Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen, and welcome to the CareDx, Incorporated Fourth Quarter 2022 Earnings Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Greg Chodaczek. Please go ahead.

Greg Chodaczek

Good afternoon and thank you for joining us today. financial the released XXst, ended CareDx XXXX. today, results quarter for December Earlier currently Company’s on release available The is the website www.caredx.com. at host Chief Seeto, Financial Executive and this will Abhishek afternoon’s Reg call. Jain, Officer; Officer, Chief

will within started, made get pursuant which call to that during would Before of be forward-looking federal we statements statements I making include Private are meaning call remind like everyone Securities statements management to are the Litigation that laws, this Act of the safe historical Any this harbor of deemed forward-looking of contained statements the in be to that provisions not XXXX. should statements. Reform facts be securities

These statements. All decisions, and and based statements upon forward-looking cause by historical coverage to pricing differ of that and or assumptions. examination you current estimates from reliance enrollment actual these results Accordingly, are these and our undue without statements, expectations should results limitation, various could matters implied are financial involve regarding those place operating on anticipated trends, risks expectations materially forward-looking and uncertainties material statements. including, not future

list XXth, future information, information, projections new or financial otherwise. this XXXX. of only the with and or our live obligation, statements, to any Commission. and Securities revise uncertainties because provided with of except business, speaks or please For a see the any our of filings February information CareDx today, intention The law, other Exchange disclaims conference the descriptions or call as in risks associated broadcast required update by events whether to forward-looking

in release measure measures comparable accordance the financial may of Principles. most financial found calculated earnings directly SEC. filed also with not in be Reconciliation This include Accounting call the will discussion are to certain with a Generally GAAP today’s Accepted that

to over I call Reg. turn the will now

Reginald Seeto

afternoon, and fourth Good earnings us. everyone. to year for joining full you call. And quarter Welcome Greg. thank XXXX Thanks, CareDx’s conference

The transplant the areas. the of the our company innovation in the our execution mission to will focus on today’s significant bring key being progress be in leader ecosystem, call the made patient while three towards of XXXX across journey. vision progress delivering During and transplant on

The as our we financial profitability versus differentiated profile peers. path first is share the to CareDx’s

the coverage, hit second point fourth collections quarter is development the XCs; transplant with collections where XXXX. catalysts, leadership third ecosystem. the digital we on during of an with is and in focus the of inflection And especially the ecosystem, The our building the

financial importance has Turning strong and with to past profile. of our the year, the inflation first during to further topic high emphasized maintain companies recession environment of threat on the position. a economic The the financial

this, we’re adjusted focused in achieve a Given profitable balance to EBITDA robust on a half of XXXX. plan first with the sheet maintaining

commitment. The following support this

company million years, announced position growth and XXXX the and of authorized two an conference directors management's program December board First, over upto long-term in opportunities. of share the $XX the of buyback in demonstrating business, cash

marketable securities As with repurchase million of balance – cash in no debt. equivalents the ended have on $XXX We and program and continued the early million cash shares and we secondly XXXX. end our of executing we have X.X XXXX in and of sheet XXXX,

at solid significantly testing XXXX, during cash that service Our driven collections cash revenues. led to by record in performance collections infrastructure we invested which services was improved QX testing in of for our XXX%

positive of generated in from million cash $X also We operations QX XXXX.

cash a to capital. with flexibility CareDx and sheet improved allows play CareDx’s raising even share collections And strong our additional without capital this thirdly, balance buyback

X% million to representing the revenues quarterly year-over-year a of turning $XX.X financial delivered results, Now growth. we

CareDx full revenues year the For X% XXXX, of $XXX.X million growth. recorded representing year-over-year

market outpace volume which services year-over-year, testing growth grew XX% X%. Our to continued of

growth digital fourth XXXX. year and showed revenues solution year-over-year patient the meaningful and full for quarter revenues product Our and

of strategy lines our of digital the more products with quarter, total in accounted for XX% our than of business fourth revenues growing scale. and Notably consistent

Importantly, EBITDA. have adjusted we improved continued milestones some trend sequential our related study excluding of QX clinical in and costs startup elevated

into track of adjusted on half XXXX As the we we to move remain deliver EBITDA in XXXX. profitability first

see multiple as to we in levers target As gross improvement grow, testing further gross our services with of plus. our margin, we in opportunities drive non-GAAP long-term, $X.XX revenues continue margin to

closure the to XXXX, to in Although an Fremantle product not XXXX expected and middle footprint with have have consolidated products a site plan improve in in margins, the operations the Stockholm impact our we site. of to of the plan reduction of

as XXXX catalyst, and strategy. focus XXXX drivers. key represents catalyst, opportunity three collections. to coverage part growth CareDx’s our to XCs our Turning of pivotal for Each a

Catalyst. with starting Now

excited of AlloSure join will Heart UroMap Lung portfolio When launched, AlloMap solutions, in which XXXX of include which which kidney was AlloMap introduced the these introduced We’re XXXX, in Kidney, in introduced potential XXXX, monitoring the number one offerings Kidney. AlloSure and introduced was and in which Heart, was AlloSure by addition best-in-class XXXX. post-transplant

have and transplant delivering and We of a long proven successful innovation. history

is measured and to kidney. LCD AlloMap clear proven infrastructure is provides on AlloMap this innovation that achieving we're to and The be process. gene from longitudinally. patients in under platform MolDx currently is Now FDA bring upon This approval already quantified to result review MolDx. can built expression a transplant moving excited a on place,

submission. UroMap, stages Regarding the preparing MolDx we're final for

Journal publications With the likelihood is New gene publication multiple both a of nephropathy. data. UroMap that across The Medicine As clinical have a urine and in BK rejection virus best-in-class reminder, assesses probability a validation of strong England in we the a and signature

invested core few years, catalyst heart. a intelligence company's the we've artificial Over pipeline development the last and as of in kidney part in

use transplant of We about AI play share other more to the year. As will role plan management. seen COV kidney with throughout and AO the industries, in in and latest a key AI developments the AI

the of Despite our product tests, support launches. community launched turning the reimbursement with coverage Now continue and second lack to recently patients transplant bridge. in broad to we new

for the obtaining than greater Heart greater total standard expertise cents gold strong diagnostics respectively. and XX% and extensive a coverage AlloSure of with $X.XX as coverage, we've years, built serve These with pay past and Over our experience kidney. reimbursement coverage AlloMap

Now, two And in AlloSure five respectively. Lungs newer time years their which and than and and with coverage, and but one it take haven't plan has including AlloSure achieve taken thus this AlloMap ago more Therefore XX Kidney, his Heart are years peak products increase launched AlloSure will early launch to Heart were only we lifecycle. Kidney. of through and coverage respectively, played and post to relatively AlloSure time are success AlloMap Heart

Lung the heartcare fourth transplantation of solutions routine of International in Heart support Importantly, transplant new now of and during patients. expanded announced monitoring CareDx’s the use AlloSure and the which guidelines, quarter, Society AlloMap

months this are with the guidelines consistent from than decade guidelines previous biopsies. update old. use what of discussions new regarding two allow These evolved with months reimbursement over update. with more has should more The a early capture is for AlloMap payers post-transplant. shift This last commercial away of Heart payers. us we these currently which We've the some And surveillance multiple from recommend starting to this decade coverage initiated invasive have at limited guideline

EBITDA. is we to use a it for of and guidelines of improvement and expression $XXX clear The hence in in single greater lead QX, determination with tests coverage quickly four over starting are profiling time. represent in of Abhishek across detail AllSure will new in achieve patients. should new section. heart more highly inclusion [Ph] estimate working kidney support than transplant gene This Additionally, derived There donor standard coverage XXXX ISO these and reimbursement for guidelines to MolDx Medicare. CareDx potential surveillance one and by of represents million in non-reimbursed remote On community lung as our greatest revenue HeartCare. with is in company. increased this portfolio vulnerable in patients surveillance becoming This in the transplant demand opportunity care AlloSure in the Lung potential cover the Lung, commercial the the

our collections. to C turning Now third

we authorizations building mentioned, during and invested proof Advantage. quarter our infrastructure of address appeals. to our collections we our the signs has significant mix offer built Medicare the As and to QX, In collections, pay within as commercial, heavily and fourth last number we including necessary shifting to QX and year, sort point The infrastructure of strategy. saw the increased in cash of been prior our improvements denials of XXXX

With coverage to for highest forward. CareDx progress with be of catch for the and improved this moving [ph] year-over-year deal and services, strike we cash revenues strong Advantage, testing with representing a XX% future quarter, for the fourth ability our on increase collections, this XXX% ever operational Collections continue initiative. the significant through For collections collections. Medicare demonstrating up at approximately achieved focus process to will new

vision across established patient transplant in continue leadership remained only leadership on entire transplant, build Not of now blocks focused We is on ecosystem. journey. to the CareDx but the company’s our XXX% building the

over We platform and EMR our manages as and strategy we data XX accurate of Our our to results cornerstone clinicians lab enabling acquired recently HLA is leadership This continuous ecosystem systems allowing labs such as transplant before timely expands for patient our our which connects to addition transplant. the capabilities, patients monitoring the provide Cerner. and digital leading to a systems; us of position decision-making digital lab deepen Epic care. mode, HLA that after

this one with leadership marking, downloads number centers offerings. established we’re leadership have XXX,XXX we’re EMRs copy already and med in patients ecosystem transplant with number Recently, with post-transplant have AlloMap AlloSure centers [Indiscernible] that is leading transplant XX,XXX over And focused center, we’ve more we where our XX-plus that care. over and the With X with space. either our app, action medication have number XX or now X with number management, two in molecular transplant discharge Transcat. we're transplant with and we've the we To This AlloCare. patient over date, plan. analytics joins built With position and unique in quality in with in than and used

now pre-transplant in And building leadership we're the setting.

AlloSeq United we’re in and in dialysis with the have now over Axis one referred patients we're HLA in with TX data two which patient through TxXX NGS sequencing HLA space. number the two in is added XX,XXX number number to referrals next-generation We’re proud systems, or States,

We a which company transplant apart are on patient the us as company. the only patient-centric journey, XXX% focused sets

That lung. the above heart and XXXX, baseline turning wanted where marked continued an has we decreases XXXX downward transplant and QX by into the sequential minus has time disease stone all in before X% for sequential volumes still or data showing first XXXX decline slightly with quarterly with extended XXXX current organs, the with QX recovery quarter in QX to sequentially guidance, Now including kidney, driven X transplant recovery negative and believe X% weeks and of kidney. XXXX, volume stages. early heart only were this line we QX created pandemic COVID-XX a in the most revisit volumes to across said, we’re trend as grew first dynamics. for

but continued, so far is year. have would increase trend sequential this what the of this hope We in QX happened

Drivers include and X perfusion the organs, Kidney finally, we're key and hospital to behind recovery, donor of American increase of We in expand that this through behind remain organs pre-Covid to in levels use is the initiative reasons early the a transport Health volume transplant transplantation rates next from One below to shortages centers. future the rebound of recognize double of and believe donors. in improved that high-risk trend time and living XX increased still years. the volume post-transplant is living kidney continuing we growth there monitoring staffing use Advancing in but stages this in increase transport, transplants

has and business core the with kidney, service organ lung has be faster out and testing services build with partner enabled This used. been strength be to of the each This been remains Our adoption readily and core called leadership choice. our rate considered new of to transplant company. transplant across to that's the add ecosystem to patients us enables us to and transplant across heart the

Now moving to guidance.

excludes year, pipeline expect from $XXX full [ph] and contribution from any catalyst $XXX guide Note, any this any major excludes coverage million of the revenues For to million. changes. contribution we

above detail in to Importantly, cover not to cash the service collection have this testing catch-up we revenues do process more collections. captured during expect for now the will through revenues section. collections a see grow Abhishek previously we in as

we’re closing, remain financial path our on to and to In EBITDA a profile adjusted committed profitability. maintaining strong

full gain Our core the year. business for and testing share above commercial service continues grew market five to times market

Our growing digital and are represent approximately products of our nicely now businesses business. and XX%

and XCs, We on catalysts, the coverage collections. focused remain

drive patient to the target our and better journey continue care. unify to solutions leadership We outcomes transplant better to and continue throughout

the support of over call turn employees I border to want CareDx thank all the Before the worked to transplant over to go Abhishek financials, patients during tirelessly and who ecosystem. XXXX the I to

Abhishek Jain

Thank you, Reg.

my the transplant collections are XXXX FY and deliver in financial and the focus the on our leadership position remarks, with for support quarter and QX results, our fourth pleased and services. from to ecosystem XXXX. following the are patients excited We results across and guidance prepared about I’ll life-saving ability coverage,

profile previous ended is versus marketable million compared $X quarter. like quarter, equivalents by the peers. the to I'll cash $XXX start cash financial collections. as in with included cash, with We our I in in CareDx’s differentiated driven a which the securities. $X million stock million would and quarter It of solid by net to cash repurchases XXXK was highlight operating quarter, activities provided the also increase

for particularly We point in our we present a QX, infrastructure as of ever higher as improving highest scaling historical saw collections the based per we in the quarter, and of had XXX% testing revenues in key our collecting investments this revenue. services collection an recognize area. on is cash collections inflection QX in This important processes our quarter result In collections test.

in become momentum to revenue in a We will look recognition XXXX. for this collections positive continuing upcoming higher quarter given quarters. a in Therefore, forward

move breakeven the we self-funding future. EBITDA the business in the is confident foreseeable into and As are half XXXX, profitability we that adjusted towards of first

and recorded QX, X% to revenues $XX.X up to year-over-year last we quarter. of compared total as Moving In revenues. million,

the X% by quarter. declined year $XX.X million, we compared as XXXX, and of year-over-year total quarter up last X% million full recorded X% to to the Testing for revenues revenue Services For up $XXX.X was fourth year-over-year.

XX,XXX XX% services X% the in X% approximately QX. revenues our and million, For grew volumes testing year-over-year. $XXX.X full Notably, testing tests to grew which were sequentially by year-over-year

tests, approximately provided XX% we year-over-year. XXX,XXX up year, the For

volume growth the volume at of outpaced significantly our market X%. transplant Importantly, XX% growth

provide now for on year-over-year growth some in me drivers the differences color Let growth year-over-year and services. the for revenue volume testing

revenue is lower Firstly, mix. the this payer primary of growth our driver

me Let this. explain

on changed $X,XXX. of XXXX ASP pay approximately not at Our test since has the start

degradation this our there As new that last test. is quarter, for to highlight to a price started share since reminder, we metric no

in the has Heart been nephrology to innovation our are driving share. being what reimbursed. However, a community Lung of gain has since increase changed and tests in AlloSure launch XXXX of that of is the expanding further the result This AlloSure strategy of start percentage of test non-reimbursed with market commercial and

in This mix XX% XX% same QX our resulted the increasing commercial to commercial year year. in in to strategy quarter this compared last as

Reg AlloSure resulting two remarks This we in change mix number life Lung and lower relatively in AlloSure of payer Heart, cycle As explains for third are alluded early tests. his earlier, in will the coverage a growth paid and volume of This it focus growth. in the first revenue opportunity these growth why see difference provides profitability. we in our is our for on coverage coverage significant and future as areas we in

Second by revenue is which single to Medicare negatively Advantage, Medicare from the growth digits. shift low impacted point

for incremental opportunity rate if the sharing further other we we were cash our $XX metric same patients represents are in to in of approximately revenue to shift million from as Medicare the at Advantage tests. get clarity, we paid XXXX FY tests prior reimbursed discussed This opportunity on alone. Advantage. Medicare calls, As seen have To provide Medicare a a new potential of

C we second This on why focused collections. is our

As collections We'll revenue continues collect improve, infrastructure to to and basis. share an annual be metric cash much to on the of able expect process and this this opportunity. we

in Third point the a in rate marginal impact year that in sequestration growth impact of XXXX was Medicare and half on XXXX. first is have will the QX reintroduced last

our revenues last to and to product pharmacy million, compared by the revenue as compared and services year turning increasing last $X.X quarter. driven business. $X.X Digital XX% increased up of as while to nontesting million, year-over-year QX, increased to quarter transplant acquisition Solutions In Now to XX% XX% XXX% Patient year-over-year and primarily last

digital and XXX% million. grew year-over-year, full year XXXX, million by and $XX.X $XX.X For to of our revenue profit revenue Patient Solutions grew the X%

for GAAP XXXX the The XXXX XX% Non-GAAP XXXX. in as Turning XXXX. of to compared the to margins. The XX% year XX%, for for was gross GAAP XXXX. as fourth fourth to compared in XX% as to year the the quarter was margin was margin fourth margin XX% the gross non-GAAP XX% and quarter gross XXXX in to the for same quarter quarter in margin XX% gross XX% was XXXX. as full last compared gross as compared full of quarter

year-over-year by our overall transplant driven in business and GAAP primarily pharmacy profile margin lower change was of gross The our impacting non-GAAP mix. margin gross

and maintain our gross healthy services, XXXX remained unchanged continue in We to GAAP testing it for at margin XX% XXXX, respectively. and

for have to we Non-GAAP in gross lower for our despite at margin areas testing growth was XXXX services strong test coverage. similar volume where XX%, XXXX

supply incremental and drove teams in efficiencies absorb these the with operations multiple lab associated Our costs areas tests. chain to

the making our durability services do broad with the our we despite coverage. investments tests not for gross testing margin are where providing of have that We are business pleased we yet in profile

It the gross compared year-over-year FY in The products XX% gross XX% improved future. points for provides by product XX% XXXX as margin us non-GAAP to a for percentage in significant as the was GAAP compared XXXX. for to at business XXXX in XX% XXXX. year opportunity our margin XX

focus stays for efficiencies to manufacturing further products margins. area this consolidate mentioned, As our of business with an to drive improve and sites plans

in Patient for non-GAAP margin as business XX% margin XX% XX% gross The XXXX our to GAAP year. XX% digital Patient Solutions in and gross was last was in XXXX. compared Solutions Digital and to compared XXXX

this change margin our by year-over-year of driven was gross in earlier, primarily Transplant acquisition non-GAAP discussed Pharmacy As business.

R&D in clinical from payments for the fourth costs quarter by mostly up were expenses expenses operating start-up non-GAAP elevated Non-GAAP QX about as million, and QX. XXXX. $X.X for was to operating paid studies in we milestone $XX.X The increase million our sequentially driven related

expenses as up by in were our efforts collection ramped we area. Increase costs SG&A our higher in this driven

negative adjusted million negative quarter. EBITDA in of previous EBITDA recorded quarter For of compared we $X.X to $X.X the the of fourth adjusted XXXX, million

continued specific would progress the approximately adjusted to make achieving of on profitability first R&D positive EBITDA. of expenses in XXXX. We million, our $X adjusted track have QX of goal on remain elevated we to EBITDA deliver Excluding half

Moving to regulatory updates.

to agency that are required. them. report action further state QX or XXXX company disclosed it First, the of response a inquiry information we previously from has The with the that we its provided agency no information our completed in the pleased to advised now been recently regulatory and has closed review

see related will internal in primarily reporting have as Second, information recently we material filed XX-K, controls. our you weaknesses in controls financial over technology general identified to our

the financial any of we in However, have result a identified not statements as these misstatements deficiencies.

have consider to be we to operate begin and of and controls if testing weaknesses remediated taken the sufficient will are the actions we a operating number remediation, through of effectively. conclude the controls material for We and time, a when applicable period that

Turning to guidance.

expect the to For $XXX XXXX, the revenues be million. of to range $XXX full we in year million

pipeline Our goal test the inflections start the XXXX. to pipeline payer waiting positive a guidance The have the while and catalysts, for since the we consistent way is payer catalysts assumes guidance what no price ASP contribution set in with for from seen assumes assumes this of year the no no setting from degradation baseline for major coverage decisions, major coverage. reimbursed

Guidance which testing to sequential commercial uncertain close COVID seen the teens. continue, declines declines that will by data lung. year. patient across efforts, in or low double-digit current overall the and that in growth kidney, is improvement volumes is QX heart of to an mid-teens volume be we as in low in declines transplant early last expect XXXX improvement in recovery market post should as been stages resulting to growth It collection to in assumes approximately assumes have shows continued and compared This noted still improved ASP shift payers, driven be XX%, which quarter-to-date

last sheet and We activities million an testing hit in summarize, of net revenue. equivalents XXX% point no of reduced $X from cash AR collected excellent as and QX services with with We and and cash, marketable improved have collections an million securities our generated inflection we to $XXX To compared balance DSOs. QX, cash debt. in operating quarter

reimbursed increase services commercial for We maintained year-over-year significantly a our in XXXX, year-over-year with and volume X%. margin We large for of growth not are continue growth XX% of in despite testing improved that gross tests in our margin our to share testing outpacing gain business. market the gross products market services

move call to towards questions. XXXX. EBITDA open adjusted of the continue With goal We I'll achieving our positive for that, half the of in first

Operator

proceed. you. first Andrew [Operator is Thank James. from Instructions] with Raymond Please Cooper Our question

Andrew Cooper

the about talk first, for Maybe to want time. Thanks gross just a bit. I margins little

of the out those really laid been that couple you've How you've impressive the where testing dynamics gross it's don't hold been about have, it, having without from low any it's of just call that, to can ASP over really, what bigger of been assume you able margin think last, course the guess, continue etcetera. improvements double-digit I I so years services that you services you to the margins some a impressive far. catalysts, much the impact because really price on absorb testing decrease done Thinking

to find? want a left what just I sense for are efficiencies So to get

Reginald Seeto

there's The that worked Yes, and hard extremely we've at service. where multimodality. Andrew, across are reimbursement around We where the there's there. has thanks There firstly, the for automation multiple quality had levers where team payer feedback volume, the margins. in gross the efficiencies with increased look testing

there's a levers of continue that's into something to and that we on, it's built our add plan. series So

we coverage work collections. now plan. obviously overall of any I'll to look there plan also at Abhishek But additional is improvement of on provide I let been through this as the the commentary. our as And the ASP has part also dynamics, part think

Abhishek Jain

COGS sure. color lot Because of bucket, in those that Rich, you are shipping freight in Andrew, stuff. adding thanks so Yes, can there charges and right? automate of there. our levers -- the for are a pieces lab, in there. many There opportunities that my there in are our the mind, pieces

market. lab operations were make the they the the and with proud that impacted pressures chain the And are both team in of side that course, are to way negotiate sure I'm will we they inflationary supply the we there, vendors and engage not the so side, of on seeing on by the

in can they So that they way find really to how team much they lot proceed say the the it going going I to really that done as will continue But absorb continue a I'm has forward have well. forward? and the past. efficiencies hopeful past, in done things would we'll the of the

Reginald Seeto

Yes, I actually one as looking services the say improving mean, gross there, the is margins if margins, site products with gross some it's doing other with you noted that the consolidation at during as just we've at of the not We're shared we’re testing across the I'll look thing business. with the organization. call,

It’s company, as environment, services as testing and particularly taking established, So a just is important. opportunities margins some this there think not in gross also do business but now in the we where products well. we’ve had that at efficiency looking

Andrew Cooper

the some of that? the pacing collected start in to just And linked the I you Great. Okay. year of fourth the P&L. benefit combo see maybe much How from give in should XXX% can including and still accruals the quarter, a you us sense guess, of of the maybe of that you’re we that that X flow-through ASP guide? of just sort one, in kind question for more kind to through

a then And spend color just in bit more secondly, R&D XQ onetime. of you’re out that the little as calling on some

XQ to what I’ll is as Just in. beyond and would why it’s others going jump be then let off great. well it exactly fall And in and

Reginald Seeto

Sure.

the us bridge going the So volume. improvements headwind of on payer mix first two of we see help the Andrew, around your question, course, benefit gap to and X that of are and how between is the there the pieces that the collection the

was or time, year. So our at low somewhere we this this decline the probably time, But decline. so are ASP last guided mid-teens XX% around double way digit I’ve assuming

So move what the in the throughout efforts, X% based And collection improved assuming as I'm on along. the baking what is year is right? basically we I’m that

have -- seen this quarter if positive. quarter, continue As to our more, forward going a to that last the us course, of going as then, collections collect we of we XXX% in is help

of On the the part question your around R&D. second

R&D on quarter. the were expenses, things couple this So a of there going

The the was one milestone first payment.

certain them of And with had pay one basically the where some So was came that one. those agreements achieving us contracts to we and while onetime partners required past the milestones. pay we in, for of course, of basically where these milestone, a in that payment the that’s

you payments, one, of know And start-up clinical stay the cost would basically increase always that study bit And QX the paid more that little some second the as would we -- the R&D costs a course, startup bumpy. is in plan.

of metric service -- the and at that sharing just for of least, this a quickly, out collections the some revenue looking thing testing positive we way to at that in lay year, to keep well. line well versus One on expectations as anticipate

should questions. So you as thank be to the for well. the set I cadence think that again But just

Andrew Cooper

back jump in I’ll Thanks. the queue.

Operator

Sykes is Please question with Our next from Sachs. Matt Goldman proceed.

Matthew Sykes

conversations Hi, good think that they’re coverage not obviously in Maybe you’re that for some feedback baking conversations had first afternoon. we do from from can with terms a Thanks what guide from taking one, these your We’d further waiting in for? conversations guidelines Reg, the some to mentioned you that XXXX guys had my that you you And you momentum achieve of of those that could see are to had ISHLT that my questions. payers. the is post love know kind standpoint?

Reginald Seeto

see of one guidelines end Yes. be the at what the at we LP and thrilled year as we important coverage. for areas the is get shared ISHLT was last We Matt. to the thought look I would organization, were particularly of

break it out I’d think to twofold. I

is test there in starting month what to two. in published firstly, guidelines is profiling, AlloMap is was FDA AlloMap, us of earlier at And England. be gene coverage cleared clear our the I should think New first on sort expression The

are early. some don’t that payers And cover there that commercial us today

payers national this already And so and this initiate regional has start discussions led already quarter with us to discussions. those some actually to several

those have been, because allow start, present and to and then the to some rationale discussions, guidelines specifically. further given has particularly in behind the receptivity us there to to information firstly, that earlier So secondly, present us it’s names allow

on-going it’s think So we’re with. one process, an pleased particularly but I

if second look those trigger you The us itself, this is, at of now area some discussions. has to HeartCare which allowed is actually an

routine COVID and a of those discussions those weren’t also necessarily ad us reminder, getting to with off and with settings cycle is hoc even during particularly allow at recommended through, previously, a such or some initiate the guidelines part. basis as the that But those As looking to place well. there’s now hoc testing an allowed on we discussions ad with as has AlloSure coming now basis take

I’d it. how bifurcate that's So

I And based to But is think of now is a happy one sort readily perspective first cadence on on had more those think a the now capture. through. company initiating other from one to come discussions. perspective, certainly, the probably that I have

Andrew Cooper

just more And Thanks sort of Reg. we details that Is then a material on just the line there for that it. the and time a in XX-K additional Abishek, remediation weaknesses. that for disclosure about? be Got of maybe the additional of or stack in other costs going there is should result thinking incurred further remediation costs in And that investment types involved technology be be would a as any efforts? little to

Abhishek Jain

Matt. Yes,

a fully test remediate financial recently to then basically the and not then call it specifically piece identified is out can it impact I you prove just second it and does out call remediated. you you to these And And this. weaknesses -- here. we out need period time the of actually actually have over that need before statements. very on to So any wanted that

remediate That’s will and it to a before base. disclose also first few at able we So fully of part. kind are quarters that take then the

things already years, company is infrastructural of trying on the we investments, rapidly in some part as and areas. our infrastructure your is plan. to we we some few second the that last our quite a but a then grown up we I having to point piece where has in those And in this catch are our think And are

Andrew Cooper

it. Got Thank you.

Operator

Please is proceed. Stephens. Carrico from with Mason question next Our

Mason Carrico

couple on a the goal. here adjusted Hey guys. Maybe EBITDA

missed positive milestone that EBITDA achieve you do if forward adjusted the going but half? you Sorry once anticipate I this, maintaining in first

Reginald Seeto

know Yes, at yes, That I’ll positive. leverage be able of if come question. kind something Mason. we a using to in is that the take goal to our to second And that you to But let the want absolutely. be I’m also And we that what will will I going our be operating forward. hoping the time, And just QX half stay is, after they same opportunities investment were there. guys evaluating happen as will mention make and up we the

Mason Carrico

first are then achieve And the guess, positive to adjusted the flipping guess, were to is be the to in stock net then say, is, able there? what I and view, in do biggest ones EBITDA part take risk being back either Okay. step One, quick look other that upcoming not comp it a you the to second question expecting the level, you we Got And maybe year? how here. half of negative? What's risk it. or two I if biggest the what back

Abhishek Jain

So the risk adjusted foresee on think I volume that EBITDA; biggest I the the market growth. is around

thing I So go probably were think only can to of. if wrong the is there, that that something

We and manage to are trying of company, lot our to stay do stuff expenses as prudent a there. a

once can again. the is risk And you say your to part was hit our second that second around what of second that So goal -- question there. the Mason, that I was question, -- foresee question the

Mason Carrico

comp Stock comp, year? in should how about be stock we the upcoming thinking

Abhishek Jain

assume very there. many thinking basically too similar would of stock well. forward be comp trajectory I I changes going of as wouldn’t the Yes. a

Mason Carrico

guys. Thanks it. Got

Operator

Our is from Capital with next Alex Please question Nowak proceed. Group. Craig-Hallum

Alexander Nowak

good Okay great, afternoon everyone.

Just How that digital much acquisition? the add XXXX? add how systems does revenue in HLA much first of that does all,

Abhishek Jain

Not material, Alex.

to call reconciling one guidance. So out it I of as wouldn’t the items the

Alexander Nowak

testing that in XXXX. Okay. understand to the growth you’re And then expecting want volume I just

top digital the indicating down down to X% products side. So growth, the are year little so volume bit. piece to market is growing, push it, the a X% mid-teens, call start that’s testing testing The going on line to

So to Or decline strip that business in how out the when all end I ASP volumes growth do about dynamics? in guess, do the the think XXXX? we day, testing you at of expect, that you

Abhishek Jain

Yes.

play feel will of because slow, at guide, out I’m has of that start year. I course, similar still And but been at be I growth out a will So market very positive when there mid-teens least how quarter to has And yes, build volume the growth, last I up. right? it will growth it the pick played relatively expect the looking the

first that’s part. the So

is it. ASPs how percentage the efforts. the us our change, payer calling are compared growth. last five digit And basically year part failed when increase about that what those of provide better the points, mid-single because by And be mix to the two the see how I’m will about I testing talk That's between is delta the going second I it as collection our in services revenue to

Alexander Nowak

of question And Okay. X-part then the helpful. on is a regulatory side. kind That here kind of

Just the inquiries? that the state, any inquiry? there? just a Was if inquiry expect settled. then was update SEC the that the the then or with the from the state that it’s DOJ, should the multi-CAC meeting, is was Or And the the second any discussions of inquiry? SEC we with state Medicare And conclusion KOLs Thanks. part of status what’s DOJ when

Reginald Seeto

Yes.

these I meetings, think been are initiated recent review. think recent for things hasn’t I regular any there and from updates a that that. with further And or CAC are the

past comments benchmark time in a past happens typically I we’ve was the of terms as of well think a sort that. tiling around as as includes talked in of line public that XX-month like of period part

across received I they about, we support we’ve across KOLs the in of and what that practice different and talked think terms from the to kidney, brought lung. heart represent organs we’ve clinical space extensive have all biomarkers

all it’s recent this in importance So an as spoken do as something this bringing we this organization innovation what about. of as to us, is the even breakthrough that at KOLs have weekend for

continue across to space come And So this we to support. to that level from and it’s the drive innovation innovate that have thrilled KOLs. of gratifying really is feel that see in about we again, for important It’s obligation us. consistency to

also; well, ISHLT. out which the from just It’s as the I timing come think should meeting preceded that of had guidelines

international from to reinforcement always get that So it’s an organization. good

Reginald Seeto

update state And part this your take second Sure. let regulatory me on time of that question around. provided I the the

DOJ state This it wasn’t agency. So the basically matter. regulatory was a SEC

are part. the that update material that CID updates And is is matter. So investigation. whole answer on first particular the was other that’s report if the And DOJ there no second your that of part any to there question

we of request with efficacy been guys. safety, receiving these any cooperate the are our to that from continue raised We products. And hasn’t around of the questions there course,

Alexander Nowak

quarter DOJPs just that other the to the I’m so late And happened that clear? related XXXX, was [Ph], end

Reginald Seeto

different completely a was inquiry. This No.

I some. think have should we

Alexander Nowak

guess, comment, clear. comment any we’re around Yes. separate just then one, a that, all -- Any sure around if it’s to I make

Reginald Seeto

I So in in think I the from didn’t the is time we and XXXX, feedback what and quite get October filings question, this one was disclosed of point, completed receipt. but the that’s finished been

Alexander Nowak

-- about that late it but looks later, we Yes. quarter can XXXX, like in it the it another looked like just talk yes. came, XX-Q, there’s in

Reginald Seeto

in have state have recent basically state from in disclosed. an fund, that vendor a what This it’s we received. there XXXX, another Late single was state. query is isolated case and yes, a we That’s

a state are single that vendor We in disclosed. have we a

Alexander Nowak

Understood. you. Thank Okay.

Operator

Our BTIG. next Please with Mark from question Massaro is proceed.

Mark Massaro

taking Hey guys. the question. you for Thank

through double-digit Just low ASPs. teens so, growth the of volume for products, think XX% buckets me X% the and year, revenue. at digital color, testing decline year, the in last and parsing last X% It around to up year. in at I That the XX% X% look I for of appreciate kind revenue, low services full all I but you to on about mid-single it, to products, add grew When out you’re kind of X%. guidance. call represented test or guiding I low nets services

year, XXXX I’m likely any give range? are one-timers And strong to products for that there a give us a strong with for XXXX. really you different in respect to not in but the scenarios seeing last so sense to me aren't in So just outlook the can just if what are products repeat growth -- a really sense

Reginald Seeto

Sure, Mark.

patient acquisition Pharmacy. the that X like around side business of non-testing piece our and out year-over-year because on think primarily I calling because of is the grew that been services Transplant was the XXX% digital and solutions I’ve that the

in going again to XXXX. happen So that's not

that is in. bit need a bake to you that So probably

Mark Massaro

can That's transplant for you helpful. pharmacy guess, is? underlying a of give growth sense us the I the what super

Reginald Seeto

be Instead provide the to to single transplant very the non-testing be services what you year. the out and mid-single digit, the similar single last expecting what two digit, you low digit let from call other pharmacy, services our you pretty seen growth have and color to high revenue of services. testing services testing the the called I’m would me to me businesses similar on let as non-testing

Abhishek Jain

the that transplant. was think asking, the Mark Yes, question what is I

So business the glove transplant transplant farm and in essentially have a is it that serves patients. centers we service essentially white

transplant ecosystem. And patients, similar built transplant And service. this on on our mission our to the white pretty really glove and a with so vision it’s focused reputation just on lead

grown that one grown has year. or area had that last So that’s through acquisition

Mark Massaro

transplant did in just you number it, of clarify, the is, here maybe transplant Reg, out know X% I say challenging to that QX? underlying then, to changes. around volume that called in And And the growth end like shortages, living market, I staffing a Great. call Okay. you’ve hear donor things drivers negative

the manage respect shortages, but actively is potential term? can guys staffing do appear think if any be items what of Many you drivers you to are that this you to maybe multiyear call to the see those with I something instance, that one, a as of curious to over just lot time. in potential I’m benefits volumes. for short-term kind changes of the near

Reginald Seeto

but increase market this dynamic. as seen I -- interesting webcast, part see think of you I the mean can this the QX whole prepared in And of really It’s you’d in we as slides X% going had X X data, of on and then X% to then decline. has year organ But last year-to-date X sequential. a weekly group minus across each total, X%, quarters, the

that expected. gone So that had way the we hasn’t

all staffing the well. donors but some there’s they’d shortages can’t to. of said, this ones always And as viewpoint. to the is with that groups drivers But from seen every rebounded I been line definitely answers, living they not all do as means and And are as do procedures the various like is across week, that centers the consistent there that’s think asked question Mark, happening same their [Indiscernible] transplant are him what’s I well and and the meet see I

have in though, the kidney seen on the increase as for do side. example, We an [Ph] stone C

they of So will at the of day, end different I than the drivers. that of you areas faster the later the some in terms think happen described,

that if or transportation patients. you expands perfusion for pool the about So talk the devices, example,

now but adding brain-dead which donors, been [ph], example, you’ve the C you hadn’t heart, it’s call pool expanded is what So there. or stone, the for DVD triple been in by strifly

talked by example, approach side, one And this do on transplant increased on as using CEO plan center, of hard to the of number even I recently alternative which organ. for weekend, has they to ceased the using the

So that you later. sooner that living however, biggest think is changes time delta donors, that driver The achieve rather do during seeing I be hopefully start I of there that do think period. biggest beta. could will than X the

rate really And I government to put the donation, and the play think in transplantation forces do that ecosystem enforce actually together. will initiatives whole

one. be think think will But expanding probably -- you’re the unifying some the will those time, nicely. it factors kick role. cadence, quite government play donor pool first initiatives over the I of is So Then different a do a right, I those will in

Mark Massaro

a million in parter. one product I around then cash. I doing RemoTraC? sort If job used of finally, to final on you $XXX across can Historically two the differentiating of you portfolio. with to And your How you’ve Excellent. are guys hover you done suite have your know respect sneak that tuck-ins, bolting volumes. XX% of guys of great

Systems. acquired You HLA recently Data

adjusted think you positivity. about should achieve we what looking sorts of potentially are we you’re How should M&A think about about at? things EBITDA how and And funnel? So to

Reginald Seeto

data year, that’s it’s from a -- acquisitions Yes. great bolt-ons No, X Mark, I mean, always small systems. question. these with historically, our a X we’ve HLA consistent done are anywhere to

to have the can really of in add that Pharmacy find a We such either the the moat some Transplant smaller line. add or unique to of opportunities ability top case to

where So we that really it we mean have inbounds, get one finding drive of to come leadership out. feel had hasn’t because mark. one people these I can opportunities so it’s many to us. been those about but It slice them, good every we’ve

a really in where it’s those are make going still doesn’t position. to to nascent where sense it’s two. going It get to in So be leadership and one or one be not

to the space. transplant but think to opportunities, of organization. as for mean, which we’re I things for one probably board committed key that’s always the I the across sense one So an us also is look makes

we on assess think I with again, get And basis. And a a So these fine of them routine rigor. a we opportunities. number of there’s very lot

have our excited the ways by in being capital ahead, able the we’re greatly again, this position year financial done to historically. appropriate So deploy we and

Mark Massaro

Okay. RemoTraC And then update or any phlebotomy? mobile on

Reginald Seeto

change significant nothing there, Mark. No,

Mark Massaro

thanks the for guys questions. all Okay,

Reginald Seeto

Thank you again.

Operator

question is Wainright. Yi Chen proceed. H.C. from next Our Please with

Yi Chen

for question my taking there is, first question. collection for room improvement? My is additional cash you Thank

Reginald Seeto

Yes.

processes As delayed pace pay with, more we exceed bit of also as catch-up that add expect now start some collections coverage as this signaled commercial the Advantage for and we’ll and of mentioned, to is play that we we And cash quarterly I think a collections Medicare chain. the testing of of revenues such sharing also on area example, we’ve is an we past what the a as regional basis. services

opportunity So there’s compare we’ll for metric. and the certainly year-over-year this and you provide that

Yi Chen

Yes.

monitoring? from Okay. generate do And you meaningful cell to therapy revenue expect when

Reginald Seeto

talking we’ve I on Yes, cell to or it's X-year have more and allogeneic other because it’s say in probably AlloSure cell us, mean therapies it therapy predicated greater we it’s always something an that whether it offerings some none make question. having market. franchise, I of U.S., -- the our The some for of on reason the signaled have, therapies about think other to horizon. the the the is that cell date really actual as market, made the a we excellent

Phase Phase the lot of activity, preclinical but unfortunately, I, line So over -- II, got there’s a no one’s yet.

of now in scale those critical there type to those it to that forward now mass. early to opportunity partnerships And transformative once so look clinical can And so and in our makes be and that we develop to this very we research goal is process the future. be

our in organ to what the space. done similar with solid So we’ve approach

Yi Chen

you upon feel you coming And observed evidence quarters the make will rebound of maybe number or in lastly, actually have it. that Got you confident before. touched living this years? donors What the

Reginald Seeto

for huge Chen. you, a such I’ll is I area donors And real living share think think a opportunity. example Yi I an as

plus actually sense. offered out that actually touristic more -- our I how up probably help wife needing were a get one the than in transplant that organ and was an community stepped to of post his and there time. dozen actually we a week, of during our a and and put that out members team to think think behavior And during donors

shortages, think I is do that there do there’s data making I think addressing think time. I So staffing opportunity. sure

to some be and diseases, quarter in QX think on are artistic during seeing directed we’ve opportunity donor, incredible infectious willing I were decline always knowing seeing help human away, organization. real will do last now an that it in think just seen go including our in I where not least time the we’re critical side, out But organ of high important. the this the behavior of space, that there's quite which people at

Yi Chen

Okay. Thank you.

Operator

the closing reached of conference to end session. question-and-answer comments. to our the I management back over for have like We turn would

Reginald Seeto

was difficult. very Thanks -- Yes. much. a XXXX we And really that year was

built the think where that and want build we XXXX to at as to collections that as We And from as in to physicians, transplant only XCs, on increasing space. obligation to one to have also role ecosystem. gladly and the we’ve that an leader we play continue the coverage taken build Everyone and to CareDx it’s a we organization an the as is role a I but them. we looks this incredible play focus call part last really we organization that role be infrastructure of patients we associations. certainly not in thought think year catalyst the to on have of

be you it. if involved think think anything of So in I we’ll then transplant, involving

XXXX. this team who any it's or and Thank one to have I for are. also and want questions such a again to in and Thank you. I supporting want you hopefully the in. again, the So evening be working It’s one, during also be shareholders to where you may the And a great listening the to or great for you so space. and analysts a thank critical thank CareDx to depending investors afternoon, wonderful hard

Operator

today’s This does you. Thank conclude conference.

this your your time thank participation. and disconnect lines for may You you at

CareDx (CDNA) 27 Feb 232022 Q4 Earnings call transcript