CareDx(CDNA) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported quarterly revenues of $82.4 million, representing a 4% year-over-year growth, and full-year revenues of $321.8 million, reflecting a 9% year-over-year growth [80][81] - Testing services revenue for Q4 declined by 5% year-over-year to $65.4 million, while full-year testing services revenues grew by 2% year-over-year to $263.8 million [108][110] - The company achieved record cash collections at 110% of testing services revenues in Q4, marking a 10% year-over-year increase [78][93] Business Line Data and Key Metrics Changes - Testing volumes grew by 19% year-over-year, significantly outpacing the transplant volume market growth of 4% [80][109] - The product revenues and patient and digital solution revenues showed meaningful growth year-over-year, with products and digital accounting for over 20% of total revenues in Q4 [80][81] - The company expects testing services revenue growth to be in the low to mid-single digits, while non-testing services are projected to grow in the high single digits [66] Market Data and Key Metrics Changes - The payer mix shifted to 68% commercial in Q4, up from 62% in the same quarter last year, impacting revenue growth due to an increase in non-reimbursed tests [111] - The company noted a negative impact on revenue growth from the shift from Medicare to Medicare Advantage, estimating a potential $20 million in incremental cash revenue if paid at the same rate as other reimbursed tests [111] Company Strategy and Development Direction - The company is focused on the "3Cs": catalysts, coverage, and collections, which represent pivotal opportunities for growth [83][92] - The company plans to launch new products such as AlloMap Kidney and UroMap, which will enhance its portfolio of post-transplant monitoring solutions [83][84] - The company aims to achieve profitable adjusted EBITDA in the first half of 2023, supported by a robust balance sheet and improved cash collections [78][99] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential for increased coverage following new guidelines from the International Society of Heart and Lung Transplantation, which support the expanded use of the company's heart care solutions [90] - The management acknowledged challenges in the transplant market, including staffing shortages and a decline in living donor transplants, but remains hopeful for recovery in the coming years [102] - The company is committed to maintaining a strong financial profile and is focused on achieving adjusted EBITDA profitability [97][99] Other Important Information - The company ended 2022 with $293 million in cash and cash equivalents, with no debt, providing flexibility for future investments [78][99] - The company has initiated discussions with payers regarding the new guidelines, which could lead to increased reimbursement over time [90] Q&A Session Summary Question: What is the feedback from payers regarding the ISHLT guidelines? - Management reported positive receptivity from payers and initiated discussions to present information supporting earlier coverage based on the new guidelines [9][10] Question: What is the current status of the transplant volume growth? - Management indicated a negative 3% sequential decline in transplant volumes, with challenges such as staffing shortages and living donor transplants not rebounding [15][16] Question: How does the company plan to achieve adjusted EBITDA positivity? - Management highlighted the importance of market volume growth and managing expenses as key factors to maintain positive adjusted EBITDA [45][47] Question: What is the expected impact of the HLA Data Systems acquisition? - Management stated that the acquisition would not materially impact revenue in 2023 but is part of a strategy to enhance digital capabilities [51] Question: What are the expectations for cash collection improvements? - Management indicated that cash collections are expected to exceed testing services revenues as the company catches up on delayed processes [27]