Revenue Performance - Revenue for the three months ended September 30, 2025, was $100.1 million, an increase of 21% year-over-year [125]. - Total revenue for the nine months ended September 30, 2025, was $271.4 million, an increase of $24.2 million or 10% compared to $247.2 million in 2024 [145]. - Testing services revenue was $72.2 million, representing 72% of total revenue, with a 19% increase year-over-year and a testing volume growth of 13% [123][133]. - Testing services revenue increased by $10.6 million, or 6%, driven by a 13% growth in testing services volume [146]. - Product revenue increased by 22% year-over-year to $12.5 million, primarily due to higher sales of NGS-based kitted solutions [124][134]. - Product revenue rose by $5.7 million, or 19%, primarily due to higher sales of commercial NGS-based kitted solutions [147]. - Patient and digital solutions revenue grew by 30% year-over-year to $15.4 million, driven by an expanded customer base from Ottr software and higher pharmacy sales [127][135]. - Patient and digital solutions revenue grew by $7.9 million, or 25%, mainly from an expanded customer base and higher pharmacy sales [148]. Profitability and Income - Net income for the three months ended September 30, 2025, was $1.7 million, compared to a net loss of $10.6 million in the same period of 2024 [125][132]. - Net loss for the nine months ended September 30, 2025, was $17.2 million, a reduction of $17.9 million or 51% compared to a net loss of $35.1 million in 2024 [145]. Expenses - Research and development expenses decreased by 4% year-over-year to $16.8 million, influenced by lower clinical trial and laboratory supply expenses [139]. - Sales and marketing expenses increased by 23% year-over-year to $24.4 million, primarily due to higher personnel-related costs [140]. - General and administrative expenses decreased by 10% year-over-year to $28.4 million, mainly due to lower stock-based compensation expenses [141]. - Total operating expenses increased by $5.3 million, or 2%, totaling $296.2 million for the nine months ended September 30, 2025 [145]. Cash and Securities - Cash, cash equivalents, and marketable securities totaled $194.2 million as of September 30, 2025, with no debt [125]. - Cash provided by operating activities was $20.7 million for the nine months ended September 30, 2025, compared to $16.2 million in 2024 [161][162]. - Net cash used in financing activities was $80.9 million, primarily due to stock repurchases totaling $75.6 million [165]. - As of September 30, 2025, the company had cash and cash equivalents of $91.4 million, consisting of bank deposits and money market funds [181]. Foreign Currency and Risk Management - The company is exposed to foreign currency exchange risks, with a 10% unfavorable change in exchange rates potentially impacting product revenue by $1.4 million [182]. - Revenue from testing services is primarily denominated in U.S. dollars, while product revenue is mainly in U.S. dollars and Euros [182]. - Operating expenses incurred outside the U.S. are denominated in Swedish Krona and Euros, subject to fluctuations in exchange rates [182]. - The company does not currently have plans for a formal hedging program to mitigate foreign currency volatility but may consider it in the future [182]. - The company continues to reassess its approach to managing risks related to foreign currency exchange rate fluctuations [182]. Accounting Policies and Estimates - There were no material changes in critical accounting estimates during the three and nine months ended September 30, 2025 [177]. - Significant accounting policies include revenue recognition, business combinations, and impairment of goodwill and intangible assets [178]. - Recent accounting pronouncements and their expected effects on operations and financial position are detailed in the quarterly report [180]. Interest Income - Interest income decreased by 33% year-over-year to $2.0 million, primarily due to a decrease in cash and cash equivalents [142]. - A hypothetical 100 basis point increase or decrease in interest rates would have an approximate impact of $0.9 million on the company's balance sheets [181]. Registration Statement - The company has filed a universal shelf registration statement allowing for the sale of up to $250.0 million in various securities [169].

Financial Performance - Total revenue for Q3 2025 was $100.1 million, representing a 21% increase year-over-year from $82.9 million in Q3 2024[5] - Testing services revenue reached $72.2 million, up 19% from $60.8 million in the same quarter last year[6] - Adjusted EBITDA for Q3 2025 was $15.3 million, compared to $6.9 million in Q3 2024[8] - GAAP net income was $1.7 million, a significant improvement from a net loss of $10.6 million in Q3 2024[7] - GAAP total revenue for Q3 2025 was $100,055,000, an increase of 20.6% compared to $82,883,000 in Q3 2024[24] - GAAP net income for Q3 2025 was $1,675,000, a significant improvement from a net loss of $10,637,000 in Q3 2024[26] - Non-GAAP gross profit for Q3 2025 was $70,939,000, up from $57,207,000 in Q3 2024, resulting in a non-GAAP gross margin of 71%[24] - The company reported a non-GAAP net income of $14,896,000 for Q3 2025, up from $7,968,000 in Q3 2024[26] - GAAP gross margin improved to 69% in Q3 2025 from 67% in Q3 2024[24] Revenue Guidance and Projections - CareDx raised its 2025 revenue guidance to a range of $372 million to $376 million, up from the previous range of $367 million to $373 million[9] Product Development and Launches - The company introduced HistoMap Kidney, a new tissue-based gene expression profiler for kidney transplant patients[4] - CareDx launched AlloSeq Tx11, a next-generation HLA typing solution to enhance transplant risk profiling[4] Cash and Financial Position - Cash, cash equivalents, and marketable securities totaled $194.2 million as of September 30, 2025, with no debt outstanding[4] Leadership Changes - The company appointed Suresh Gunasekaran and Jeff Teuteberg to its Board of Directors and as Chief Medical Officer, respectively, to strengthen its leadership[4] Operating Expenses - Total GAAP operating expenses for Q3 2025 were $69,647,000, slightly higher than $69,032,000 in Q3 2024[22] - Non-GAAP operating expenses decreased to $57,853,000 in Q3 2025 from $52,221,000 in Q3 2024[22] - Sales and marketing expenses increased to $24,449,000 in Q3 2025 from $19,802,000 in Q3 2024, reflecting increased investment in growth initiatives[22] - Research and development expenses decreased to $15,449,000 in Q3 2025 from $15,711,000 in Q3 2024, indicating a focus on efficiency[22]

Core Insights - CareDx, Inc. has appointed Dr. Jeffrey John Teuteberg as Chief Medical Officer, effective October 1, 2025, bringing over two decades of experience in clinical transplantation [1] Company Overview - CareDx, Inc. is recognized as a leading precision medicine company focused on developing and commercializing healthcare solutions specifically for transplant patients and their caregivers [1]

Core Insights - CareDx, Inc. is a leading precision medicine company focused on transplant patients and caregivers [1] Group 1: Company Innovations - CareDx announced new innovations and products to be featured at the ASHI 2025 Annual Meeting [1] - The event will take place from October 6th to 10th in Orlando [1]

Financial Data and Key Metrics Changes - The company reported solid test volume growth in Q2, with low double digits overall and kidney testing up almost 20% [5][41] - The revenue guidance for the full year was tightened, with a midpoint of $370 million, reflecting confidence in growth despite a $5 million write-off in the first half [41][42] - The average selling price (ASP) is projected to increase to $1,400 by the end of the year, representing a 7% increase [31] Business Line Data and Key Metrics Changes - The digital solutions segment, which accounts for about 15% of revenue, has grown at a CAGR of 20% to 30% over the last three years, driven by the adoption of multiple services by transplant centers [43] - The company has successfully implemented surveillance protocols in 60 transplant centers, with significant room for growth as there are over 200 kidney transplant programs in the U.S. [9][15] Market Data and Key Metrics Changes - The company is in two-thirds of all transplant centers in the U.S., indicating a broad market presence [47] - The market access team has made significant progress in transitioning contracts to a new CPT code, which is expected to enhance revenue predictability and speed up payment processes [49][50] Company Strategy and Development Direction - The company is focused on solutions-based selling, offering a comprehensive portfolio of services to transplant centers, which has driven significant adoption of its products [6][7] - There is an ongoing strategy to convert digital solutions into a SaaS model, enhancing operational efficiency for transplant centers [47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the early stages of market adoption for their services and the positive impact of recent policy changes regarding surveillance testing coverage [3][57] - The company anticipates continued growth in kidney testing volume as more data from clinical studies supports the utility of their services [9][16] Other Important Information - The KOR study publication demonstrated that patients monitored with surveillance testing were six times more likely to detect rejection when undergoing a biopsy, reinforcing the importance of their testing services [39][40] - The company has a strong balance sheet with no debt and close to $200 million in cash, allowing for continued investment in growth initiatives [54] Q&A Session Summary Question: What are the greatest opportunities for CareDx? - Management highlighted the early stages of market adoption for their services and the importance of their role in patient care for organ transplant recipients [3] Question: How much more room is there for additional centers to adopt surveillance protocols? - There are over 200 kidney transplant programs in the U.S., with 60 currently having adopted protocols, indicating significant growth potential [9][15] Question: What impact do you expect from the new Epic system? - The company aims to have 50% of its volume coming through the Epic system by the end of next year, with expectations of increased operational efficiency [18][21] Question: Can you discuss the revenue cycle management program? - Management noted that improvements in revenue cycle management are expected to yield significant benefits over the next two years, with a focus on automation and workflow efficiency [25][28] Question: What is the status of the draft LCD and its potential impact? - The company has advocated for clearer policies on surveillance testing coverage, which could have a significant financial impact depending on the final policy outcome [32][34] Question: What is the company's capital allocation strategy? - The company has been active in buybacks and continues to invest in growth opportunities, particularly in expanding its commercial team and operational infrastructure [54][56]

Core Viewpoint - CareDx, Inc. faces uncertainty due to proposed reimbursement changes that threaten its core testing business, impacting near-term growth, while the company's expanding transplant solutions platform positions it for long-term opportunities in an $8 billion market [1][5]. Company Overview - CareDx is a provider of solutions for transplant centers, offering lab tests, transplant management services, digital administration, and pharma services, targeting a total addressable market (TAM) of $8 billion [3]. Financial Performance - In the second quarter, CareDx reported adjusted earnings of 10 cents, missing the consensus estimate of 12 cents, with sales of $86.68 million, also below the consensus of $90.56 million [4]. - The company narrowed its fiscal 2025 sales guidance from $365 million-$375 million to $367 million-$373 million, compared to the consensus of $370.79 million [4]. Analyst Insights - Analyst Andrew F. Brackmann views CareDx as a deeply undervalued company with a powerful platform, despite ongoing reimbursement challenges that raise questions about its future [2][5]. - Brackmann initiated coverage with a Market Perform rating, noting that shares trade at a 67% discount to peers based on a 2026 revenue multiple and discounted cash flow analysis suggesting a fair value closer to $20 per share [6]. Market Dynamics - The proposed local coverage decision affecting CareDx's testing services, which account for about 75% of revenue, may create modest revenue headwinds, leaving near-term forecasts unclear [5]. - CareDx has faced challenges including reimbursement issues, patent disputes, regulatory probes, and leadership changes, with potential downside from the draft LCD appearing priced in [7]. Stock Performance - CareDx's stock is currently trading higher by 1.02% to $12.88, reflecting some market optimism despite the uncertainties [8].

Group 1 - CareDx reported revenue of $86.68 million for the quarter ended June 2025, a year-over-year decline of 6.1% and an EPS of $0.10 compared to $0.25 a year ago [1] - The revenue surprise was -4.45% compared to the Zacks Consensus Estimate of $90.72 million, and the EPS surprise was -16.67% against the consensus estimate of $0.12 [1] - CareDx's shares have returned -33.3% over the past month, while the Zacks S&P 500 composite increased by +0.5% [3] Group 2 - Revenue from Patient and digital solutions was $12.81 million, exceeding the average estimate of $11.91 million, representing a year-over-year change of +19.2% [4] - Revenue from Testing services was $62.03 million, below the average estimate of $67.39 million, indicating a year-over-year decline of -12.5% [4] - Revenue from Product sales was $11.83 million, slightly above the average estimate of $11.69 million, reflecting a year-over-year increase of +11.5% [4]

Core Insights - CareDx reported quarterly earnings of $0.1 per share, missing the Zacks Consensus Estimate of $0.12 per share, and down from $0.25 per share a year ago, representing an earnings surprise of -16.67% [1] - The company posted revenues of $86.68 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 4.45%, and down from $92.27 million year-over-year [2] - CareDx shares have declined approximately 40% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.15 on revenues of $94.77 million, and for the current fiscal year, it is $0.60 on revenues of $371.5 million [7] - The estimate revisions trend for CareDx was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical Services industry, to which CareDx belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Establishment Labs Holdings Inc., another company in the same industry, is expected to report a quarterly loss of $0.54 per share, with revenues anticipated to be $51.61 million, reflecting a 17% increase year-over-year [9][10]

Financial Data and Key Metrics Changes - Adjusted revenue for Q2 2025 was $90.5 million, representing a 14% year-over-year increase [8][26] - Adjusted EBITDA was $9.1 million, compared to an adjusted loss of $0.3 million in the previous year [8][31] - Cash collections accelerated to 105% of adjusted testing services revenue, with payment per test increasing across all tests and payer classes [22] Business Line Data and Key Metrics Changes - Adjusted testing services revenue was $66 million, up 14% year-over-year, with approximately 49,500 tests delivered, marking an 8th consecutive quarter of sequential testing volume growth [9][28] - Patient and Digital Solutions revenue was approximately $12.8 million, representing a 19% growth compared to last year [23][28] - Lab products revenue was $11.8 million, up 12% year-over-year, driven by sales of AlloSeq Tx kits [25][28] Market Data and Key Metrics Changes - Kidney testing volume grew nearly 20% year-over-year, with over 60 surveillance protocols implemented nationally [10][12] - Heart and lung testing also saw growth, although lung represents a smaller proportion of overall volume [45] - The company added 4.2 million new covered lives for AlloMap Heart, becoming an in-network provider with a large commercial health plan covering 1.2 million lives [17] Company Strategy and Development Direction - The company launched AlloSure Plus, an AI-driven diagnostic for kidney transplant monitoring, aiming to enhance clinical decision-making [11] - CareDx is focusing on expanding its market access strategy and evidence generation to support its products [15] - The company is improving its enterprise infrastructure and business processes to ensure revenue growth outpaces operating expenses [21] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed the midpoint of 2025 revenue guidance, narrowing the range to $367 million to $373 million, with expectations of mid-teens growth in test volumes [8][32] - The draft LCD policy for molecular testing is viewed as a significant step forward, affirming coverage for surveillance testing [18] - Management expressed confidence in the operational excellence initiatives and the potential impact of the draft policy on future financial expectations [21][32] Other Important Information - Abhishek Jain announced his retirement as CFO, with Nathan Smith appointed as the new CFO [35][36] - The company is implementing Epic integration to enhance testing order processes and improve results delivery [21] Q&A Session Summary Question: Discussion on the LCD and potential headwinds - Management highlighted three focus areas for public comments: frequency testing, evidence supporting heart care, and bundled payments [40] Question: Data on heart and lung test volume growth - Heart and lung testing volumes grew, with continued positive trends in transplant volumes [45] Question: Changes to the long-range plan due to the draft LCD - No updates to the long-range plan will be provided until clarity on the final LCD is achieved [50] Question: Clarification on the $30 million headwind scenario - The $30 million headwind was calculated based on the attachment rate of heart care being over 90% [52] Question: Updated split on surveillance versus for-cause testing - There is a significant shift towards surveillance testing, but specific metrics are not being disclosed [56]

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary statement on forward-looking projections about future results and operations, subject to risks, with no obligation to update - Forward-looking statements include projections regarding revenue generation, commercial success of testing services, products, and patient/digital solutions, ability to obtain and expand reimbursement coverage, plans for updating solutions, outcomes of clinical trials, favorable review in publications, ability to obtain additional financing, anticipated cash needs, trends and challenges, dependence on suppliers, business disruptions, retention of key management, successful acquisitions, international expansion, regulatory compliance, intellectual property protection, litigation outcomes, and remediation of **material weaknesses** in internal control[11](index=11&type=chunk) - The company operates in a competitive and rapidly changing environment, with new risks emerging. Management cannot predict all risks or assess the impact of all factors that may cause actual results to differ materially and adversely from forward-looking statements[9](index=9&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events, as the company cannot guarantee that future results, levels of activity, performance, or events will be achieved or occur[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, offering a snapshot of the company's financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $68,212 | $114,689 | | Marketable securities | $118,043 | $145,964 | | Total current assets | $307,296 | $351,832 | | Total assets | $444,257 | $491,050 | | Total current liabilities | $93,180 | $89,371 | | Total liabilities | $116,887 | $112,617 | | Total stockholders' equity | $327,370 | $378,433 | - The company's **total assets** decreased from **$491.05 million** at December 31, 2024, to **$444.26 million** at June 30, 2025, primarily driven by a reduction in cash and cash equivalents and marketable securities[15](index=15&type=chunk) - **Total stockholders' equity** decreased from **$378.43 million** to **$327.37 million**, largely due to accumulated deficit and common stock repurchases, partially offset by additional paid-in capital[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Testing services revenue | $62,033 | $70,918 | $123,954 | $124,755 | | Product revenue | $11,833 | $10,610 | $22,643 | $19,204 | | Patient and digital solutions revenue | $12,813 | $10,746 | $24,767 | $20,364 | | **Total revenue** | **$86,679** | **$92,274** | **$171,364** | **$164,323** | | Total operating expenses | $97,800 | $99,601 | $195,859 | $194,216 | | Loss from operations | $(11,121) | $(7,327) | $(24,495) | $(29,893) | | **Net loss** | **$(8,568)** | **$(4,623)** | **$(18,921)** | **$(24,511)** | | Basic net loss per share | $(0.16) | $(0.09) | $(0.35) | $(0.47) | | Diluted net loss per share | $(0.16) | $(0.09) | $(0.35) | $(0.47) | - For the three months ended June 30, 2025, **total revenue decreased by 6%** year-over-year, primarily due to a **13% decrease** in testing services revenue, partially offset by **increases in product (12%)** and **patient and digital solutions (19%) revenue**[17](index=17&type=chunk) - **Net loss** for the three months ended June 30, 2025, **increased by 85%** to **$8.6 million** compared to **$4.6 million** in the same period of 2024[17](index=17&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the company's comprehensive loss, including net loss and other comprehensive income/loss items, for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Loss Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net loss | $(8,568) | $(4,623) | $(18,921) | $(24,511) | | Foreign currency translation adjustment, net of tax | $976 | $144 | $2,456 | $(1,001) | | **Comprehensive loss** | **$(7,592)** | **$(4,479)** | **$(16,465)** | **$(25,512)** | - The **comprehensive loss** for the three months ended June 30, 2025, was **$7.6 million**, an increase from **$4.5 million** in the prior year, primarily influenced by the **net loss** and a positive foreign currency translation adjustment[20](index=20&type=chunk) - For the six months ended June 30, 2025, **comprehensive loss** was **$16.5 million**, an improvement from **$25.5 million** in the prior year, largely due to a lower **net loss** and a positive foreign currency translation adjustment[20](index=20&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%20Equity) This section outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, for the periods presented Condensed Consolidated Statements of Stockholders' Equity Data | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------- | :---------------------------- | :--------------------------- | | Common Stock (Shares) | **54,771,203** | **55,462,730** | **53,220,123** | | Common Stock (Amount) | $51 | $51 | $53 | | Additional Paid-In Capital | **$1,013,193** | **$1,022,982** | **$1,028,591** | | Accumulated Other Comprehensive Loss | **$(8,569)** | **$(7,089)** | **$(6,113)** | | Accumulated Deficit | **$(626,242)** | **$(636,595)** | **$(695,161)** | | **Total Stockholders' Equity** | **$378,433** | **$379,349** | **$327,370** | - **Total stockholders' equity** decreased from **$378.43 million** at December 31, 2024, to **$327.37 million** at June 30, 2025. This was primarily driven by a **net loss** of **$18.92 million** for the six months ended June 30, 2025, and a **$50.0 million** repurchase and retirement of common stock[23](index=23&type=chunk) - Additional paid-in capital increased by **$15.4 million** during the six months ended June 30, 2025, mainly due to employee stock-based compensation expense (**$18.36 million**) and proceeds from stock option exercises (**$4.08 million**), partially