CDNA - Earnings call transcript Q1 2024

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Operator

Good day, everyone, and welcome to today's CareDx, Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn today's conference over to Greg Chodaczek. Please go ahead, sir.

Gregory Chodaczek

afternoon, you good today. joining and Travis, and for thank us Thanks, today, for XXXX. results released quarter Earlier financial XX, the CareDx ending March The on release available website is www.caredx.com. at the company's currently President and will Chief this call. afternoon's Hanna, John Executive host Abhishek Chief Financial and Jain, Officer, Officer;

the will include examination federal get would facts to and forward-looking this should statements operating forward-looking those decisions, Litigation risks be the made the upon of regarding of implied that statements coverage statements. deemed the management are matters and not statements laws, of we statements various enrollment from which expectations during assumptions. pursuant historical These of or remind everyone that involve to differ statements, like call XXXX. within harbor to be Before making forward-looking to this our All securities Private trends, are Act pricing these statements. started, historical our are Reform in estimates by that materially Any I provisions and be anticipated based forward-looking could safe results, results call material that financial and meaning contained current cause expectations statements actual Securities of uncertainties limitation, including, and without

on Accordingly, reliance should you not place these statements. undue

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

accounting certain earnings to in measure comparable turn This with are John. measures release the Reconciliation the that calculated SEC. be be with will call of now discussion found financial I today's -- may directly over GAAP also not call financial in generally principles. will a accordance to accepted include will most filed the

John Hanna

Greg, start globally. CareDx everyone warm and and be for joining transplant you, is testing call. its and thanking mission our this community solutions the and want product their part organization transplant a patient today's to by honor of to an Thank employees for welcome. providing to digital to I outcomes improve and It by innovative

aims I on remarks Increasing new participating with Access initiative to new my called rates our the number transplants hospitals Medicare exciting The and outcomes. proposed quarter a all Model. Transplant In Before living want announced for of begin prepared yesterday. initiative Centers performance, and increased emerged increase Organ to the acknowledge that XXXX first Services I transplant the The for disease. renal an organ program, with by measured development increases kidney be post-transplant access transplants, would to acceptance in kidney end-stage people Medicaid

for the to We The patients a program approximately a potential all to pleased hospitals development XX% hear for the about awaiting begin on and U.S. CMS are organ list XXXX. new this proposed X, X-year approximately transplant XX,XXX it the kidney. is scheduled kidney on transplant the initiative of January holds in mandatory latest

patient be tailwind to for transplant adoption anticipate our to a we that solutions a this evaluation. program's the CareDx, the of For initiative component improve critical outcomes,

results. our to Turning

for our financials centers and our transplant look is that create for across quarter, all driving operational the the from by will detailed sharing discipline. results for businesses quarter Then start call a will patients and I and anticipated, XXXX. growth. examples over of our today's I better to solutions stemming turn outlook call our are first Our the than growth from including value Abhishek significant highlights at

XXXX. momentum the CareDx quarter half of that first created the the strong growth upon builds in second posted in

fourth volumes. quarter, tests first Revenue we reported Services onetime up million, prior representing growth delivered in X% was $XX from $XX.X the approximately XX,XXX quarter performed quarter. collections Services quarters. Testing the up excluding third quarter-over-quarter, of up Testing tests, and of we primarily in X% business, from XX% In million, quarter revenue the the prior the For consecutive from

findings in in Services were business patient first largest HeartCare, AlloSure presented oral SHORE the encounters. Surveillance our presentations, participating Testing with prospective innovation featured clinical that is large posters products is in X,XXX Lung Heart Society over late-breaking Registry, by continued Lung. its over of Our Prague, of propelled and an Kidney during HeartCare clinical of the in utility International growing were of Annual and the peer-reviewed evidence study enrolled, In an encompassing clinical body of data, Transplantation At presentation multicenter highlighted ISHLT Outcomes study solutions, study is transplantation symposia. a of heart XX supporting and XX,XXX observational our oral XX kind Meeting scientific The over patients centers, from SHORE, our AlloSure the X or session.

negative results patients with presented with that prognostic dual support combined X months. X first acute that and donor-derived alone for both DNA cell-free Notably, in positive results X in These also poor dual rejection. testing highlighted Heart the alone Heart from use outperformed our data first HeartCare, patients' compared researchers predicted Independent cell-free HeartCare. the outcomes donor-derived HeartCare risk surveillance months years results AlloMap with demonstrated DNA of the at AlloSure testing results earnings of presentation. in the are findings characterizing in positive value These or to

the are both donor-derived AlloSure having patients for SHORE findings of the expression health. of to believe study and importance clinical gene assess providers allograft profiling care to DNA transplant and AlloMap have significant way cell-free the because potential We transform heart the

to become year. data study new that generated by will sparingly. from of the the biopsies first the several care of performed believe created to the rich print potential HeartCare surveillance anticipate We We has and the standard in set more be publications be this SHORE

using as already further earliest biopsies protocol, center noninvasive in like the HeartCare of which remained And biopsies routinely to allowed of our with have Improving cases adopters Stanford non-invasively. is taken of discover of note led University testing. outcomes have greater shift HeartCare's community of one Stanford positive eliminated importantly, away patients impact the of XX% Stanford outcomes clinical the than incorporating of journey patients outcomes. transplant to driving centers excellent. the in results. implemented have the HeartCare in surveillance dual HeartCare rejection a testing on solutions. adoption Many way to subclinical They the their at transplant from has

clinical efforts Payers revenue plans in we contribute evidence the of coupled cycle to outcomes. emerging We million margin should continue the with private medical payers improving Lung, acknowledging policy Kidney in AlloSure expanded anticipate and management, our for XX utility other in upon successfully are the Building coverage, our commercial Blue growth coverage future HeartCare, for quarter. lives testing Blue Shield focused that and AlloSure Cross with to solutions quarters. in patient

Lastly, the coverage to affected groups, coverage, transplant on advocacy be long-standing to which clinicians transplant CareDx continues has our efforts, Medicare primarily from restore there and significant pressure patient kidney patients.

unwavering this be in efforts issue. policy will We to address our

software, XX% and least $X.X good year-over-year on of we Digital Currently, a in of our at business, over After uptake administrative solutions frequently transplant positive in of one with patient see solutions. use of million digital services. our and where adherence as outcomes, experiencing one staff Solutions U.S. Moving growth such centers an the such quality or our revenue, of and patient had value-added quarter XX%. additional a to reporting acquiring we Patient our medication solutions, augmentation as

including They health become their quality For our solutions. user needs, digital patient operations and last of HLA over the logistics addressing and support. has example, coordination, significant have XX care Tampa patient a X improvement, products lab General adopted management months,

patient with We digitally EMR integrated to their provide enabling are them system, enhanced care.

process have in operational resource efficiencies improved stages all their sought scores, at measurement their our they recently their of quality their and patient transplantation utilization refining transplant to increase assistance result, throughput a center. across the workflow. They of waitlisting As

work Our their demonstrates as the of trusted essential Tampa partner and Solutions how with to us success program. and transplant CareDx's a establish Digital Patient General

growth, Foundation's Tx methods HLA business, continued recipients. to identify driven a in we Tx comprehensive best typing Finally, adoption need AlloSeq NGS-based laboratory primarily to $X.X the reflux testing in for AlloSeq solutions delivers HLA organ to NGS-based AlloSeq our PCR increases transplant the laboratories quarter, by results eliminates match legacy of recently the kits. to HLA help using from our ambiguous real-time resolve HLA converted LifeLink revenue and genetic Tx Products efficiencies. XX% industry-leading in million the results typing year-over-year for because it achieved operational

quarter. summary, had first strong a In we

growing, and Traction We have gain utility our the novel as ever-growing Products noninvasive Services continues market returned and and business the demonstrate in set continues share. reset to Patient is Testing evidence clinical our gaining testing. growth. is to data Solutions momentum Digital our of for business to need our and

and a healthy the We efficiencies driving sustain profitable are by cash organization, line effectively managing balance. improving growth our to enabling bottom us throughout

our quarter, as revenue Given provide in press detail more in $XXX for $XXX CareDx in performance the is Abhishek remarks. raising million his first XXXX noted release. to will to million guidance our its

In team the focus conclusion, I want for execution. their CareDx thank to entire and

that, talented forward ask share We an XXXX. results. quarter organization I incredibly have more on and to look Abhishek will Abhishek? details to first inspired our a strong we With and

Abhishek Jain

to non-GAAP noted, non-GAAP I John. focus today, our you, my results. to our filings today turning otherwise revised will and first XXXX Unless remarks reconciliations in refer before will our Thank to release recent information. results Please further In for discuss on GAAP SEC quarter my guidance. press remarks

to highlights. Services with consecutive XX% $XX test Testing of X% the as volume delivered compared over million, up patient Total XX,XXX of revenue We quarter results, the Services up representing was $XX.X me third Testing growth. first the the sequentially, financial fourth quarter million, XX% start up was XXXX. quarter key quarter-over-quarter. revenue Let for

and of $X.X $X.X $X.X million, to up up as losses Products Reported in of million, compared year-over-year. revenue Improved XX% million loss adjusted 'XX. year-over-year, Patient and revenue to Digital million $XX.X QX EBITDA Solutions XX% of

the Finally, of of debt. end we a XXXX cash strong position no $XXX and March at million maintained

are million XXXX full $XXX revenue million the $XXX to first of the overall year from prior $XXX our performance million Due $XXX guidance to strong guidance raising our quarter, million. to we in to

for Services starting up the of with details, use services. across Kidney $XX.X X% the XX,XXX the third AlloSure the Services testing consecutive in by grew Testing Services to first driven attributed cardiothoracic quarter revenue success Services. quarter and in XX% was Testing services. heart for and sequentially, Testing to was results QX abdominal testing in Testing revenue tests, growth strong both to continued Services up volumes. Strong performance growth sequentially. our This Testing Moving is over million, of patient reestablishing

unpaid revenue historical quarters. approximately added efforts pursue quarter. unpaid the $X.X management tests million in delivered addition, These In revenue revenue cycle prior first claims. continued initiatives, from benefited continue Testing in claims including in pursuing Services to from We'll the aggressively

margin to Our gross non-GAAP XX% first the discussed the for earlier, the fourth in million as Services quarter at Testing Services margin quarter adjusted Adjusted compared XX% was gross Testing stayed XX%. revenue, healthy $X.X XXXX. in of

lab drive sample expenses Our team operations continues efficiencies focus well with on manage initiative processing improving costs. logistics and to and

turning the other to Now businesses.

reported in XX% Digital of results revenue were $X.X by top business Strong Patient Our Solutions digital million line quarter, year-over-year. offerings. first up core and the driven

quarter Digital Our Solutions to business margin first XXXX. the compared was XX% in Patient XX% gross and non-GAAP quarter of for first the

Our digital recorded Products up labs. HLA NGS-based $X.X quarter, in once [ of by for XX% year-over-year. again the was driven solutions million Growth business Products in first business revenue ] the

XXXX. business the Our Products first our non-GAAP the first was in from XX% down gross quarter, XX% for of from quarter margin

have We the up contract U.S. the our manufacturers end-of-life Europe. and manufacturing one in ramped products build with completed capabilities our for of and

track We on site to of our part initiative. are operations our Australia Fremantle, manufacturing in consolidation substantially close as

to the business We on gross margin improve basis. of expect help this these a the initiatives sustainable will us mid-XXs

were as down million P&L. over quarter Moving to the Non-GAAP compared the down down last first million quarter for the quarter $XX.X as first to the approximately $X.X of operating XXXX. and expenses compared million, $X

continue have that expenses substantial made to will our help in ensuring growth. We in invest that while progress managing drive we areas

the in XXXX the loss in of first an quarter $X.X the quarter compared quarter million EBITDA of and 'XX. a million loss to was of EBITDA $XX.X for adjusted fourth $X.X of million of of loss a XXXX first Adjusted

The $X.X by first quarter million was positively revenue as in discussed impacted earlier.

on making are we're profitable We pleased progress growth. with the that driving

continue with anticipated quarter seasonally position $X.X to equivalents the cash. operations, Cash do sheet for $XX.X to $XXX of and million positive Based in operations year believe the foreseeable million cash not to $X.X a first the compared annual quarter cash current cash was debt. strong cash a to future. We bonus maintained quarter ago. operations usage no marketable million on cash that cash, a used Turning first our need Cash higher in securities, is last we usage balance payouts. raise to million as in in and in due of from and we

Services on all actual million. Based across growth XXXX now annualized low The the XXXX, healthy of to $XXX first Services performance full Turning on Testing the assumes Solutions change raising and in assumed guidance high to for are business and double-digit 'XX. Digital revenue we year year-over-year Testing quarter midpoint million based of guidance collections, guidance. the businesses our of in to revenue growth or revenue quarter payer $XXX from Products Patient medical benefits mid-single-digit No no revenue our fourth with new our onetime for decisions the private year-over-year and associated coverage, coverage single-digit growth businesses. incremental for

XX% of previously XX%, the Services margin. gross high at approximately our reported by Testing driven expect improved the We of be margin to gross end range to our

revenue adjusted be $XX EBITDA Due for full expect previously to to between we to the $XX margin, the improved to our compared to gross 'XX guided $XX million million as expectation million. $XX losses million year and

thank against plan our I for CareDx would XXXX. the their team focus like and in for delivery to executing entire

call would Before we open turn for questions, closing deliver remarks. over line to John like to the the to I

John Hanna

Thank you, Abhishek.

team. prepared remarks, conclude we to be the a our of express As proud how am again CareDx want I member to I

Our any results I serving our underscore of and strong would patients. And quarter open line the the the like ask for to value our to solutions to operator questions. commitment this now

Operator

Group. Capital from Bill with [Operator Craig-Hallum Instructions] Bonello comes question first Our

William Bonello

Nice quarter.

housekeeping just just interesting a item. So period that out prior collections. the It's you called first,

you bigger quarter? just than period revenue normal this expect typical work a Just revenue you thinking kind as in become a a what for on won't this, Or about capture, prior a of might thing is lot while?

John Hanna

going this Abhishek Appreciate to Thanks, the take question. to Bill. I'm ask one.

Abhishek Jain

in to some to claims Thanks And would appropriately. becomes these success you're pursue at your once back continue we tailwind Bill. these right the model prior negotiating the as we so that the provide for we those But of kind going this basis. these of we And go-forward question, look definitely question, color from the Yes. want that Bill. it can unpaid from with to a enough we tests, period have had payers,

William Bonello

just And Okay. the thing -- is -- the then second just what go ahead.

John Hanna

add. was Yes. just Bill, to I going

declining period period prior onetime in we see had these also we we amount over negotiate collections, this as time QX, prior events. through think and I of onetime potential revenue

will So we we into out of But don't as occurs. those part we're guidance. we when call here to not to call out do it it because to anticipate this will We a perpetuity. it continue down, so sum onetime balance be providing go-forward events continue a think our draw that substantial

William Bonello

rate? get it to Okay. But think I it. It's presumably makes run just not you forward, sense. million paid. paid one. I like But getting it getting that period, paid? That looking you should in it, -- also think that does never were about this will other the to when Or sorry words, little bit beat be a think past something when But it about In we $X.X I it so you a speak that's about weren't prior is that?

John Hanna

what we're occur, That's to hoping Bill.

so as that processes with result see we'd And ASPs working go-forward a of on individual anticipate payers. we improvement a basis, through these would in

William Bonello

terms of thing February? the other surveillance ticked the was letter physician situation there? what's it just that the up Or talk seeing on you. about Thank then testing And out of since you Okay. the end you're put side? what kidney kind of CMS in at back Has can behavior

John Hanna

all grew question. we prepared our Bill. heart, remarks, Thanks, business, the Yes, in volumes stated lung. segments of across And and our kidney that's great X as a

in to continue requirements as change has agency We substantially that stated that than have other assays that clinicians put think forward. transplant intend that place forward continue products We volumes to rejection, payment we of or continue to testing, access has implemented field MACs the communicate going in of see and to a support for monitoring it provide adopt as going for going to we'll CMS grow these the to is put in with that result don't and they our they place the that. that to acknowledge have the and

Operator

with comes Matt next Our from Sykes question Sachs. Goldman

Prashant Kota

for This the on quarter. Prashant Congrats is Kota Matt. on

article And So having and trend being revisions you year impact the majority will billing for last heart term? anticipate with ASPs? continuing the that mix your impacted near in and from that kidney do to lung how volumes revenues, product majority both

John Hanna

for to this ask take question. Abhishek Thanks the to I'm one. going

Abhishek Jain

of the cardiothoracic growing we out this now that is have called pretty our seeing pretty XX% kind our we the trend that a Investor is Day that at given are that in franchise decent believe volume. Prashant, continue. yes, -- about we will pace, And heart fact meeting of

Now if here, permanent will I but a us expect to would continue. shift provide one this quarter not there is further from

Prashant Kota

Got the then of it. can involving may such synergies delivery organ surveillance? that organ any companies For speak And within transplant TransMedics? transplant upstream example, exist to you network as

John Hanna

Yes. Alex Services, Testing take this question. of Thanks. ask I'm Johnson, to President our going to

Alexander Johnson

Yes. acquired lot consequently, company And organ going excitement We a this. we're that's going MediGO supply utilization space. with where to And around that's the of bit ago. think of increase places the area I market growth as think in And we've is well products. digital in. as of are areas certainly have transplant. we other for tools can these a play that And increase outpacing of Thanks. seen upstream. there's a quarters called I continue to quite transplant. and think heart we this And I couple And there's work on the a this a Certainly, areas in that

business product primarily pre-transplant. is Our

tools outcomes as as that really our clinicians. about the and whole ecosystem able ways as upstream for utilization so completes to well well, think to better and the incorporate our And we're patients increase

great journey. it's positioned as We're there as well transplant well So in a question. entire play very to the

Prashant Kota

Got your I that just love it. sense would actually the to high love get lastly, would plan it takeaways get document impact I to through read from and proposed IOTA the on Model And its that behind haven't then of you. CMS. from key but fully, mentions details level incentive

Alexander Johnson

take so Alex get is XXX last at did or I least to tried pages it. again. through through it all can read still this or We're going night. Yes, I this.

continue there's outcomes. to mean improving and that to patients. the headline are to are utilization the increasing all going clear need I help reducing I organ and is discards things and here think a supply these increase that

And so already when kidney a on nicely. upswing -- transplants a market you look got you've growing it, have at perspective, been just nice from

grew I think basis. I was Heart annualized think year, from in about they XX% actually has to that. growth above grow, year-over-year an Last X%. QX seemingly continued heart

got read here. significant And And some is so care we're how We'll and see we'll you've initiatives continue to forward. closely, we'll monitoring certainly goes. this upsides proposed. and the drive these value-based see where This market

And organs, think, more our extremely, to when transplant. more right? watch products be it's to It's can that's organs? And organs. do because what we are you higher-risk higher-risk there exactly you just need not better where need well You I of play best It's them positioned, have these carefully. positioned utilization

tools. digital need use You to

these You need help to monitor like patients. to use products AlloSure

goes. And forward where extremely where to so is we're well this something this and seeing really positioned, we're looking

Operator

question Stephens. Mason Carrico comes with next Our from

Mason Carrico

million anything the accelerated So above cash so are the there. Services, is increase Services or Testing in collections if this back you Testing rate you your in million incorporating volumes? has quarter that to assumptions whatever you growth maybe through higher were guide? of guidance for were, terms in could trends the walk In is $X or now benefiting million $X $X what Are But what looking adoption the here makeup just could, for a I'm color seeing assumptions? any again. that initial Really, this, so, you

John Hanna

Yes. ask through assumptions to Abhishek Thanks, for to Mason. I'm those walk going you.

Abhishek Jain

Yes.

single-digit saw Services volume Testing full QX, assuming we the to to year based on mid that were growth compared the yes, high growth single-digit have the we raised expectation in that Mason, now volume we as previously. So the

were at single-digit, change growing we So that's that assuming piece second growing -- to the the single-digit. the at of that at our guide. And to assuming that high the a single-digit Products is be we mid going we business midpoint be business grow are assuming a to were is now in first high a

'XX that year-over-year a results changes from making revenue at couple the the have we of year-over-year. Mason, growth X% first increased overall in a revenue new And we're X% to seen of quarter. now the our on guide on based the So adjusted midpoint have basis, we a

rate So almost doubling growth the there.

Mason Carrico

I missed, the part The volume you're what it. growth, Got guiding. is

You've got sense. it. HeartCare. appreciate the That makes And on color detailed

I to where offering, you or opportunity stand-alone? What could HeartCare AlloSure much HeartCare kind and you heart know stands a sense portion us volumes, we at just may specific the how potential give get of Heart Given that as But -- for of too here. from versus look utilization today? not and want today AlloMap your coming is

Abhishek Jain

Mason. Yes,

the on So generally that, not to working the second volumes towards, back. But level. organ how said having the piece do And again, of now payer also that provide are the standpoint, we I we seeing that the year. first details. the coverage change commercial And coverage there's do for HeartCare, no you the have as year we in level know. from think the HeartCare as Medicare, at that's next like is the from the We get the

Operator

program. no participation. time. Thank today's for you further queue this does are There This questions conclude in the at your

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CareDx (CDNA) 9 May 242024 Q1 Earnings call transcript