CDNA - Earnings call 4 2023

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Operator

Greetings, and welcome to CareDx, Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greg Chodaczek, Managing Director of Investor Relations. Thank you, sir.

begin. may You

Gregory Chodaczek

available thank CareDx and full joining today. is us ended www.caredx.com. website Good financial you results today, currently release The released XX, and the for Earlier company's December at afternoon XXXX. for on the year quarter

Abhishek today Chief Services; Scientific is joining call Chief the Officer. and call of Michael Patient and today of Alex Also is Joining Financial the Goldberg, President Officer; Johnson, CareDx's Testing Jain, Woodward, Board. Chairman Robert the

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

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

business, please filings and of uncertainties our description with the see list a our the and For Exchange Securities risks with Commission. and associated

the obligation, are with required earnings law, call future revise to financial will statements, a XXXX. the the that accounting of other broadcast directly of this measure projections provided whether may or in otherwise. accordance today, in to as any information, February events information XX, This by or today's disclaims comparable release certain found calculated be principles. intention or financial in conference CareDx with financial Reconciliation accepted live update most new information, GAAP measures forward-looking call also only not speaks generally because discussion or include to any The SEC. except

to I call the will now turn Alex.

Alexander Johnson

and Thank XXXX you, a Quarter Earnings leadership to a position the afternoon, in solid CareDx' Greg. ended Fourth and Good growth and welcome year. challenging CareDx Full after to Conference everyone, market XXXX Call. start Year

Our team the spent coverage complexities with the Medicare to addressing to to reconfiguring the billing the innovation. associated last and patient article restore year fighting adjust the to to transplant changes access company

offer the back and Before of bit we me perspective. details of a let year, move into the moment a quarter the and step for

early health incrementally the billion their should. stages having the some a of opportunity as kidney, U.S. the U.S. improved but the lasts in from still still long outcomes, as care short-term are far need experiencing market in away are are Transplant to transplanted harder in of $X system. We highest lung health newly patients care patients for it

to And researchers team continue that patient world's effective truly closely focus care working remains believe and with of transplant best We entire our this the some clinicians, centers. requires transplant from understanding management.

the face our as impact in complexities base. billing in demonstrated successfully reflected revisions and stabilized execute of article deliberately, performance. market year, executed Last is in We with by to structure revenue results. this with and ability associated our Our high we growing our and reduced quickly lead the our cost

million, exceeding of guidance. our we the pre-announcement, high year end updated our revenue with reported Consistent full $XXX of

volume year. row. in the results was patient volumes XX,XXX and testing have an our quarter-over-quarter, XXX,XXX growth footing sequential patient tests regained in X% We approximately fourth for the testing quarter test with a second in services full for the about delivered our patient quarter We increase business up services

for care. access medical transplant in role make This continue our year, patient and support leading witnessed molecular patients, we play pivotal including transplant practice. societies from clinical We into improving to strong advocating testing, innovations to the our innovations driving AlloMap, and progress AlloSure in underscoring from

coverage In for confirmed approved heart Lung August coverage Medicare And donor-derived of one our product in of for multimodality testing supported clinical XXXX, the XXXX, lung opportunity cell-free outcomes. improve of to clinical approach rich two care, innovation our patient was can defines Medicare help our pathway for our innovation new CMS. the first differentiated transplant by the market leverage approval of a This DNA value approval pipeline patients. was portfolio, with by pipeline. reimbursement that approval AlloSure and

million coverage post with the transplant cardiothoracic On lives. adding year we XX.X side, primarily first for existing additional business, We lives We XX covered the the months ended our Heart. by million AlloMap coverage an for commercial payer X expanded progress. in saw good in

our pleased growth we other business double-digit and growth both patient respectively. in lab and are of our solutions at with Looking digital lines, year-over-year XX% businesses, the products representing and XX%,

news. Before I recent to touch moving on our on litigation XXXX, Pat will

CareDx statement million. January, assessed our of damages approximately and intend review damages. a verdict We judicial jury in was seek in mentioned jury decision to monetary we As following $XX late the of

active the resolution the matter patent matter be litigation then subject would we be process. Court. QX a at to appeal District would be to speculative, be for to but briefing would Circuit. multistep expect through on timing the multiyear, The there this expect Precise to least We any XXXX Federal in

strategic multicenter, invest In testing AlloSure, coverage. and continue our and is focus coverage This a growth, expanding while secure XXXX. coverage. for market to to studies gain nonreimbursed profitable significant for help additional testing grow and services reimbursement we volumes to on AlloMap is There in business, purpose-driven will reimbursement to the to tests. continuing penetration opportunity forward patient year, Looking

patient demonstrate kidney data our AlloSure to and our Registry was of clinical visits, year. now and allograft are we a KAOR, designed continue publication finalizing quarter, last this expect we completed and in mentioned KAOR the the Outcomes of monitoring. utility As collection clinical last outcome, a variety to

Kidney. policies had by payer with researchers working We also influence have who coverage AlloSure to have experience publish other can evidence with unique opportunities leading that extensive

interim of collected been of ongoing care patient our we and hard outcome from monitored. for surveillance heart, or have anticipate the readout registry The shore sure. In early data in encounters an years

working with the now multi-modality beyond an coverage the care We utility goals twin towards are year heart of supporting X. testing publication interim and of of readout

We evidence in as expect coverage payer generate improved of will with build-out the cycle that, publication along commercial such reimbursement. to studies billing of process, expected appeals are rate infrastructure, the These XXXX. support an our revenue management and

the and In of or transplant adoption our to we Digital centers more further in our in use our Patient solutions. Over of XX% one increase XXXX. business, digital offerings portfolio the U.S. Solutions aim of

now a services. out transplant greater CareDx enables first uptake platform, embedded new medical As a record roll within we CareDx administrators started we of results and and shared last single which electronic platform digital have called and for The a to is centers month, access SaaS workflow. AlloMap to have order health This and interface as AlloSure, well solutions view seamlessly our to allows to HeartCare. clinicians test as clinicians for Pro

Our growing lab products business global. is

and expand have we'll transplant products continue new best-in-class to We a business laboratories QPCR kitted with portfolio, to a using worldwide the technologies. and strong NGS

line scale footprint to business broad HLA further. Our products geographical as typing market from leverage leadership for through our grows and our benefit allows us AlloSeq NGS Tx

on thoughtfully From we'll managing our and remain perspective, focused an cost investments. structure operational

investors. repeating. team to and value last Annual Investor our underscores during growth Day worth heard this driving and our is it for leadership month, commitment This the You of dedication

recent action taken streamline further. including multiple actions costs, have to We QX to even a reduce

and us and support see our steps You'll cost as employees our investments we disciplined take patients is towards continue COGS drive deliver a manage to clinicians, taking that and near-term CareDx to to profitability. value. shareholder approach

transplant the be restore I support and efforts behalf access Finally, like coalition full The We actively to would continue community our discussions Medicare on our touch to beneficiaries. of for partners patients. in with efforts HHS patient advocacy transplant substantial has and progress. engaged made while we advocacy on CMS, to

wide-ranging included and which the nature shows to the transplant Senator Washington, innovation Some We gift continue honor of Revere of and a Medicare rollback commuter in Speaker the to press to transplant of Brand, December, conference Alsharpton, seen the XXXX stop Notable Gingrich publicly hundreds access Capitol physicians Billen may where in the the in transplant New here. broad coverage. fight House the recent of speakers of and patients, former made early beyond. Hill D.C. of advocates concerns you bipartisan the have on in and efforts for

since fact, editorial the as transplant tests fourth for In last Medicare access recently for issue their September, Friday, the powerful highlighting Street patients. Journal Wall coverage the published disparities patient and

XXXX. We are momentum encouraged as we by our enter

Our our plan. team on is laser-focused executing

of baseline in X set We the half our second to expanding expediting the across to testing profitability. all innovative are patient back 'XX, our journey portfolio businesses access services and building revenue on

to go and an our XXXX With will Michael our for Chair ask before 'XX. the Board From to on our Abhishek? search for I Q&A. we details update share moving there, will that, more our outlook into Goldberg, on CEO for Abhishek results

Abhishek Jain

today, quarter release noted, information. remarks on reconciliations for GAAP I focus Thank Unless our 'XX our to to year will you, otherwise Alex. will my In today on refer fourth guidance. non-GAAP to and focus before results. my results 'XX turning Please non-GAAP in full press remarks further

updated revenue the a debt. the solutions of three, the $XX.X consecutive year-over-year. growth. up the shares in I'll million end of reported cash than financial end our testing and compared year in 'XX. Patient test at patient for a product XX% $XX.X Number volume better guidance. full million December growth. volumes year in to of maintained 'XX Number sequential the up delivered revenue start year-over-year driven XX,XXX $XX.X by testing tests of quarter in $XXX.X Fourth million, in of services million came third to and bought services we digital results as two, $XX.X of $XXX.X of of patient approximately revenue X% expected, quarter with position XXX,XXX million. million, revenue million Number strong second over 'XX. 'XX, no $XXX.X cash approximately four, reported fourth in grew million revenue Number high XX% quarter, and five, And 'XX exceeding highlights. X.X Number one, test full quarter of reported primarily

revenue to compared fourth Services. the to X% quarter third Moving the down as $XX.X Testing 'XX. was starting Testing details, Services quarter the with million, of for

the quarter As exclusion heart to payer. well from settlement tests the to the that outside as QX call, the quarter criteria earnings new expected fourth discussed to care as our in impact Advantage MolDx large revenue Medicare onetime lower of be fourth of was of coverage were due

are testing both kidney earlier, for grew X% sequentially, see volume mentioned consecutive quarter. services second to franchisees the heart by and increased As we and pleased

penetration Alex As we volume on market testing our strategy growth. services stay increase drive to and focused earlier, alluded in executing

to quarter ago. Our was the compared margin XX% non-GAAP testing fourth XX% in quarter gross services a as

in our line team We impact XX% the pleased gross significant billing a lab are margin top keeping with efforts above operations article from the of despite revisions.

on reducing reduction is processing costs, execute to management and of inventory continues optimization in the shipping and team scrap and operations Our specimen improvements collection usage.

Moving to Lab Digital and businesses. and Solutions Products Patient our

the Our both of organic Patient revenue compared results $X.X XX% business million of by $XX.X and full were year top Solutions and acquisitions and in Digital as Data 'XX, up Systems Strong year-over-year, XX% driven HLA fourth quarter, for our and up 'XX. million growth line the to recorded Medico.

Patient and a Solutions XX% to margin business, fourth was for gross Our quarter non-GAAP the compared year Digital before. as XX%

full year as improved 'XX, XXX XX% basis margin the XX% points in non-GAAP to 'XX. compared For by to gross

The driven saving acquisitions. a our gross higher to cost and gross transition line SaaS-based was recurring top for growth, our model newer the expansion profile margin margin the by initiatives,

$XX.X quarter, was 'XX, a fourth offering. of and by to business quarter solid business ago, fourth full $X.X the this products in the products Products gross for as associated XX% NGS in revenue Our Growth margin year of products primarily onetime XX% the to up business. in with X% for a non-GAAP for year-over-year. one a year end our due year-over-year XX% recorded inventory driven compared life was charge of higher-margin up our business million million the

consolidation growth, our Products to it basis mix. business an by in chain the for non-GAAP from shift in a XXX and margin and year was gross organic efficiencies revenue optimization cost with NGS offerings XX% site XX% impressive 'XX manufacturing to continued driven 'XX, grew supply ongoing as points full to compared

Our team gross margins planned efficiencies with focus further site the as on XXXX. they consolidation for and complete improving drive in

operating Non-GAAP quarter fourth P&L. million, $XX.X approximately QX. Moving the $X.X million from the were for down sequentially down expenses

focus coverage, $X.X our result related down marketing on $X.X and restore increased targeted our million sales primarily the Medicare policy came as legal million, expenses. to So to efforts G&A expenses a reducing of spend

$XX.X QX adjusted million Our EBITDA million losses in in as to compared were QX. $XX.X

of $XX.X the case fourth have jury quarter million We also awarded for by accrued damages a IP the 'XX. in litigation in

of and review ourselves. substantial and As defend we earlier, to seek against Alex the suit, judicial are good intend in verdict claims the we will the we have less and mentioned vigorously believe that defenses

matter, to our For on please XX-K. disclosures this recently further refer filed

to Turning cash.

million in initiatives securities billing in maintain to in in a challenges to balance in down testing the for services that cash, XX% a used fifth in continue in with the improvement added operations entire impacted revenue of used 'XX consecutive and compared operations CareDx cash outstanding efforts the million, by cash used by equivalents 'XX. Article We team. operations as is million 'XX and the the of with was to collections The $XX testament a debt. delivered no year quarter RCM $XXX our cash over full cash strong the revisions, introduced in sheet Cash million positively Despite and operational 'XX. was marketable to financial $XX.X $XX.X

like in our quarter cash and in XXXX. continue foreseeable the also that operations, usage million raise note not I need million we future. in $X.X anticipated income cash position believe to we fourth cash Based on that Finally, the do would in earned we in $XX.X to and interest current to

guidance. to turning Finally,

growth to to commercial business gross XX% Number The testing based midpoint new margin for implemented. margin in fourth coverage full on gross $XXX growth mid-XXs incremental assumed two, services million one, be as margin slightly Solutions revenue to We're approximately products and either in of to mid-single-digit our payers. three, 'XX our services large XX% gross or range low testing revenue high from XXs. products 'XX Medicare testing revenue businesses We Digital assumes, of year the and Medicare $XXX from expect services the remains year-over-year. guidance 'XX. Patient both and the Number Solutions mid-single-digit Digital actual margin annualized million. to for expecting decisions reimbursement quarter revenue be the of above currently Patient No and gross XX%, with in to number

basis, to We to million, expect fourth expenses rate an operating from absorbing meriting million for reset while inflation. our annualized $XXX between $XXX be non-GAAP benefits and run down phases, quarter

throughout 'XX, We $XX expect adjusted EBITDA between to to be million $XX losses the quarterly in adjusted million with improvements EBITDA losses year. in

I questions, ongoing turn call we Before to the Michael like of discuss open to the Michael? for line would over CEO to the search.

Michael Goldberg

Presso search Board like aided would to on an you, search briefly CEO exhaustive of The leading well Reynolds. the Thank underway. touch Abhishek. process We by the is is search firm

the X-month As The originally within myself communicated forward. and drive continues we Alex, CEO previously, frame to track on of from Abhishek to a the announce initiation office remain new CEO the in November. projected the of time successfully business of X- the search comprising to

CareDx dedicated forward the decades, been and XXXX. With For questions. for the to strong look over patient allograft we to And line over outcomes X improving hand survival. open has that, transplant a long-term to it I'll extending moderator to

Operator

[Operator Instructions] question James. with Cooper from first Andrew Our Raymond comes

Andrew Cooper

noise, back of really the cohort of of patterns, quarter. from. you through Obviously, anything level. to out of lot grow stand and that that, result for in But kidney to seeing to lot heart patients just high like base did think anything sort a this of when the I those fourth ordering the guess, about and both orders across It you're kind feels course like XXXX. super XQ or the getting a Maybe start stability happened that's

of any the what would end changes? you're there great. really surprises, any Any be on market in Just commentary sort seeing

Alexander Johnson

And that, And QX excited for more comments. before serve terrific grow was think to to I it's on patients. continue And a to And think is I to it I back those QX. we No, baseline on. think think grew thanks I we're back stability, nice growth. to

ask to I'll forward mix. add patterns feel that going commentary. think some that I consistent headline the about so good here is But Abhishek And for we very seen patient we've

Abhishek Jain

Thank you, Alex.

growth, testing think kidney as and well services as are is our I is the heart our progressing happy from we it coming and covered both the volume quarter us of second lot confidence you the that how of pretty a consecutive the as gives franchises. growth more business have that well see very to

of that fund the us in basically market more the The digit growth growth all good So we seeing kind news we where year. side, comfort the that growing be areas to. volume is we heart that to the in gives the need are are in double the franc last

a definitely lot there enter So more we as promise XXXX. into

Andrew Cooper

gross year. then, some or slightly through margin I side things, said like And Helpful. Okay. obviously, above services, low said, the the to just sticking think testing but course the of M&E lumpiness XXs for maybe I 'XX, you of

then ongoing digest And how maybe to, of would about the a any some talk in margins you and paid test your legal with had of place? there. if you takes XX-plus Just dispute, it very large to not royalty, of the first form frankly, as percent proportion all puts being pertains sort your ability terms in about think of that it actually for to

Abhishek Jain

Yes.

mid-XXs, gross in we close margin margin of on gross Testing XX% XX% remember services usually reason billing the if our article margin the itself because very, that was having calling were came in calls. mid-XXs that's of So take previous is the I above noise XXs, and kind XX% is gross kind that high above the like XX% like range. gross that XXs, I Services think kind And out, the the the low testing healthy happy to have revisions, we been I dropped in basically margin we with of range. to to without out to I slightly to noise very see in

improvement that the increasing be are because of to our not cost to we And see through run. to do we we to incrementals as there. test gross going to other spend that revenue started how variable our work on most we spend definitely the than need the to margin from need that So we standpoint, drop continuing to we're the

the first part. that's So

piece, that, lot the that's of QX the you we $XXX should a And paid, not second booked I of you're articulate being a took front significant I your of tests. million $XX did right. And we example be I that absolutely XX,XXX booking think, a but question, opportunity in of ourselves. our revenue, tests to are that million. have kind Maybe

spending the work to the we to So a the and that's going need piece effort we that data large this generating time and like is then in and opportunity, lot continue through on of that coverage. a after

through hold that initiative finally, through And coming the our in getting RCM collections to our gained P&L. the that coverage have we revenue

So it's process. the overall

still do feel that that worrying to there. as paid basically not much to I the we having tests too that the test the ability are and right continue that do about gain thing opportunity to today will that that So is get because complete

Andrew Cooper

if Okay. I in. Helpful. maybe just it sneak And can one, last then one

Just impressive lot of system. you've the been from pulled out a perspective. It's cost that of

to on cash think we've how costs more we Is think today? line how flow access it path we needing Is longer than breakeven raise, needing higher of, today? not trajectory can hey, a As EBITDA you about get do Just markets, sit breakeven that out? the think about more are we about to get function you you do top and there term? a cash the to got where commentary to as to the not pull

Abhishek Jain

kind question, adjusted And I Andrew. a about great way see EBITDA that's losses. the of No, the

the about next guiding for adjusted we $XX EBITDA to million $XX at look million the are guide, If you year. losses of

the more it get we model with single-digit set based Now basically we can not pretty from half losses but that generating a kind to XXXX, year. the basically the my double-digit profitability the EBITDA the is losses that's for have the I'm XXXX my throughout for and time begin to get first of we low kind you to loaded our losses to flow XXXX. just guiding operations XXXX improving EBITDA hopefully end. mind, us cash and low looking of by we to of losses, a adjusted get are the will adjusted solid EBITDA thinking adjusted will as it That on at least be up front in in back and

Andrew Cooper

go Yes, Great. ahead.

Abhishek Jain

I flow, called part question about your can in I draw the 'XX, basically really million the which $XX have that can cash in cash. cash also I parallel operations take at and of a is $XXX quick reason usage to we million. on in out that the our second

be losses RC adjusted usage the EBITDA those initiative. the very EBITDA at sense kind is the the collections in cash that of 'XX, losses looking to would improvement So or thinking in over my any through about without similar operations adjusted

a back next from million that need cash a about if 'XX to So basically basically having you in the usage end to then talking EBITDA and profitability $XX of $XXX million the -- probably having in standpoint, adjusted raise you're to with at the year, cash by an don't cash. midpoint, get foundation

kind are the from we how of management that's thinking So standpoint.

Operator

Our next question comes with Goldman from Matt Sachs. Sykes

Unknown Analyst

me? on Congrats quarter. hear Matt. you is the for Can Pashant on This .

Abhishek Jain

Prashant, Yes, you we well. hear can very

Unknown Analyst

Okay. Great.

lingering impacts So -- you seeing segments? any first you billing article across are business your are the still of off,

Alexander Johnson

Sure. Certainly, still volumes in March. and we mean, they are I below revenue services significantly when was the what article introduced testing billing our were and are.

is comfortable and clinicians the and performance. rules are for fact though much more our certainly So patients. coverage is all getting we're beneficiaries mean numerical -- and What with seeing still centers their I billing Medicare a article we just that of for the

saw is a in to consistent QX and so We that's AlloSure in seeing being now centers, in with Medicare way patients protocols these seeing in we're putting with protocols new that billing And them that we're what that. the article. manage Multiple in put in kidney now centers, place kidney. at allow

Unknown Analyst

a multi-modality And care launching take? that reimbursement? and Are you proceeding coverage before long AlloMap Got private path on it. product and And kidney to typically obtain coverage then for then specifically kidney How elaborate with the required my kidney? payer could does just obtaining care? to for you

Alexander Johnson

Sure.

We of multistep unpack you highlights that. conversation. some to think reimbursement certainly of there. pathway to is And couple there's can ultimate of So out things I give a a the

one multiyear is trivial Medicare we done a headline know not data this do It We where to that's it's exercise. I process and into go -- produce to with the know playbook. we as that HeartCare. think able kidney, the a And for was now evidence were And the we to mine was an analysis. patients. the fields speak, Medicare. XX% so talked in still rate now ultimately was our with AlloSure that And consistently effort, as successful are, of and extremely for over being together attach for used It AlloMap data challenging about a HeartCare has -- well we've we've that.

little think, some For question more of turn I process to it a I'll the on more context, to Robert which as itself, your add part is, well.

but I use certainly the that's we think next. thing before both you and we'll from AlloMap at going study our not for one asked we and see tests -- for both data the necessarily that Kidney we're was requirement, AlloSure multimodality, at when that something OKRA look looking a coverage where it's where

more it's long I the data think I what time. the than time asked or how think about you

future, as we'll to assess together look so that And we put the that start and towards plan.

Unknown Analyst

it. then really question at kidney And tests these Kidney And UroMap Got see in other you AlloMap eventual the sales transplant all? cannibalizing complement my X last is, how each helpful. do do space? That's

Alexander Johnson

evaluating about urine virus. system especially from influence there's BK of a there's an mechanism come quiescent. status whether not AlloMap looking they -- can being activation And whether whether has the UroMap there cellular the different rejection immune directions the approach of of kidney, and really very mediated it's at in -- or the in They're different -- be immune of everything the or and

their so really unique And work for we're as there's we each market, be these and opportunities and with two them. where and used paths defining of bringing in they'll clinicians, the

in see we'll think I not way. each parallel other's and So in them

Operator

next comes question Jefferies. Our Brandon with Couillard from

Unknown Analyst

Brandon. you Matt in a us 'XX. of for is the the help guide. to This we bit on Maybe cadence through back more going move as terms Can

quarter spread of think kind then step-up in million a million, evenly I this year? that it historically, $XX of out? $XX expect bit Or a a be is appreciated. are seen XQ. make bit in other you for Do Any half a would you've weighted items the that there may kick some be or initiatives the would in, there year? that back that color more And

Abhishek Jain

me Matt. have revisions the downs, article the let Sure, year. the Things been And and year. ups down and because last business break billing up down this throughout of by

a like. you little business. year-over-year quarterly model at our and there, yearly starting So cadence the you you suggest, business, for the would overall the products non-testingbusiness look start then guidance, should based baseline as will should differently And particular should basically actual I with are basically that looking business. since basically testing would and starting specifically should the X I that more, seasonal, quarter-over-quarter the say, the a growth would the in with services revenue bake bit QX they for that be on give other businesses, growth QX suggest you I what sequential to for and in 'XX, slightly how the revenue number

S. Brandon Couillard

But we back the Is a forward? your repurchased multiyear here more it beyond? of prepared payout, be about then, helpful. does Okay. 'XX. the capital you're million here 'XX That's million litigation debt, sizable. of plans going think should table? the cash which of potential in in And $XX to allocation $XXX shares thinking about the year, could as usage no cash talked in exiting going about and remarks, How you about the process. allocation, you Just is buyback capital on how

Abhishek Jain

$XX in actually 'XX And and purchases bought shares No, X.X we pretty like in were it most million contact picked for actually that million quarter. well the standpoint, absolutely. those up you of from the fourth

our award, of litigation $XXX And based starting process. lot the if on jury in then very steps the that program. go taken needs a possible pursuing But this IP pretty multiple cash million for actually cost we are like district feel with multistep, So on comfortable have through, to cash. confident in the projecting we we fact have multiyear and based even you're and buyback with appeals, the share there with code, were system that the we like out that of

a we how here taking will some share program pieces we And on share or table. the will assess of to decision the onto buyback bring And at other buyback stance are time, for as pass the these We will to play now. discussion that out. the program back the

Operator

Our Craig-Hallum. Nowak Alex next from comes question with

Alexander Nowak

Okay.

revenue in look The what annualizing at basically QX take XXXX, the XXXX you XXXX, level the did company I more X% question and I'm at for I for guide without normal in the comes growth, you it, little taking necessarily about basically reimbursement? what If here future XXXX, think is, in can a growth or achieve give bit. pick point ultimately in time guess of a the

Abhishek Jain

would paths that say market the services multiple we momentum in for I seeing where transplant So testing of there there's grow. secular And our course, a a volumes. are are to good basically growth

to Specifically, is the kind growing growth been look last of secular to company the at old the at then a they kidney some if so the high growing in pattern, on be My that a that's the are side, doing basically in and first low piece. able space forth. the that you double-digit they on basis a growth, have of hard kind we our from so the of year. grow if of Transmedics, all like usage same-space heard of this And particular and to organic that going kind sense also digit. single And shop receive we things

higher a low single particular let space of in sense kind a But to scenario. double-digit grow Alex is good my very grow in digit this this there's actually can space lot to of opportunity me kind So of much absolutely, add further. have But rate. more we that a at that feel high

Alexander Johnson

because different Yes, as that's on. come swath upside as a apply nice And Alex. business a without And will for us And as that to commercial well reimbursement. certainly, tailwind payers broad the with of you our Medicare mentioned obviously, there's well.

I Abhishek think it well. covered

organs And basically can that are testing they're to there tailwind that growth it when even and coming One transplant quite utilization interesting you was at for kidney, how So volume, think avenues, And utilization data year. our XXXX, when even really business. donation the of back. growth significant donor get you have a overall heart, the long saw see heart transplant right? kidney. while. you I that look and that's combined at bulwark to wrong when And last year, XX,XXX, Last really is is I to you volume think in just look which start see volumes all XX,XXX for. better the it's whether but when during for living when you And had other services points XXXX, not really opportunity you living that think on also in a transplanted last flatlined Back the when you pandemic, between right? of just at here, increase, our really model look different not where market you X% tailwinds you the

apart reimbursement does revenue think by where thanks out the our I middle-term because it piece significant let can piece, there in leaving the So the us for piece long increase take story areas. areas are and

Alexander Nowak

tested. they need organs, sense to just makes be if we're transplanting It higher-risk

total clear makes around has reimbursement. moves answer crystal your someone the make sense year. Again, this transpired there. over wanted with last I So just

CMS on only with we're enter that looking as that that can today seeing is the with as And set conversations everything from fair is to like, your much only could So There's stone. in to you're based say the pretty and that sits say now, reimbursement it higher you drop. add here? we shoe the is go things be another have view at you're nothing could right

Alexander Johnson

public look an as stone not for bring back I to it. going think on at LCD would that's as set probably There's now coverage mean patient transplant we really the tests. Medicare well I way significant pressure outcry certainly is and in the process

an process -- in certainly, out that the think will that in certainly see. we'll I ongoing there's XXXX play So

help that assuming for could we We But currently may, data not the the live that we're going that nothing is Medicare, what processes back pulled patients. comes bring something base of That's now fact, our can KAOR which that future in which on but change. years patients -- for be in potentially I for will around on if can that data surveillance, there and are have help we'll very we'll execute is study really case, where as impactful but don't example, in And out, our just 'XX, that change. that's where does things generate with change, in area think evidence unfortunate back for was some that's I coverage. on more right think a significant be

think of So there's number continue it sure from making to here a I that model evolves for where us shots it on goal is on growing coverage today. and

Alexander Nowak

as here I at it what scenarios LCD the does guess, get finalized the outline could if with Medicare, stands happen? just it you Can

Alexander Johnson

this. solidified clarify what Robert question, as Maybe clarify was Just ask our think Sure. the bit? can -- if to business I'll just a meaning question the with answer clarify. it But your change I would you what's maybe to to today

Alexander Nowak

because, LCD so. Absolutely finalized guess, year a again, a they're scenarios to with I came get within draft have out ideally that, that Medicare they and when to this on if legally, do going does finalize

centers what finalized, and what it for this just can get I'm when to the change, or how run? what they there. to get changes billed thus, So that going it transplant scenarios of interpretation trying can is does billed test whether for understand be get out they can you

Robert Woodward

This is Robert.

the closely articles. the and language parallels very thinking of incorporates about the billing draft lot with from So a

have to they a response it so what put process they had that And though process, of the done. pressure lot been already seems even their they help a a wasn't same place, place didn't public to to there get so public in to really

any this is if as So their be didn't they as base business in and finding changes and if draft continue within it of and way is as mentioned, article. what far finalized case any or currently already allowing. as do businesses in ways for would then as to changes, for the they're substantive And it's providers. the form our going the the that testing to billing make scope been patients

Alexander Nowak

sense. Makes it. Got

any DOJ Lastly, inquiry. the status on just

Abhishek Jain

material over there, nothing Alex. No,

the in disclosed had we DOJ XX-K, of but nothing whatever have on to, side, We substance. the

Operator

Chen comes with H.C. Our next from question Yi Wainwright.

Yi Chen

expect do XX potential could any XX next the there to you be months, Within upside policies? regarding reimbursement

Alexander Johnson

I lost the think of yes, I the piece question. -- your I lot think Sure. And lost I a last

You're to was asking reimbursement. piece? the And changes last what

Yi Chen

is XX the policy policy, if based guidance months? reimbursement potential, potential any your there's So improvement on was guidance that the the right? current XXXX Basically, -- within your asking on No, I'm next to reimbursement XX question.

Alexander Johnson

with a August can potentially before this August. have Yes. for the That's -- before that LCD think, as I until finalized. an Rob finalization potential catalyst opportunity of mentioned, happen -- They can

add these is impactful mentioned, continue analysis On so be certainly additional or we've have change business. publication, for certainly insure that months. patients, or in And KAOR, additional coverage our and of patient XX would will next I the at those top we have for whether studies very provide there, for that, in to publications what's data their if an there payers to drafting for think, Medicare opportunity that in as we And some can and coverage happen evidence SHORE populations. to it's

Yi Chen

it. line Got heart, kidney, -- top different of think you provide between driver transplant you -- types be transplant growth revenue? lung, the do to And type expect largest which the of do for to

Alexander Johnson

Yes.

heart growth billing right that's now a article significant. good bit, in that continue there's is a a certainly, will as growth driver. the think heart our be I to mix changed And

with to Abhishek, living ability for that push you back want mix. to... kidney we'll on to the also else that continue donors, anything However, come

Abhishek Jain

talk get data our I of some are of I publication if there. when if what of to on called in a based the coverage kidney the that on I've data turns side. very on previously there limited commercial is course, out I policy studies be there's course, there sizable the we see opportunity billing right out way that manner, have think opportunity the significant [indiscernible], about different then it, coverage with a over from there pieces the the article the two our opportunity changed, standpoint, then efforts, were to

can basically a upside. So fairly drive sizable that

to were about coverage the from think greater on we show comes AlloSure talk for heart heart Medicare. get X limited the for play. in than primarily, have the that's where we I you coverage Can the where back If now surveillance year

we will those of some commercial not last is going that economic So from the play have we working out coverage play health to to the the are AlloSure in that been that the some opportunity of least, on, on the another get studies Heart. are how trying but out that piece standpoint. And

the So between to like franchises. are I mind, kidney would multiple called play. honest, they my equally are say, in Hut revenues both XX-XX I pieces again, and the be out in place. are there pretty in And are heart that much

opportunity So I see the areas. the lie in both

Yi Chen

is expenses, a forward? item going be to quarter litigation the it regarding recurring every going lastly, And

Abhishek Jain

the the effective to look this expenses. that of areas efficient team has that you in you legal some down, Yi through to off. the million. expenses of glad think by have if as to kind figure have of focus more limit trying Chen No, it we And to kind at out been they to report our how some question, have into $X.X been those this roughly we that because G&A our do. started honest, taper I Happy expenses legal need be in of where one like very being to has focus And trying and cases of to has come I been cases been bring base key for we that the know and quarter, the down asked fourth that to

investigation been favor. SEC the has example, in For our decided

On now a there that have we been audit, the have can in lot template been have of we adjudicated and a that our there PBE claims actually favor, use.

looking is be by quarter of down, and down, there. them. the some are reduce spend spend G&A, to single million primarily $X.X looking the every of So at legal legal But driven able opportunity coming to the kind we for fourth

a that priority. So stays

Operator

with from question Stephens. Nathan Kariko Our comes next

Jacob Krahenbuhl

Jacob on is for This Mason.

touched a service growth. on to this and quick think you that apologies So guide just maybe testing been if has your little I revenue and a XXXX on single-digit But assumes low on bit revenue late. jumped the guidance said

further increases you to terms between growth maybe if baking you wondering be wins are heart, upside year? lung, Just that times, in bit organ and down there, could little on of a due ASP that any different during in would the commercial or anything break kidney,

Abhishek Jain

No, sure.

in taking on to here on is pieces revenue revenue. we this yes, services quarter And the the mid-single-digit that are base a important growth. one side, I'm testing of services for So fourth the testing revenue expecting low

testing the the would because volume that year services testing year. revenue you are annualized, volume So just digits. growth standpoint, to of the services we will for growth I'm growth assuming transplant seeing, quarter that very full the we similar standpoint, it to basically a you lower revenue assumption from kind the were be taking on is not for next example the which But get mid-single if from is fourth a what are have

that's first the of So part play. the

ASP, last kind could expecting similar the to be there ASP. headwinds on what lot piece on on seeing expecting quarters. I'm seen collection ASP And X% experience the based efforts to second are the I'm have to different the be scenarios few not all of the we our then cash. XXXX and more And collecting But about in X% been a where we in headwind on based had efforts and we

little a mid-single for testing us limited lower ASPs, the digit, So digit, if the gives headwinds volume that testing driving revenue, mid-single-digit a volume low the of but makes that to by sense. mid-single in services services transplant growth ASP growth growth headwind the for bit,

Jacob Krahenbuhl

here test? on what for if this Kidney AlloMap decision super touched that a expectations again, But your wondering on. you And sorry, on get just maybe has That's it. are and just could around Got Okay. helpful. when coverage been already follow-up CMS one

Alexander Johnson

as process seeking as Ongoing far coverage.

as don't And specific soon as work to we any we have it get can. we expectation so

Operator

participation. our reached concludes the today's you your Thank for end question-and-answer conference. session. have This We of

may You lines your disconnect at time. this

CareDx (CDNA) 28 Feb 242023 Q4 Earnings call transcript