Q2 2021 CareDx Inc Earnings Call
Greetings and welcome to the Cat Dx incorporated second quarter 2021 earnings conference call on.
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I would now like to turn the conference over to your host Anne Cooney.
<unk> President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today earlier today <unk> released financial results for the quarter ended June 30th 2021the.
The release is currently available on the company's website at Www dot.
<unk> Dot com.
Red Sito, President and Chief Executive Officer, and anchor Dean Graves, Chief Financial Officer will host this afternoon's call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements within the meaning of fed.
The real securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation our examination.
<unk> of historical operating trends expectations regarding coverage decisions pricing and enrollment matters and our future financial expectations and results are based upon current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual actual results to differ materially.
As anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.
For a list and descriptions of the risks and uncertainties associated with our business. Please see our filings with the Securities Exchange Commission.
The information provided in this conference.
Call speaks only to the live broadcast today July 29, 2021, <unk> disclaims any intention or obligation except as required by law to update or revise any information financial projections or other forward looking statements, whether because of new information future events or otherwise.
This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles.
The reconciliation to the most directly comparable GAAP financial measure maybe found in today's earnings release filed with the SEC.
I will now turn the call over to rich.
Thanks, <unk> and welcome to.
Good afternoon, everyone and thank you for joining us for <unk> second quarter 2021 earnings Conference call.
Today I'll focus on 5 key highlights from the quarter. The first is our record revenue growth driven by testing services. The second is expanding our leadership across new organ areas.
The third is.
<unk> leadership with innovation from both our internal pipeline and from external partnerships. The fourth is building on the 2021theme of connecting the patients as part of the patient journey. The fifth is top of the excellent financial position and the increase of our full year guidance to be covered by anchor.
On the first topic.
We had another stellar quarter of growth.
77% growth in total revenue from last year ago quarter was driven by new volume highs of outpatient testing services.
Sustained success is because we focus on bringing leading innovation to mainly improve the outcomes of transplant patients are 100% focused on the transfer.
Continuation of over 2 decades has led many to consider and to call us the transplant company.
As part of this I want to thank each and every 1 of the <unk> team in delivering on our vision of being the leader leading partner in transplantation.
For the second quarter results total revenue.
Revenue was $74.2 million, increasing 77% compared to the year ago quarter.
The main driver of growth in the quarter was from our testing services revenue, which increased 79% to $64.9 million.
In addition revenue from our products business increased 108.
8% to $6.9 million and digital and the other revenues contributed $2.4 million to the topline.
I'd like to highlight the global products business was in launch mode at the start of the pandemic. The H..1 2021 performance is a reflection of improved conditions ex U S as well as the strong demand for NGL.
Products that we deliver.
The product team is excited to be in launch mode again.
Okay.
In the second quarter.
The <unk> provided 37400, Alice Shaw and Allomap test results to transplant patients growing 109% from the second quarter of 2020.
Approximately 6600.
Of these tests were part of hardware.
Our comprehensive gene expression and underwrite Sophie.
For free DNA assessment of graft rejection as.
As the end of June more.
More than 295, kidney centers and community practices and Greg on the Hunt for any heart centers, who are using our offerings.
Notably more than 65 kidney transplant centers in United States have now adopted and offshore testing protocol.
Yes.
Our direct to center approach remains core to our strategy, where we are focused on building the moat through an expanded portfolio of offerings within the transplant centers and by increasing the number of our short testing protocols.
We've also started to replicate our unique service model and building a community for RG presence.
In this way our team for a more effective and.
In transplant patients and the community for all just once they care has been transferred from the transplant setup.
We are uniquely positioned to play the role of connecting the patient, especially as we take a long term focus on the transplant patient journey.
During Q2, we continued to expand on our leadership through multimodal innovation to new areas and live.
We announced enrollment of the first patient in the Maple study Maple is the 500 patient multicenter prospective study using a multi modality approach to assess the status of liver allograph for lung. We are very excited by our show lung as new innovation for lung transplant patients, especially as 50% of Allographs fell within.
5 years.
Our submission is on the technical review by <unk> as part of the New LCD process. As previously mentioned, we had submitted our short lung in the middle of last year and.
In support of driving record growth and leadership, we are hyper focused on leading with innovation scientific data generation.
At the 2 largest transplant.
2021 ice H O T in Hec, our testing services offerings and innovative pipeline, where the focus of more than 65 scientific abstracts. It takes an incredible commitment to build such a significant body of clinical data, especially on the diagnostics space again. This has only been possible because we're 100% focused on transplant in the.
And the patient.
The key highlight from the ATC conference was the announcement of <unk> 1000, and the <unk>.
Losses of a 1 year data from the first 1000 patients enrolled on the <unk> study.
This prospective study included more than 50 transplant centers and was designed to evaluate the safety and efficacy outcomes in kidney transplant recipients, whose.
As post transplant care is managed using our Shaw.
The noteworthy findings from the first 1000 patients work.
1 of your grass survival among patients monitored with Alice Shaw the tightened those of patients report on the National units registry data.
<unk> use in patient management significantly reduces the number of biopsies performed as compared to biopsies guided by Sharon.
Transplant and Alice Shaw discriminates rejection from <unk> in both routine surveillance and for Kohl's groups.
We're also delivering innovation in the stem cell and cell therapy space the.
The substantial longer term opportunities that we're executing against with a proven track record to understand patient needs clinician preferences and.
Credit workflow, we're able to develop these testing solutions by leveraging our broad technological capabilities, we recently announced the launch of allo him in the acrobat study introducing our latest innovation and testing services for stem cell transplant patients.
And driving transplant innovation, we also continue to support the broader ecosystem by investing in.
In and acquiring or partnering with innovative companies. For example in May we announced an investment in mirror matrix of life Sciences company pioneering a novel technology for by engineering fully Transplantable human organs with close to 120000 people from the U S. On the waitlist and only 40000 of available Oregon's per year, we believe in investing in companies addressing.
The organ availability through novel innovations.
In June we augmented our pipeline with organics through strategic agreement, which will develop advanced analytics and AI. The integrate our short data with large transplant database of to provide clinical data solutions.
We've also shared the for 2020.1 our key theme is connecting the patients as.
As part of the transplant patient journey, we recognized early on the strategic value of patient care managers and of now added digital platforms to strengthen this patient interaction. We've also expanded the availability of Allocher apt to Android platforms. Today, we have an easy to use mobile app designed to help organ transplant patients manage the medications.
Schedule lab of appointments and view the test results the.
The staff will be augmented by the acquisition of transplant hero of mobile application provider of novel Cloud based medication management solutions for patients.
As we continue to connect the transplant patient.
We now manage more than 29000 referrals from Daragh.
Losses practices to the transplant centers and more than 7000 patients on the waitlist at centers. We've also of more than 9000 patients of those sign up for re metric.
Before turning the call over to Ankur discuss our financials I'd like to say, how pleased I am to have Doctor Hana Valentine join our board.
Dr. Valentine is professor of medicine.
Standard and former Chief Scientific Officer of Science scientific workforce diversity at the National Health Institute NIH were.
We had growth of Ballantyne join our board and we all look forward to work with the and learning from them now handing over to anchor.
Thank you rich.
I am very pleased with the business performance.
And our financial results for the second quarter of fiscal year 2021.
Let me provide you more details.
Turning first to the income statement.
Our second quarter revenues grew 77% on year over year basis to a record $74 million.
We see continued very.
Adoption for our testing services and products.
Testing services revenues grew 18 of 17, 9% year over year to $65 million for the quarter driven by strong volume growth in both the kidney and heart patient results.
Product revenues increased 108%.
Percent year over year to $6.9 million driven by strong demand for our N G S products across all 3 regions.
Digital business revenues were $2.4 million growing 10% year over year.
Moving to gross margins for the second quarter of 2.
Thousand 21, the gross margins was 68 per cent compared to a gross margin of 64% in the same period of 2020.
The non-GAAP gross margin for the quarter was 70% compared to 68% in the prior year's second quarter.
We are driving productivity and efficiency in.
On our lab operations at the same time, we're also investing to scale out capacity for higher volumes. Both for current services for heart and kidney patients and also for the upcoming new services.
Operating expenses for the quarter were $55 million.
We continue.
On your to invest in R&D pipeline, both in development of new services for transplant patients and also clinical trials to provide data on clinical outcomes.
As rich mentioned, we recently reported long term data for the K Oar study demonstrating the long term benefits for the kidney patients.
Similarly, we continue to build our commercial capabilities across multiple organs and also across the patient transplant journey.
For the second quarter net loss was $1.9 million compared to a net loss of $6.6 million in the same period last year, our net loss per.
Per share was 4 cents for the quarter compared to a net loss per share of 15 cents in the second quarter of last year.
Non-GAAP net income for the quarter was $5.9 million compared to a non-GAAP net income of $1.7 million in the same period last year.
Our basic and diluted.
Non-GAAP net income per share in the second quarter of 2021 was 11 cents compared to a basic and diluted non-GAAP net income of 4 cents in the same period last year.
As a reminder, we define adjusted EBITDA as non-GAAP net income before interest income tax.
Next depreciation amortization and other expenses.
For the second quarter of 2021, we recorded positive adjusted EBITA of $6.8 million or 9% of revenue compared to an adjusted EBITA loss of $2.8 million in the second quarter last year.
Cash and cash equivalents and marketable securities at June 30th 2021 was $370 million.
On an operating basis, we generated record cash from operations of $9.8 million in the second quarter.
On the capital deployment side be.
Really deployed capital and continuing to strengthen and expand our portfolio in the transplant ecosystem with.
We invested in transplant hero to bring medication management capability to our direct to patient offerings.
We invested in mid of metrics to support expansion of available organs for transplant.
And we partnered with organics to develop advanced analytics aimed at transplant patient journey.
Turning to guidance, we are updating our 2021 revenue expectations to reflect our second quarter results and the continued strong demand for our testing services.
Activated states.
As of today.
We anticipate 280 million $200 million to $290 million in revenue for the year on.
The guidance balances the ongoing uncertainty around Covid variance and includes continued market penetration of our products and services.
And the <unk>.
We see great demand for our services and continuation of a very positive response from patients as.
As the transplant partner of choice, we have a tremendous opportunity in front of us to provide innovative clinical and digital offerings across the patient transplant journey, we remain focused on <unk>.
Days in that opportunity.
With that I'll open the call for questions.
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The full pricing stock Keith.
Our first question comes from Andrew Cooper.
Realizing Raymond James Please go ahead.
Hey, guys. Thanks for the questions I guess, maybe first can you give us an update on the attachment rate for heart care with our for Alex Your heart with Allomap and any kind of updates on conversations with the commercial payers.
And what that trajectory could look like as we think about the the 6600 tests getting getting paid from here forward.
Yeah.
Yeah. Thanks, Andrew I'll take the first question I'll, let on good total where the coverage, but yes the attachment rate.
Is is above 85% I think in the last quarter, we talked about of between 80% 85.
What we've seen is this incredible.
Unmet need with the clinical utility of this.
Multi modality approach and we're really excited so proud to be the first and the only company to achieve this and I think with that we.
Truly see some real clinical benefits, obviously of evidenced by the rapid attachment. So on could you on.
And on the commercial coverage, yes, gentle ongoing the update on the coverage. So we continue with our discussions with the commercial payers, we did get some.
A little bit of additional covered lives across some of our portfolio in the allo sure.
And but as such the the adoption and the coverage discussions both are going quite well.
The common would be great and maybe just 1 on on the guide appreciate the raise but I guess, that's on I just think back to 2020.
Your volumes were really pretty resilient in the face of of Covid.
With the bigger impact on the product side. So just help me think about kind of the puts and takes here when we think about the run rate.
Okay. We just saw in the second quarter relative to <unk>.
Raising the guide maybe.
Maybe a little bit more modestly than some folks might have hoped.
Yes. Thanks for the question Andrew This is anchor so yeah. We're very pleased about the overall business performance very pleased with the momentum here the raising the guidance had $10 million.
At the midpoint the.
The the increase at the midpoint reflects the strong performance for Q2 and also includes increasing the guidance for Q3, and Q4 as well to of raising the back half relative to what we said last quarter.
Also like to remind you that in the first half in the first 2 quarters.
Bind.
We've raised the guidance by $25 million of for the year. So we're very pleased overall.
The good momentum in our business, we've seen good adoption in our business.
Probably some people might ask no 1 time kind of performance in Q2 either.
As we look forward to our guidance are at the intent in the dry.
Now can continue to drive the market penetration model and we expect.
To keep driving that given where the COVID-19 variants are today and with all of the discussions are we felt it would only be prudent to not take note that given the risks that are in the environment Covid.
Covid in the past has been once we put pretty much like in place was structurally.
And the beneficial for us.
On the testing services side, but on the product side, we did see some ramifications in the short term we have not seen anything like that right now, but we felt it would be prudent to not ignore the discussions that are happening right now.
Okay, Great and maybe just 1 last 1 for me just in terms of.
The cash balance it's nice to see some of it go to work when we think about Miro matrix.
And the transplant hero, but are there things out there, maybe a little bit bigger in size that debt.
Are attractive to you and you're considering what does that pipeline look like and just how do we think about use of cash given EBITDA positive again in the quarter.
And kind of trending towards.
The towards generating more cash as opposed to necessarily needing more with the pretty clean balance sheet.
Yeah, our focus still remains on continuing to add assets within within the patient transplant journey the.
You've taken you've seen us take the approach over the last several quarters, where we continue to add asset.
Assets within the portfolio in the AD offerings net approach will continue in general the funnel has a whole list of opportunities of various sizes.
But our our approach towards adding offerings is the approach that remained.
Great I will stop there I appreciate all the questions.
Thanks.
Okay.
Our next question comes from Matt Skies with Goldman Sachs. Please go ahead.
Hey, Thanks for taking my question, Hi, rich on Caribbean.
Just maybe 1 bigger picture question Rajeev mentioned on past calls on today on some of the key drivers for growth from 1 of which being in.
Of the past you've talked about the community nephrology, which youre pushing into any update on your progress there and then on the second 1 just on the patient journey.
I appreciate all of the apps and the technology of the developing to get to the patients any color on sort of any metrics. We can we can use to see the success of the engagement with patients downloads et cetera of things like that debt.
We can see youre, making the impact of the patient.
Yeah. Thanks, Thanks again, Matt.
The on the first 1 on the community for all of its certainly has been an area of.
Because for us since the start of the only had the team ramped up I mean, firstly, we were well ahead of expectations I think in the prior quarter, we shed more than.
100 community oncology centers from they are using.
All of shall we can seem to see really nice growth during Q2.
The key for US is really making sure that we have of long term plan and that of Vinci involved the movement of additions of protocols, which we've seen.
Happened during Q1, and actually Q2 in the communion for all of the setting as well as now moving to.
We tend to see some additional offerings in that space as well so community for all of the is really this incredible point of continuation that we have and we are in the unique position to play the role of transitioning of patient from the transplanted them. When they go back to community, so really exciting and well ahead of expectations on the patient journey. This is really pivotal to.
As the company in really every single piece of.
What we've been adding whether its from our internal pipeline or from the some of the external BD partnerships and focus on these pre peri post transplant journey, and I think getting that digital connection as well as now sharing some of the actual patients themselves the 'twenty 9.
What we'd referrals for example from Dallas of the centers moving into the transplant Center and then the 7000 of the actual those on the active waitlist.
Moving on to those actually receive the transplants at 1 and 3 kidney patients of wanting to hard transportation's getting of offerings and then moving on to the post.
On the journey, so as we look at that digital and as you mentioned the App plays a key part of that whether it's pre parity or post.
We've had thousands of patients download the app, it's really progressing really well we've seen some improved obviously performance measures.
When patients are on the App as well as using a patient came in just sort of really.
Translating to of accelerated this type of platform. During the course of the last 6 months and we continue to see a lot of excitement.
Not just from the per.
Patients, but also from centers they see what we bring is incremental offerings and value.
Great. Thanks for that range very very healthy.
For color just 1 more from me just curious obviously.
As we COVID-19 pretty unpredictable, but clearly things seem to be going the wrong direction, but now you've got the <unk> asset.
Well developed I would love to get an idea of from you as to the utilization I'm sure. It was obviously very strong and it's probably come down a little bit, but do you feel like youre much better position now obviously with the room of truck and as utilization actually stayed fairly high with the patient.
Patients using mobile phlebotomy or will you have to see the transition back to that in case things do indeed worsen from here.
Yes re metric itself of mobile flow has been the exceptional offering that we've built that in last quarter I think we share it was.
Around 40% this quarter continues to be around 40%. So we we see even with.
With the increased volume and growth really strong support for the the <unk>.
Mobile business with built in.
Again as you talk about that access to the patient. This is just the beginning of how we continue to look at how we interface with the some with.
With his patient where we had this direct consent so.
Again really consistent with what we'd seen in prior quarters in terms.
That usage.
Great. Thanks again guys.
Thanks again, Matt Thank you Matt.
Our next question comes from Steven Mah with Piper Sandler. Please go ahead.
Hi, guys congrats on the quarter.
Steven Thank you very much.
So.
Maybe a follow up question on the attachment rate for for Alisher Heart, what do you. What do you think the Max attachment rate you can get to a new era of approximately 85% right now.
Yeah, we're above.
<unk> 85 to set the moment and I think to get.
Even this level of has exceeded I think anyone's expectations I mean from US we certainly knew those incredible clinical utility, but I do thing.
If you think of of multimodal tests being at this level I think it would be the envy of any sort of.
And sort of.
Predictor of projections that 1 could achieve so.
And clearly the the upper limit of 100% right. So.
Thanks, and as we continue to have clinical utility, we'll see if we if we get there, but I think we're very happy with the numbers that we've just shared.
Okay, Great and then another follow up question on.
On the direct to patient strategy.
Obviously, you guys have made a significant investment over the years and continue.
I think <unk> investments for example transplant hero is.
Can you point of any 1 of those strategies, which is maybe driving this.
This volume growth.
And in patient adherence and then the second part of that question or should we expect you guys to continue to.
The year to invest in the into this direct to patient strategy.
Yes, I mean, firstly, it's not 1 single thing I mean the basis was.
Covid did accelerate out of direct to patient strategy, which.
It started with 3 of my attract with the offering and I think from there we have always had a strategic patient care managers.
And we 1 of the the first companies to realize how incredible it would be to have these for.
Folks involved from the management of these patients and so if you think of patient came on to then with the addition of the App.
Now moving on to potentially other offerings it really has.
Helped drive an incredible adherence rate in all stages.
The continual stickiness with with what we do.
With our core products. So I think not 1 single thing, but I think it's all additive and I think you'll see more of that so again, we're really excited by the combination of offerings. We have brought to the patient and that can only increase I think the second question is.
Are there other things that we may.
Continue.
I think we will continue to.
Add to outpatient care offerings.
What we see as an entire ecosystem.
Out there and we're going to continue to invest in this direct to patient.
Journey because for us it's.
It's so important for us to connect all the pieces from the pre Peri and post and it makes it easy being.
The company of the transplant company and being 100% focus on trends, but I think everyone looks up on Luke's hooks up to us and expect us to lead the way and that's what we've found so far.
Okay got it thanks, and then just maybe a follow up question so on transplant.
<unk>, yeah, it looks like you've.
<unk> got really good growth over the last quarter went from 20000 dialysis for portals to 29000 went from 500 dialysis centers to 800 and.
<unk> 30, waitlist transplant centers to 50.
What's really driving that.
Fantastic.
Engagement.
<unk> is of what we've talked about or.
Yes.
Yes, I mean, there's been some changes in the.
The kidney initiative and I think we've realized that it involves multiple parts of that ecosystem, where those from opioids of whether it's dialysis centers of whether its convenient for all just.
I think there's all of these macro changes, we've seen and we anticipated the impact of 1 of those macro changes with dialysis centers.
Have.
And instead of 2 progressed patients more too.
Refer patients motor transplant centers, so as part of that we developed an offering which.
So I believe is the best in class and 1 that.
Leverages, what we have in terms of how email platforms. Both of these order entry and shot so what's been the attraction here is we've created a solution to address an unmet need which is how do you get referrals and of seamless way to the transplant centers and secondly, how do we ensure there is an electronic wafer.
For communication and so really what we've seen is bringing slang that addresses the unmet need which we're really good at and then to being able to introduce that in a way that we're trusted really helps us and really has helped us bring this to market.
Yeah.
Okay, great. Thanks, and then the last 1 for me it's on the Allo heme.
We built.
Can you just confirm that that's not going to be covered under the the transplant umbrella of LCD and how do you think about reimbursement for for our heme and didn't do envision of similar sort of multi test.
Surveillance protocol similar to the Alisher.
Thank you.
Yes, Allah him I think he sold the recent release, we had with the acrobat study for the first patient enrolled for stem cell transplant is not part of the <unk>.
Solid organ universe LCD. So that's the first thing the second thing is as we look at Ala him it's being.
In the.
What we believe is the next generation of climbers in.
What the study itself is looking at is how do we measure obviously staff stem.
Stem cell on graph on it but what the study itself is trying to do is look at and measure relapse, which has never been done before so I think there are multiple.
Different approaches to existing reimbursement of the future.
Use the split but the important thing here is we want to drive innovation that's like that.
As a hallmark of the company, which is what we stand out for its innovation and so we're trying to do site, which hasn't been done before which is now providing of tests that can look at and measure relapsed with.
In this approach so that's that's what we sort of taken but yeah. There are multiple avenues of options for.
<unk> and just to clarify there Steven I think on your question around reimbursement the the.
Current universal, let's see the cover solid organ transplant.
So as we worked through the city our expectation is the Ala heme does not get covered on that.
Yeah, that's right Yeah, I just wanted to confirm that it's not covered.
And my second part of the question.
Do you assume that this is going to be a kind of a multi day test protocol as you look for.
For relapse is going to be of multi test for multiple tests per year or once of the year or just can you give us a sense of the testing frequency of maybe.
Yeah no. So this this will be a longitudinal patient management tests as well similar to what we've done in.
The other transplant, so it's important to actually have that patient months of longer choosy.
Okay. We haven't we haven't shared on the frequency, but yes, it would be longer term b.
The longitudinal also okay alright, thank you.
Thank you again.
Our next question comes from Brandon <unk> with Jefferies. Please go ahead.
Thanks, Good afternoon.
On <unk>.
Good afternoon, Hi, Brian.
Retro fill of the marketing spend.
The second quarter jumped pretty considerably sequentially can you just talk about the areas, where you're investing most heavily on the knocker it'd be great. If you could share kind of an update on the opex outlook for the full year.
Yes, sure. So our investments primarily you see of sequential investments going heavily into the R&D on the sales and marketing on your question.
It's more on the later so we've been we've been preparing our team, especially at heart team for potentially upcoming approval for our.
For the lung launch that has been 1 area, where we've been investing and then you've heard us about continuing to work on the nephrology side of things with which has been another of India.
But we can.
As for clean message from the kidney perspective, but if you step back from those details of.
In general of developing our commercial capabilities towards multi organ.
Solid organ transplants commercial channel that debt to medical is the is the investment within the.
Within the sales.
Continued ticketing direction.
If you if you think about the direction going forward that on the sales and marketing side will remain the medically related messmore.
Because and then on the R&D side as well under the under the New LCD, we had the opportunity to pull in of lot of our pipeline.
The 10 models, we have so we've been we've been increasing on investments and the interaction both on the development side of things.
As well as on the clinical trial side of things. So that we can we can enrich our pipeline sooner than our original plans.
Got it and then.
Yes.
Obviously good progress.
Yes in terms of the number of transplant centers of adopting our share protocols could you just talk about the impact of test volumes when the New center adopts and are you able to.
Some extent sort of blackout competition, when you've got the new center.
The establishing outward.
Also of protocols.
Yeah, No I think for us the gold standard is.
Hum.
The center get onto protocol. It takes the rollout of effort now that the early adopters of done from the first year, we're almost into you for.
You know to get those protocols has to be earned.
It comes from multiple engagements sharing clinical data getting clinical use experience, but also showing that you're the leading integrated.
2 on the space and I think certainly once you.
Get that name protocols like we don't we don't counted unless says the word I'll assure on it. So it was just out of cell free DNA for example.
Or if the center uses of high.
A regular frequency, but it's not on protocol, we don't count that either so we do think it's important to.
Had this relationship which was.
Built over 20 years continue with the centers and it's a real honor and privilege once they put us on too.
On the protocols as part of that so yeah. Its core implicit to the strategy that was developed.
And yes, there is a nice increase as consistent with the protocol once it's adopted.
Got you last 1 for me.
Any update on timing for kidney care launch and would it be unreasonable to look at the at the capture rate that you've experienced for heart care and use that as a proxy for future kidney care rollout.
Yes, I mean kidney care and.
Multi modality is in the area that we are truly excited by its 1 where.
I think it was validated through through hard Karin.
Now that we're actually doing that across Oregon's kidney care of lung care and and live of care in terms of Allomap kidney, specifically I mean for US we are putting the process in place for example, we mentioned we'd have clear.
The validation for the labs.
But the new here, but you know clearly there's a process, which we're going through for lung and we're learning from that and so I think we continue to be on track with.
Based on net new LCD, and we're putting things in place, but apart from just sharing the CLIA validation. We have no other sort of guide in terms of the timing of when to expect debt.
Sure.
So the debt that's sort of an area that we see extremely exciting but again, we're on track for what we want to do.
Great. Thanks.
Thank you again.
Our next question comes from Alex Nowak with Craig Hallum.
<unk> total group.
Please go ahead.
Great Good afternoon, everyone.
<unk> had about 2 months now to get the word of the K oar results. What's the initial feedback from the transplant doctors and how do you think this changes our share is utilization now now that doctors can see if they fall of protocols are going on the west scrap.
The failure.
Yeah. That's a really good question I mean, I think as we've rolled out.
What had cable data the first announced the ADC and had sort of multiple sort of follow up calls across the country. I think there's a strong level of excitement, but also validation. So I think in many ways some of the.
The results that we share.
Sure.
Instead of being seen by some of the centers and the real real time utility for example from the animal study and so I think if anything it's just further further validation of.
And getting long term study data, which we are the only company to of established so I think that's been really good where the where this could come more in terms of utilization is probably.
Emotional pay side I think that's where this information is being used in sort of request a bit further by our payer team and so that obviously this was some interim.
Data and there's more data to come but that's where I think the further.
The upside would come from but I think we're so well established in centers in that you've got there.
Experienced this just further adds to it I mean, there were so many useful insights that came from these long term studies and again, we're the only ones who have gone long term studies.
And what we show in advance that was also the prediction of earlier for.
Formation of for example of DSA through de Novo DSA, So I think things like that which are being.
Away from the can be shown in these long term studies person. The Admiral now of Kayo really reinforces true insights of netting seeing there now that reduction of biopsies the increase in the overall.
Outcomes was length. It was just really compelling.
Compelling of powerful but centers and uses we're seeing that as well as part of their own experience.
Okay understood.
The repeal of can you just clarify what you said on our share of along with the track of assessment of where that stands and when do you expect growth to be finalized and then when would you expect the okra study to read out.
Any update there.
Okay I'll cover the lung part and then rich covered the the second part on Okra.
Aircraft. So overall on the lung side no change the status as we have said before the <unk>.
We are under technical assessment with multi X the dossier and all of the details on Texas required the sequestered in the under the new LCD have been have been filed.
And based on the process.
<unk> has been communicated we would expect the result sometime in the half 2 of this year.
On the on Okra, I mean, we've shared and consistently I think it was still on track to complete enrollment of Oprah before and the year, what's clear is centers really.
Crave innovation in this multimodal approach that we've taken with.
Is that the care, which includes our show of Allomap plus I box has really been flying that has really just moved very quickly because of the unmet need and that drive to work with lead us on innovation.
So the so the completion of enrollment will take place by the end of year and I think Alex no surprises we.
Keep generating day of the future for US is then getting to <unk> 1000, right in the future. So as we continue to develop long term studies innovation, we've got care 1000 with more day to come and then clearly once we finish enrolling okra then that'll be the next sort of thing. The goal is to keep on moving the needle with innovation right. We're the market leader and we say well known transplant and.
Scott just come to expect us to bring the innovation. So we continue to do that.
That's great. Thank you.
Thanks again Alex.
Our next question comes from Mark Massaro with B P. I G. Please go ahead.
Hey, guys. Thanks for taking my questions Congrats.
Congrats on a strong quarter.
Hi, Hugh.
Yes.
Beat by 9% on the top line.
$6.4 million.
And you raised the guide by $10 million for the year I mean should we think about the delta.
The people of $3.5 million or so for each of Q3 and Q4 or do you think it could be more weighted to Q4 for.
Yes.
Keep it equal between Q3 Q for the overall the business as I was saying earlier that on the guidance, we're very pleased with the.
The momentum on the adoption side.
And the fundamental business model and trying to continuing to drive the market penetration is the model. We are working with so you use that I would ticket across half 2.
Okay and this looks like it's your fifth consecutive quarter of.
Call it double digit revenue and volume growth sequentially.
So when I think about your business, obviously, an increase in the attach rate on out on heart care higher utilization of the Raimo track.
Greater outreached of community Nephrologist.
Are there any reasons to think that.
Both on debt.
You can't continue this double digit type growth trajectory on a sequential basis I guess, what types of things could we look out for that that might render that growth rate unsustainable.
Yes, I think the way radio.
Radio appointing Mark we have a we have a fairly large in radio.
Tractive market in front of us where we are in the early stages of market penetration so the.
The model that we're working on that.
The greatest describe and on the correct the center side, where we continue to.
Introduce an add on products in 2 centers or continuing to drive protocols on their adoption of that business model.
That continues we still have long ways to go.
We've had tremendous success over the last 4 to 5 quarters, both in the centers as well as starting in the nephrology setting at the start of this year and that remains our biggest focus through the the going forward as well.
As of now we haven't seen anything right.
That would point to.
Any change in adoption of the momentum there.
The the range of the guidance as I was talking about earlier.
It would also not be prudent for us to keep our eyes off of whatever is going on relative to COVID-19 radiant, etc, especially on the product side of our business.
But in the core services side, the the business momentum is quite good.
That's great and then we'd be curious to learn more about your.
Allogeneic cell therapy business and you know.
If you of any update on the work with the <unk> biotherapeutics.
And can you just give us a sense.
For how the how the Ellis allo cell product is what kind of feedback you're getting and if theres been any new customer activity there.
Yes, Mark I mean, we were excited by the.
The different areas of chance that we go into so moving from solid organ too. We just talk briefly about the.
Stem cell space, and clearly into the cell therapy space with <unk>.
The only public disclosed.
Offering that we can.
Mentioned is the tower because the other partnerships of not allowed us to to mention those and even with the tower, we had actually we.
A lot of disclose until we kept on us when they finally.
Okay with this are shown at the TCT conference. So we continue to see.
The strong interest and partnerships across companies.
Companies and I think it's an area that we'd love to share more about tissue to potentially at some point on Investor day, it's really dependent on.
Others allow us.
I think the key thing here is the feedback is having a standardized really sort of sensitive test has been really helpful.
We've got feedback from the different.
Different companies, because there's no real standard today, and so I think a couple of develop their own home brews, but as they use also the going okay.
So right now of a wave.
Using a reference standard.
Using the across the the samples that they have have today, we've had multiple AD boards as well and I think there has been a really strong level of excitement of even partnering on wanting to work off of that work with us as well.
Amplified as a result of.
This is what they're hearing from some of the other partner companies as well. So so strong I think positive sort of interest and I think obviously the only thing is it's out of our hands in the terms of sharing.
Sharing who those are and secondly, just as long as the studies continue because we had some examples where net.
Non partners.
Sided 2 day priority.
Ties of some parties decided to discontinue a program. So I think you sometimes the subject to the whims of.
Drug development that again strong interest and this is something that we continue to invest in growing.
Okay great.
As you are nearing the final Medicare determination for lung.
Maybe characterize how synergistic the lung opportunity is with the kidney and the heart I guess any statistics you have on the number of transplant centers that are.
Really working with all 3 versus any specialty transplant centers.
Yes, I mean, I think you've seen the venn diagram.
Graham if you cover all of the kidney.
The 220, plus and you're pretty much cover.
On everything Thats above and below diaphragm and I think for US. It's you don't have to expand or go into different centers. As a result of that what I can say is that having this panel of an approach of selling thats really special I've been out of the field the last.
Can you give a months and at each of these different <unk>.
On the meetings I tend to they are pan organ experiences. So I do think there is an increasing recognition of 2 kids, we now bring.
Along we had the above diaphragm, the heart lung sort of story as well as the blow diaphragm, which is kidney and liver and I.
I think of those 2 ways, but certain.
Couple of some existing synergies and efficiencies because we are already present in the above and below diaphragm and so it makes it a very high efficient way to deploy our team, but more importantly, we just has such a strong presence in the offerings that we have allow for that cross portfolio usage, whether it's the.
The order, whether it's the trend chart, whether it's the.
There, whether it's the waitlist management, whether it's.
The other offerings that we have in development as well so you're absolutely right. There is a very concentrated pool of centers.
Relationships that we've been able to build upon.
Great and just final question for me can you talk about your work with history.
<unk> your map and development progress there and when we could expect to see those products.
Yes.
<unk> is in development as well as system out for me I think the both.
Making the nice progress. Thank you of maps more on the on the CLIA lab side at this stage and.
A map of his the map still still in more on the development stage, but they are both are on track from what we had sort of in Tony have on our timelines, but these are exciting offerings that we already have in place in terms of looking at our multimodal studies. So.
<unk> for example is being used in.
Couple of different studies.
<unk> is part of that multimodal approach that we're using as well.
That's great that's it for me thank you.
Thanks, Thanks, very much Matt Thank you.
Our next question comes from Ken with H C. Wainwright. Please go ahead.
Alright, Thank you for taking my question.
Looking at the revenue of 2020 of the first half represents.
The 42% of the total 2020 revenue in the first half of 2021 revenue already represent 50% of the midpoint of your guidance.
So can you comment on whether you're being conservative about share revenue guidance or the.
Some other elements in the second half of this year that we should consider then the potentially slow growth. Thank you.
Thank you each any of good good observation, there and I think the only thing I would say is the seasonality last year.
Covid impact both in the.
In the first half of the year and then second half as we pretend loaded out for EMA track.
Which was hugely beneficial for the patient and for us.
It gave it on a nice pickup in the business in the second half.
The point being last year's seasonality.
Already in the half 1 was half 2 was quite a unique.
For the year that it was on.
This year will play out on its own seasonality.
Got it.
Thanks.
So could you comment on.
What percentage of lung transplant patients are covered by.
And of Medicare.
About 25% to 30%.
Okay. Thank you.
Okay.
Okay.
Ladies and gentlemen, we have reached the end of our question and answer session I would now like to turn the call back to rich.
For closing remarks.
Thanks, very much I want to thank.
Everyone Who's on the call day really said.
Taking interest of what we do as the company.
At the essence of what we do is really how do we help transplant patients and I think having Alison vessels, who take interest in covering us but also listened.
There is a real privilege and honor and I just want to thank each and every 1 of you for taking the time, we have a really important golden in as a company and the more that we can help and support patients. The more of that we think we are contributing to.
Overall mission. So thank you again and I hope you all have a great rest of the day. Thank you bye now.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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