brisbane, California 94005.

S-1 333-196494 10.12 6/3/2014

Second Amendment to Lease, dated January 2, 2020, by and between the Registrant and BMR-Bayshore Boulevard LP (formerly known as BMR-Bayshore Boulevard LLC), for office and laboratory space located at 3260 Bayshore Boulevard, Brisbane, California 94005.

10-Q 001-36536 10.1 4/30/2020

Incorporated by Reference

1 unchanged sentence

Exhibit Filing Date

10.11+ Second Amendment to Lease, dated January 2, 2020, by and between the Registrant and BMR-Bayshore Boulevard LP (formerly known as BMR-Bayshore Boulevard LLC), for office and laboratory space located at 3260 Bayshore Boulevard, Brisbane, California 94005.

10-Q 001-36536 10.1 4/30/2020

Third Amendment to Lease, dated June 27, 2022, by and between the Registrant and BMR-Bayshore Boulevard LP.

4 unchanged sentences

10-Q 001-36536 10.1 11/3/2022

10.15 Amended and Restated Exclusive Agreement, dated January 27, 2014, by and between the Board of Trustees of the Leland Stanford Junior University and ImmuMetrix, Inc.

10-Q 001-36536 10.1 8/14/2022

License and Commercialization Agreement, dated May 4, 2018, between the Registrant and Illumina, Inc.

2 unchanged sentences

8-K 001-36536 1.1 4/15/2022

Separation Agreement, dated September 20, 2023, by and between CareDx, Inc.

and Abraham Ronai.

001-36536 10.1 11/8/2023

Legal Consulting Agreement, dated September 20, 2023, by and between CareDx, Inc.

and Abraham Ronai.

001-36536 10.2 11/8/2023

Consulting Agreement, dated October 30, 2023, by and between CareDx, Inc.

and Reginald Seeto, MBBS.

Separation Agreement, dated November 1, 2023, by and between CareDx, Inc.

and Reginald Seeto, MBSS.

Retention Bonus Letter, dated December 1, 2023, by and between CareDx, Inc.

and Alex Johnson .

Retention Bonus Letter, dated December 1, 2023, by and between CareDx, Inc.

and Abhishek Jain.

21.1* Subsidiaries of the Registrant.

23.1* Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.

24.1* Power of Attorney (see page 1 3 3 of this Annual Report on Form 10-K).

24.1* Power of Attorney (included on the signature page of this Annual Report on Form 10-K).

31.1* Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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§ 1350 (Section 906 of Sarbanes-Oxley Act of 2002).

Clawback Policy

101.INS* Inline XBRL Instance Document

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Omitted portions have been filed separately with the SEC.

‡ Certain identified information has been omitted pursuant to Item 601(b)(10) of Regulation S-K because such information is both (i) not material and (ii) information that the Registrant treats as private or confidential.

The Registrant hereby undertakes to furnish supplemental copies of the unredacted exhibit upon request by the SEC.

+ Non-material schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

5 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Reginald Seeto, MBBS

Reginald Seeto, MBBS

President and Chief Executive Officer

February 28, 2024

/s/ ALEXANDER L.

President of Patient and Testing Services

(Principal Executive Officer)

/s/ ABHISHEK JAIN

Abhishek Jain

Chief Financial Officer

(Principal Accounting and Financial Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Reginald Seeto and Abhishek Jain, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander L.

Johnson and Abhishek Jain, and each of them, his true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on behalf of the registrant on the dates and the capacities indicated.

Signature Title Date

/s/ REGINALD SEETO, MBBS President, Chief Executive Officer and Director

/s/ ALEXANDER L.

JOHNSON President of Patient and Testing Services

(Principal Executive Officer)

February 28, 2024

Reginald Seeto, MBBS

/s/ ABHISHEK JAIN Chief Financial Officer

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures