CareDx(US:CDNA)2020-05-01 02:55Financial Data and Key Metrics Changes - Total revenue for Q1 2020 was $38.4 million, a 48% increase compared to Q1 2019, driven primarily by testing services [10][27] - Testing services revenue increased 46% year-over-year to $31.4 million, while product revenue rose 6% to $4.7 million [27] - Gross margin improved to 68% in Q1 2020 from 63% in Q1 2019, with non-GAAP gross margin at 71% compared to 67% [28][29] - Net loss narrowed to $5.8 million in Q1 2020 from $7.5 million in Q1 2019, with net loss per share improving to $0.14 from $0.18 [30][32] - Positive adjusted EBITDA of $0.2 million was recorded, marking the seventh consecutive quarter of positive adjusted EBITDA [11][33] Business Line Data and Key Metrics Changes - Testing services accounted for the majority of revenue growth, particularly from AlloSure Kidney and AlloMap Heart [27] - Digital revenue contributed $2.2 million to the total revenue, reflecting growth from recent acquisitions [10][27] Market Data and Key Metrics Changes - The impact of COVID-19 led to a slowdown in testing services volume towards the end of the quarter, but volumes have nearly returned to pre-COVID levels [12][17] - Transplant centers experienced a significant drop in activity, with overall transplant volumes down by 30% to 40% in some areas [47] Company Strategy and Development Direction - The company launched RemoTraC, a home-based monitoring solution for transplant patients, in response to COVID-19, which has seen rapid adoption [14][15] - CareDx is focusing on digital capabilities and telehealth integration to enhance patient engagement and clinical decision-making [23][82] - The company has withdrawn its 2020 revenue guidance due to uncertainties surrounding COVID-19's impact on business [24][38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to adapt and recover from the COVID-19 crisis, emphasizing the importance of compassion and common sense in their operational plans [21][26] - There is uncertainty regarding the long-term impact of COVID-19 on transplant activities, but management believes that transplant centers will gradually return to normal operations [49][56] Other Important Information - The company has established a global COVID-19 transplant registry in partnership with the National Institute of Health to gather data on the impact of COVID-19 on transplant patients [18][19] - Cash and cash equivalents as of March 31, 2020, were $32.2 million, with a negative net operating cash flow of $3.1 million due to annual incentive compensation payments [34][35] Q&A Session Summary Question: What is the new operating model for RemoTraC? - Management indicated that RemoTraC has become a significant part of their operations, with patients appreciating the convenience of mobile phlebotomy [40][41] Question: What is the current state of transplant activity? - Management noted that transplant volumes are down by 30% to 40%, but they expect a return to normalcy as centers reopen [46][47] Question: How is the company positioning itself in the post-COVID world? - The company is leveraging digital tools and virtual meetings to maintain engagement with transplant centers and patients [68] Question: What is the impact of the $20 million advance payment program with CMS? - The program allows Medicare providers to request an advance of expected payments, which will be recouped over time [71][72]