CareDx (NasdaqGM:CDNA) FY Conference November 20, 2025 09:00 AM ET Company ParticipantsKeith Kennedy - COOJohn Hanna - CEOConference Call ParticipantsMason Carrico - Research AnalystMason CarricoWelcome, everyone, to day three of the Stephens Conference. I'm Mason Carrico. I'm the med tech and diagnostics analyst here. Excited to have CareDx with us today. We've got John Hanna, CEO, and Keith Kennedy, COO. Thank you, guys, for making it.John HannaThanks for having us, Mason. We really appreciate it.Keith Ke ...

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]

Financial Performance & Growth - CareDx reported Q1 2025 revenue of $84.7 million, an 18% increase year-over-year[18] - Testing volume in Q1 2025 reached approximately 47100, a 12% increase year-over-year[18] - The company's non-GAAP gross margin for Q1 2025 was 685%, a 150 basis points increase[18] - Adjusted EBITDA for Q1 2025 was positive $4.6 million, a $6.4 million increase year-over-year[18] - CareDx is targeting a 15% 3-year revenue Compound Annual Growth Rate (CAGR) and aims for $500 million in revenue by 2027[61] - The company is aiming for a gross margin target of >70% and an adjusted EBITDA target of 20% by 2027[61] Market Position & Strategy - CareDx estimates the transplant services market to be a $50 billion market[24] - The company has performed approximately 1 million rejection monitoring tests[24] - Accounts with 3 or more CareDx solutions have 2x higher average patient acquisition and 2x the testing services revenue[34] Innovation & Pipeline - CareDx is expanding into cell therapy monitoring with products like AlloCell and AlloHeme[48, 55] - The company is launching new diagnostics, including HistoMap Kidney, AlloSure SPK, and AlloSure Heart PEDS[41]

Financial Data and Key Metrics Changes - CareDx reported quarterly revenue of $86.6 million for Q4 2024, representing a 32% year-over-year increase [10] - Full year 2024 revenue reached $334 million, up 19% year-over-year, exceeding the high end of guidance [36] - Adjusted EBITDA for Q4 was $9.8 million, with a full year adjusted EBITDA of $27.8 million, a significant improvement from a loss of $38 million in 2023 [10][42] - The company ended the year with a cash balance of $261 million and no debt, generating $22 million in cash from operations in Q4 [10][44] Business Line Data and Key Metrics Changes - Testing Services revenue for Q4 was $63.8 million, up 37% year-over-year, with approximately 45,500 tests delivered, marking a 14% increase [12][13] - Patient and Digital Solutions revenue was approximately $11.4 million in Q4, representing an 18% year-over-year growth [15] - Lab Products revenue also reached $11.4 million, showing a 23% year-over-year increase, driven by sales of AlloSeq Tx NGS-based HLA typing kits [17] Market Data and Key Metrics Changes - CareDx expanded payer coverage significantly, adding or expanding coverage for 28 million lives for AlloMap Heart and 36 million lives for AlloSure in 2024 [14] - Approximately 5% of CareDx's revenue comes from outside the U.S., with significant potential for growth in the European market [19] Company Strategy and Development Direction - The company aims for long-term profitable growth, targeting $370 million in revenue for 2025 and $500 million by 2027, with a focus on operational excellence and scaling business profitably [10][48] - Key growth drivers include a go-to-market strategy to provide comprehensive solutions to transplant centers, evidence generation to expand payer coverage, and operational excellence to improve efficiency [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving significant milestones in 2025, particularly with the anticipated implementation of the IOTA program for kidney transplant centers [23][24] - The company is focused on enhancing patient adherence to immunosuppressants through a medication therapy management program launching in 2025 [26] Other Important Information - The company has initiated a share buyback program of up to $50 million over two years, reflecting confidence in its financial position [44] - A significant legal victory reversed a prior $96 million verdict, positively impacting the company's financial statements for 2024 [42] Q&A Session Summary Question: Can you discuss efforts in converting existing accounts with fewer than three solutions to three or more solutions? - Management highlighted the focus on the XynQAPI product for quality reporting and the launch of a medication therapy management program to assist patients with drug interactions, which will drive the use of AlloSure [56] Question: What is the path forward regarding litigation after the reversal of the $96 million verdict? - Management indicated that while an appeal is likely, the reversal allows for strategic capital allocation, including reinvestment in growth opportunities and share buybacks [66] Question: Can you clarify the impact of prior period collections on Q4 revenue and guidance for 2025? - Q4 revenue included approximately $2.2 million from prior period collections, with no contributions from these one-time tests included in the 2025 guidance [72][73] Question: How much of the mid-teens volume growth in 2025 is expected from increased surveillance testing? - Management believes surveillance testing will significantly contribute to mid-teens volume growth, with ongoing discussions to turn on protocols at transplant centers [75] Question: What opportunities exist to improve revenue capture through the billing organization? - The company is focused on enhancing billing processes and systems to improve cash collection, with a new leader in place to drive these initiatives [87][90] Question: Can you remind us of the objectives of the KOAR study? - The KOAR study is a prospective multicenter study evaluating the efficacy of AlloSure Kidney to detect rejection, which is crucial for payer acceptance and product adoption [96]