Q2 2024 CareDx Inc Earnings Call

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Operator: Please stand by, your program is about to begin. If you need assistance during today's conference, please press star zero. Good day, everyone, and welcome to today's CareDx Incorporated second quarter 2024 earnings conference call.

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Unknown Executive: If you need assistance on today's conference, please press star zero.

Unknown Executive: Good day everyone and welcome to today's CareDx, please incorporate it, second quarter, 2024 earnings conference call. At this time, all participants are going to listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question by pressing Star One on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded. I'll be standing by if you should need any assistance.

Operator: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note, this call may be recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the call over to Mr. Greg Chodaczek, Managing Director.

Speaker Change: Good day, everyone, and welcome to today's CareDx Incorporated second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session.

Speaker Change: You may register to ask a question by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2.

Speaker Change: Please note, this call may be recorded. I'll be standing by if you should need any assistance.

Greg Chodaczek: It is now my pleasure to turn the call over to Mr. Greg Chodaczek, Managing Director.

Speaker Change: It is now my pleasure to turn the call over to Mr. Greg Chodaczek, Managing Director.

Greg Chodaczek: Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter ending June 30, 2024. The release is currently available on the company's website at www.caredx.com.

Greg Chodaczek: Thanks Leo. Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter ending June 30th, 2024. The release is currently available on the company's website at www.caredx.com. John Hanna, President and Chief Executive Officer, and Abhishek Jain, 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 the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Greg Chodaczek: Thanks Leo. Good afternoon and thank you for joining us today. Earlier today CareDx released financial results for the quarter ending June 30th, 2024. The release is currently available on the company's website at www.caredx.com.

Greg Chodaczek: John Hanna, president and chief executive officer, and Abhishek Jain, 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 the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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, are examination of historical operating trends, expectations regarding coverage decisions, pricing and enrollment matters, and our financial expectations and results are based upon current estimates and various assumptions.

John Walter Hanna: John Hanna, President and Chief Executive Officer, and Abhishek Jain, 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.

Greg Chodaczek: 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, are an examination of historical operating trends, expectations regarding coverage decisions, pricing, and enrollment matters, and our financial expectations and results are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

Greg Chodaczek: For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call relates only to the live broadcast today, July 31st, 2024. CareDx 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. Reconciliations of the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to John.

Speaker Change: Within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements.

Speaker Change: All forward-looking statements, including without limitation, are examination of historical operating trends, expectations regarding coverage decisions, pricing and enrollment matters, and our financial expectations and results are based upon current estimates and various assumptions.

Greg Chodaczek: These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

Speaker Change: These statements involve material risks and uncertainty, so that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements.

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

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

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

Greg Chodaczek: The information provided in this conference call speaks only to the live broadcast today, July 31, 2024. CareDx 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.

Speaker Change: The information provided in this conference call speaks only to the live broadcast today, July 31, 2024.

Speaker Change: CareDx 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.

Greg Chodaczek: This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable gap financial measure may be found in today's earnings release filed with the SEC.

Speaker Change: This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles.

Speaker Change: Reconciliations of the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to John .

Greg Chodaczek: I will now turn the call over to John.

John Walter Hanna: Thank you, Greg, and thank you to everyone who has joined today's call. After a good start to the year, we had another strong quarter marked by growth across all of our businesses and disciplined operational execution. CareDx's commitment to patience, innovation, and providing robust solutions that address transplant centers' needs is driving our growth. We continue to publish compelling evidence supporting the role of our testing services in extending allograft survival. Our digital solutions are vital to helping our customers navigate complex workflows and achieve high quality output.

John Hanna: Thank you, Greg. And thank you to everyone who has joined today's call. After a good start to the year, we had another strong quarter marked by growth across all of our businesses and disciplined operational execution. CareDx's commitment to patience, innovation, and providing robust solutions that address transplant centers' needs are driving our growth. We continue to publish compelling evidence supporting the role of our testing services and extending Aligraf survival. Our digital solutions are vital to helping our customers navigate complex workflows and achieve high-quality outcomes. and our NGS-based laboratory products are gaining wider adoption, supplanting legacy technologies.

John: Thank you, Greg, and thank you to everyone who has joined today's call. After a good start to the year, we had another strong quarter, marked by growth across all of our businesses and disciplined operational execution.

John: CareDx's commitment to patience, innovation, and providing robust solutions that address transplant centers' needs are driving our growth. We continue to publish compelling evidence supporting the role of our testing services in extending allograft survival.

John: Our digital solutions are vital to helping our customers navigate complex workflows and achieve high-quality outcomes.

John Walter Hanna: And our NGS-based laboratory products are gaining wider adoption, supplanting legacy technology. In my prepared remarks, I will share examples of how our solutions benefit patients, transplant centers, and laboratories, underpinning the drivers of increased utilization and top-line growth. We've reached an inflection point in our business; our revenue growth coupled with our disciplined approach to expense management has translated into sizable improvements in our adjusted EBITDA, resulting in both top line and bottom line growth. We became adjusted EBITDA positive this quarter and expect to be adjusted EBITDA neutral for the remaining two quarters of the year, resulting in positive adjusted EBITDA for the full year as reflected in our updated guidance.

John: And our NGS-based laboratory products are gaining wider adoption, supplanting legacy technologies.

John Hanna: In my prepared remarks, I will share examples of how our solutions benefit patients, transplant centers, and labs, underpinning the drivers of increased utilization and top-line growth.

Speaker Change: In my prepared remarks, I will share examples of how our solutions benefit patients, transplant centers, and labs, underpinning the drivers of increased utilization and top-line growth.

John Hanna: We reached an inflection point in our business. Our revenue growth, coupled with our discipline, approach to expense management, has translated into sizeable improvements in our adjusted EBITDA, resulting in both top-line and bottom-line growth. We became adjusted EBITDA positive in this quarter and expect to be adjusted EBITDA neutral for the remaining two quarters of the year, resulting in positive adjusted EBITDA for the full year, as reflected in our updated guidance. Given our strong year-to-date results and expected growth for the remainder of the year, we are raising our revenue guidance for fiscal year 2024 to 320 million to 328 million, a growth rate of 15 percent year over year at the midpoint of our guidance.

Speaker Change: We've reached an inflection point in our business. Our revenue growth coupled with our disciplined approach to expense management has translated into sizable improvements in our adjusted EBITDA, resulting in both top-line and bottom-line growth.

Speaker Change: We became adjusted EBITDA positive this quarter and expect to be adjusted EBITDA neutral for the remaining two quarters of the year, resulting in positive adjusted EBITDA for the full year as reflected in our updated guidance.

John Walter Hanna: Given our strong year-to-date results and expected growth for the remainder of the year, we are raising our revenue guidance for fiscal year 2024 to $320 million to $328 million, a growth rate of 15% year-over-year at the midpoint of our guidance. Turning to our financial results for the second quarter, we reported revenue of $92.3 million, up 31% from the prior year. In our testing services business, we delivered approximately 43,700 tests, up 17% from the prior year and up 4% from the previous quarter. This represents the fourth consecutive quarter of sequential growth in testing services volume. Testing Services revenue was $70.9 million, up 33% year-over-year.

Speaker Change: Given our strong year-to-date results and expected growth for the remainder of the year, we are raising our revenue guidance for fiscal year 2024 to $320 million to $328 million, a growth rate of 15% year-over-year at the midpoint of our guidance.

John Hanna: Turning to our financial results for the second quarter, we reported revenue of 92.3 million, up 31 percent from the prior year. In our testing services business, we delivered approximately 43,700 tests, up 17 percent from the prior year and up 4 percent from the previous quarter. This represents the fourth consecutive quarter of sequential growth in testing services volumes. Testing services revenue was 70.9 million, up 33 percent year over year. We accrued 13.2 million in revenue from tests performed in prior quarters, making our adjusted testing services revenue in the quarter 57.7 million, up 21 percent year over year.

Speaker Change: Turning to our financial results for the second quarter, we reported revenue of $92.3 million, up 31% from the prior year.

Speaker Change: In our testing services business, we delivered approximately 43,700 tests, up 17% from the prior year, and up 4% from the previous quarter. This represents the fourth consecutive quarter of sequential growth in testing services volumes.

Speaker Change: Testing Services Revenue was $70.9 million, up 33% year-over-year.

John Walter Hanna: We accrued $13.2 million in revenue from tests performed in prior quarters, making our adjusted Testing Services revenue in the quarter $57.7 million, up 21% year-over-year. In the second quarter, we achieved a significant milestone, the first peer-reviewed publication of our SURE study in the Journal of Heart and Lung Transplantation. As shown on slide six of our earnings presentation, this prospective observational study demonstrates that HeartCare, which combines Alloshare Heart and Allomap Heart, identifies acute cellular rejection in heart transplant patients better than donor-derived cell-free DNA alone.

Speaker Change: We accrued $13.2 million in revenue from tests performed in prior quarters, making our adjusted testing services revenue in the quarter $57.7 million, up 21% year-over-year.

John Hanna: In the second quarter, we achieved a significant milestone: the first peer-reviewed publication of our Sure Study in the Journal of Heart and Lung Transplantation. As shown on slide six of our earnings presentation, this prospective observational study demonstrates that heart care, which combines Allosure Heart and Alamab Heart, identifies acute cellular rejection in heart transplant patients better than donor-derived cell-free DNA alone. The findings also demonstrate on slide seven that using heart care is associated with lower biopsy rates and excellent clinical outcomes two years post-transplant. We believe that heart care could potentially guide clinicians to perform surveillance biopsies more sparingly.

Speaker Change: as shown on slide six of our earnings presentation.

Speaker Change: This prospective observational study demonstrates that heart care, which combines Alloshore heart and Allomap heart, identifies acute cellular rejection in heart transplant patients better than donor-derived cell-free DNA alone.

John Walter Hanna: The findings also demonstrate on slide 7 that using heart care is associated with lower biopsy rates and excellent clinical outcomes two years post-transplant. We believe that heart care could potentially guide clinicians to perform surveillance biopsies more sparingly.

Speaker Change: The findings also demonstrate on slide 7 that using heart care is associated with lower biopsy rates and excellent clinical outcomes two years post-transplant.

Speaker Change: We believe that heart care could potentially guide clinicians to perform surveillance biopsies more sparingly.

John Hanna: The Sure Study is the most extensive prospective study of its kind in heart transplantation, with 67 participating centers and over 2,700 patients enrolled. Sure is designed to follow patients for five years, so we expect Sure will continue to generate meaningful publications for the foreseeable future.

John Walter Hanna: The SURE study is the most extensive prospective study of its kind in heart transplantation, with 67 participating centers and over 2,700 patients enrolled. SURE is designed to follow patients for five years, so we expect it will continue to generate meaningful publications for the foreseeable future. Moving to our kidney business, a landmark study was published last month in Nature Medicine, validating our Allovue AI-enabled risk prediction model and demonstrating that Alloshore kidney detects subclinical rejection in stable patients.

Speaker Change: The SURE study is the most extensive prospective study of its kind in heart transplantation, with 67 participating centers and over 2,700 patients enrolled.

Speaker Change: SURE is designed to follow patients for five years, so we expect SURE will continue to generate meaningful publications for the foreseeable future.

John Hanna: Moving to our kidney business, a landmark study was published last month in Nature Medicine validating our all of you AI-enabled risk prediction model and demonstrating that Allosure kidney detects subclinical rejection in stable patients. The International Multicenter Study of 2,882 patients that underwent donor-derived cell-free DNA testing was conducted by the Paris Institute for Transplantation and Organ Regeneration along with researchers in the U.S. and Belgium. William. Several key findings from the study shown in slide 9 of our investor presentation are, Alashore Kidney, donor-derived cell-free DNA levels were elevated before biopsy-proven rejection in an analysis of patients receiving consecutive biopsies.

Speaker Change: Moving to our kidney business, a landmark study was published last month in Nature Medicine validating our Allovue AI-enabled risk prediction model and demonstrating that Alloshore kidney detects subclinical rejection in stable patients.

John Walter Hanna: The International Multicenter Study of 2,882 patients that underwent donor-derived cell-free DNA testing was conducted by the Paris Institute for Transplantation and Organ Regeneration, along with researchers in the U.S. and Belgium. Several key findings from the study, shown in slide 9 of our investor presentation, are: Alishore kidney donor-derived cell-free DNA levels were elevated before biopsy-proven rejection in an analysis of patients receiving consecutive biopsies. Alloshore kidney donor-derived cell-free DNA levels decrease for patients with successfully treated rejection, suggesting alloshore kidney may be used to assess treatment response.

Speaker Change: The international multicenter study of 2,882 patients that underwent donor-derived cell-free DNA testing was conducted by the Paris Institute for Transplantation and Organ Regeneration, along with researchers in the U.S. and Belgium.

Speaker Change: Several key findings from the study shown in slide 9 of our investor presentation are

Speaker Change: Alishore kidney donor-derived cell-free DNA levels were elevated before biopsy proven rejection in an analysis of patients receiving consecutive biopsies.

John Hanna: Alashore Kidney, donor-derived cell-free DNA levels decreased for patients with successfully treated rejection, suggesting Alashore Kidney may be used to assess treatment response. Alashore Kidney's surveillance testing detected subclinical rejection in clinically stable patients, and surveillance monitoring with Alashore Kidney and Alavue improves the detection of antibody-mediated rejection and T cell-mediated rejection compared to standard of care measures such as serum creatinine, donor-specific antibodies, and biopsy. This study underscores Alashore's role as a leading indicator of kidney transplant rejection. It enables clinicians to intervene before clinical symptoms of rejection occur and monitor post-treatment progress while avoiding invasive biopsy procedures. These findings contribute to a growing body of evidence that may establish new standards globally in routine monitoring of rejection and treatment response in kidney transplant patients.

Speaker Change: Alloshore kidney donor-derived cell-free DNA levels decreased for patients with successfully treated rejection, suggesting Alloshore kidney may be used to assess treatment response.

John Walter Hanna: Allishore Kidney Surveillance Testing Detected Subclinical Rejection in Clinically Stable Patients, and Surveillance Monitoring with Allishore Kidney and Alluvue Improves the Detection of Antibody-Mediated Rejection and T-Cell-Mediated Rejection Compared to Standard of Care Measures such as Serum Creatinine, Donor-Specific Antibodies, and Biopsy. This study underscores Alloshore's role as a leading indicator of kidney transplant rejection.

Speaker Change: Allishore Kidney Surveillance Testing Detected Subclinical Rejection in Clinically Stable Patients

Speaker Change: And, surveillance monitoring with Alloshore Kidney and Alluvue improves the detection of antibody-mediated rejection and T-cell-mediated rejection compared to standard-of-care measures such as serum creatinine, donor-specific antibodies, and biopsy.

Speaker Change: This study underscores Alloshore's role as a leading indicator of kidney transplant rejection. It enables clinicians to intervene before clinical symptoms of rejection occur and monitor post-treatment progress while avoiding invasive biopsy procedures.

John Walter Hanna: This enables clinicians to intervene before clinical symptoms of rejection occur and monitor post-treatment progress while avoiding invasive biopsy procedures. These findings contribute to a growing body of evidence that may establish new standards globally for routine monitoring of rejection and treatment response in kidney transplant patients. Turning to coverage, we look forward to the finalization of the draft Medicare local coverage determination, likely in the third quarter. CareDx, transplant clinicians, and their specialty societies, and transplant patients continue to advocate to permanently restore longstanding coverage language.

Speaker Change: These findings contribute to a growing body of evidence that may establish new standards globally in routine monitoring of rejection and treatment response in kidney transplant patients.

John Hanna: Turning to coverage, we look forward to the finalization of the draft Medicare local coverage determination, likely in the third quarter. CAREDEX transplant clinicians and their specialty societies and transplant patients continue to advocate to permanently restore long-standing coverage language. Recall, in February of this year, CMS issued a statement affirming their commitment to ensuring that patients with transplanted hearts, lungs, and kidneys who meet Medicare's local coverage criteria can continue to access molecular blood tests and that these tests remain available to patients when medically necessary and ordered by a physician. We have had significant success in increasing commercial payer coverage for our kidney and heart testing services.

Speaker Change: Turning to coverage, we look forward to the finalization of the draft Medicare local coverage determination likely in the third quarter. CareDx, transplant clinicians and their specialty societies, and transplant patients continue to advocate to permanently restore long-standing coverage language.

John Walter Hanna: Recall, in February of this year, CMS issued a statement affirming its commitment to ensuring that patients with transplanted hearts, lungs, and kidneys who meet Medicare's local coverage criteria can continue to access molecular blood tests and that these tests remain available to patients when medically necessary and ordered by a physician. Furthermore, we have had significant success in increasing commercial payer coverage for our kidney and heart testing services. In the first half of 2024, we gained additional coverage from Blue Cross Blue Shield plans and other commercial plans totaling approximately 27 million lives nationwide. This includes new policies for ALIMAP Heart, Alishore Heart, and Alishore Kidney.

Speaker Change: Recall, in February of this year, CMS issued a statement affirming their commitment to ensuring that patients with transplanted hearts, lungs, and kidneys

Speaker Change: who meet Medicare's local coverage criteria can continue to access molecular blood tests and that these tests remain available to patients when medically necessary and ordered by a physician.

Speaker Change: We have had significant success in increasing commercial payer coverage for our kidney and heart testing services.

John Hanna: In the first half of 2024, we gained additional coverage from Blue Cross Blue Shield plans and other commercial plans totaling approximately 27 million lives nationwide. This includes new policies for Alamab Heart, Alashore Heart, Alashore Kidney. The coverage coupled with improvements in revenue cycle management have contributed to ASP growth that we will continue to benefit from in future quarters.

Speaker Change: In the first half of 2024, we gained additional coverage from Blue Cross Blue Shield plans and other commercial plans totaling approximately 27 million lives nationwide. This includes new policies for ALIMAP Heart, Alishore Heart, Alishore Kidney.

John Walter Hanna: The coverage, coupled with improvements in revenue cycle management, has contributed to ASP growth that we will continue to benefit from in future quarters. Moving to our patient and digital solutions business, we achieved our first quarter of over $10 million in revenue, representing 19% year-over-year growth. This growth can be attributed to SAS conversions and an uptake of our lab information management system software solution for HLA laboratories. Additionally, our digital offerings continue to gain traction in U.S.-based transplant centers, with over 70 percent having at least one of our patient and digital solutions.

Speaker Change: The coverage, coupled with improvements in revenue cycle management, have contributed to ASP growth that we will continue to benefit from in future quarters.

John Hanna: Moving to our patient and digital solutions business, we achieved our first quarter of over 10 million in revenue, representing 19% year-over-year growth. This growth can be attributed to SaaS conversions and an uptake of our lab information management system software solution for HLA laboratories. Our digital offerings continue to gain traction in U.S.-based transplant centers, with over 70% having at least one of our patient and digital solutions. Because our value-added solutions complement each other and deliver positive outcomes, transplant centers are acquiring additional products from us. Florida Memorial Hospital and Joe DiMaggio's Children's Hospital, renowned for their adult and pediatric transplant program, have implemented CareDx's quality reporting software to facilitate their engagement with regulatory accreditation and payer organizations.

Speaker Change: Moving to our patient and digital solutions business, we achieved our first quarter of over $10 million in revenue, representing 19% year-over-year growth. This growth can be attributed to SAS conversions and an uptake of our lab information management system software solution for HLA laboratories.

Speaker Change: Our digital offerings continue to gain traction in US-based transplant centers with over 70% having at least one of our patient and digital solutions.

John Walter Hanna: Because our value-added solutions complement each other and deliver positive outcomes, transplant centers are acquiring additional products from us. Florida Memorial Hospital and Joe DiMaggio's Children's Hospital, renowned for their adult and pediatric transplant programs, have implemented CareDx's quality reporting software to facilitate their engagement with regulatory, accreditation, and payer organizations. CareDx's software solutions are cloud-based tools that, in this case, transform raw utilization data into insights, aiding centers in achieving high-quality outcomes. In our lab products business, we reported another first, achieving over $10 million in revenue, representing 35% year-over-year growth.

Speaker Change: Because our value-added solutions complement each other and deliver positive outcomes, transplant centers are acquiring additional products from us.

Speaker Change: Florida Memorial Hospital and Joe DiMaggio's Children's Hospital, renowned for their adult and pediatric transplant program, have implemented CareDx's quality reporting software to facilitate their engagement with regulatory, accreditation, and payer organizations.

John Hanna: CareDx's software solutions are cloud-based tools that, in this case, transform raw utilization data into insights, aiding centers in achieving high quality outcomes.

Speaker Change: CareDx's software solutions are cloud-based tools that, in this case, transform raw utilization data into insights, aiding centers in achieving high-quality outcomes.

John Hanna: In our lab products business, we reported another first, achieving over 10 million in revenue, representing 35% year-over-year growth. This strong growth was primarily driven by continued global adoption of our industry-leading ALAC-TX-NGS-based HLA-typing kits for use in bone marrow transplantation and solid organ transplantation. Centers are discovering that our ALAC-TX has many benefits over legacy-typing technologies. We expect this migration toward our best-in-class NGS-HLA typing will continue. For example, two top HLA labs in Rome, Italy, Cagliara, and San Camillo transitioned from legacy HLA-typing solutions using real-time PCR methods to NGS-based ALAC-TX. They recognize the value it provides in eliminating the need for reflex testing to resolve ambiguous results, thereby increasing operational efficiencies.

Speaker Change: In our lab products business, we reported another first, achieving over $10 million in revenue, representing 35% year-over-year growth.

John Walter Hanna: This strong growth was primarily driven by continued global adoption of our industry-leading Alloseq TX NGS-based HLA-typing kits for use in bone marrow transplantation and solid organ transplantation. Centers are discovering that our OwlSeq TX has many benefits over legacy typing technologies. We expect this migration toward our best-in-class NGS HLA typing will continue.

Speaker Change: This strong growth was primarily driven by continued global adoption of our industry-leading Alloseq TX NGS-based HLA typing kits for use in bone marrow transplantation and solid organ transplantation.

Speaker Change: Centers are discovering that our OwlSeq TX has many benefits over legacy typing technologies. We expect this migration toward our best-in-class NGS HLA typing will continue.

John Walter Hanna: Two top HLA labs in Rome, Italy, Cagliara and San Camillo, transitioned from legacy HLA typing solutions using real-time PCR methods to ALICEQ-Tx. They recognize the value it provides in eliminating the need for reflex testing to resolve ambiguous results, thereby increasing operational efficiency. This growth in a price-sensitive market like Italy, which is one of the top five markets in Europe, reflects the value Alloseek TX innovation brings to the region. In summary, we had a strong quarter across all three businesses, testing services, digital solutions, and lab products, and demonstrated solid year-over-year growth, and we believe this will continue.

Speaker Change: For example, two top HLA labs in Rome, Italy, Cagliara and San Camillo, transitioned from legacy HLA typing solutions using real-time PCR methods to NGS-based ALICEQ-Tx.

Speaker Change: They recognize the value it provides in eliminating the need for reflex testing to resolve ambiguous results, thereby increasing operational efficiencies.

John Hanna: This growth in a price-sensitive market like Italy, which is one of the top five markets in Europe, reflects the value ALAC-TX innovation brings to the region.

Speaker Change: This growth in a price sensitive market like Italy, which is one of the top five markets in Europe , reflects the value Alloseek TX innovation brings to the region.

John Hanna: In summary, we had a strong quarter across all three businesses: testing services, digital solutions, and lab products, and demonstrated solid year-over-year growth, and we will believe this will continue. I want to thank the entire CARDIX team globally for their commitment to transplant patients and for their disciplined execution in delivering against our plan to return to growth.

Speaker Change: In summary, we had a strong quarter across all three businesses, testing services, digital solutions, and lab products, and demonstrated solid year-over-year growth, and we will believe this will continue.

John Walter Hanna: I want to thank the entire CareDx team globally for their commitment to transplant patients and for their disciplined execution in delivering against our plan to return to growth. With that, I will ask Abhishek to share more details on our second quarter results.

Speaker Change: I want to thank the entire CareDx team globally for their commitment to transplant patients and for their disciplined execution in delivering against our plan to return to growth.

Abhishek Jain: With that, I will ask Abhishek to share more details on our second quarter results.

Speaker Change: With that, I will ask Abhishek to share more details on our second quarter results. Abhishek?

Abhishek Jain: Abhishek?

Abhishek Jain: Thank you, John.

Abhishek Jain: Thank you, John. In my remarks today, I will discuss our second quarter results before turning to our revised 2024 guidance. Unless otherwise noted, my remarks will focus on non-CAP results. For further information, please refer to GAP to Non-GAP Reconciliations in our press release or news presentation and recent SEC filings. Let me start with the key financial highlights before providing more details around our device 2024 guidance, reported total revenue of $92.3 million for the second quarter, up 31% year-over-year, delivered over 43,700 test results up 17% year over year and 4% as compared to the last quarter to presenting the fourth consecutive quarter of sequential testing services volume growth, reported testing services revenue of $70.9 million, up 33% year-over-year, including $13.2 million associated with tests performed in prior periods.

Abhishek Jain: In my remarks today, I will discuss our second quarter results before turning to our revised 2024 guidance. Unless otherwise noted, my remarks will focus on non-cap results.

Abhishek: Thank you, John . In my remarks today, I will discuss our second quarter results before turning to our revised 2024 guidance.

Abhishek Jain: For further information, please refer to GAP to non-caprications in our press release or in presentation and recent SEC filings.

Abhishek: Unless otherwise noted, my remarks will focus on non-CAPT results.

Abhishek: For further information, please refer to GAAP to non-GAAP Reconciliations in our press release, earnings presentation, and recent SEC filings.

Abhishek Jain: Let me start with the key financial highlights before providing more details around our revised 2024 guidance. Report a total revenue of 92.3 million for the second quarter, up 31% year-over-year. Delivered over 43,700 test results, up 17% year-over-year, and 4% as compared to the last quarter, presenting the fourth consecutive quarter of sequential testing services volume growth. Reported testing services revenue of 70.9 million, up 33% year-over-year, including 13.2 million associated with tests performed in prior periods. On a comparable basis, adjusted revenue grew 21% year-over-year, driven by strong testing services volume growth. Reported patient and distal solutions revenue of 10.7 million, up 19% year-over-year, and product 7 of 10.6 million, up 35% year-over-year.

Abhishek Jain: On a comparable basis, adjusted revenue grew 21% year-over-year, driven by strong testing services volume growth. Reported patient and distance solutions revenue of $10.7 million, up 19% year-over-year, and product revenue of $10.6 million, up 35% year-over-year, reported an adjusted beta gain of 12.9 million as compared to a 10.4 million loss in Q2 of 2023. Finally, it generated cash of $18.9 million from operations and ended the quarter with $229 million in cash, cash equivalents, and marketable securities.

Abhishek: Let me start with the key financial highlights before providing more details around our DEVICE 2024 guidance.

Abhishek: Reported total revenue of $92.3 million for the second quarter, up 31% year-over-year.

Abhishek: delivered over 43,700 test results, up 17% year-over-year, and 4% as compared to the last quarter, representing the fourth consecutive quarter of sequential testing services volume growth.

Abhishek: Reported testing services revenue of $70.9 million, up 33% year-over-year, including $13.2 million associated with tests performed in prior periods.

Abhishek: On a comparable basis, adjusted revenue grew 21% year-over-year, driven by strong testing services volume growth.

Abhishek: Reported patient and distance solutions revenue of $10.7 million, up 19% year-over-year, and product revenue of $10.6 million, up 35% year-over-year.

Abhishek Jain: Reported adjusted a bit again of 12.9 million as compared to 10.4 million loss in Q2 of 2023. Finally, generated cash of 18.9 million from operations and ended the quarter with 229 million in cash, cash equivalent, and marketable securities.

Abhishek: Reported adjusted beta gain of 12.9 million as compared to 10.4 million loss in Q2 of 2023.

Abhishek: Finally, generated cash of $18.9 million from operations and ended the quarter with $229 million in cash, cash equivalents, and marketable securities.

Abhishek Jain: Due to the strong overall performance in the second quarter, we are raising our school year 2024 revenue guidance to 320 million to 328 million from our prior guidance of 274 to 282 million. Moving to the details, starting with growth margins, our non-GAAP testing services growth margin was 81% in the second quarter compared to 73% in the second quarter of 2020. Adjusted for the 13.2 million in revenue associated with tests performed in prior periods, testing services growth margin was 76%. Our patient and distal solutions non-GAAP growth margin for the second quarter was 37%, up from 33% in the second quarter of 2023.

Abhishek Jain: Due to the strong overall performance in the second quarter, we are raising our school year 2024 revenue guidance to $320 million to $328 million from our prior guidance of $274 to $282 million. Moving to the details, starting with gross margins. Our non-gap testing services gross margin was 81% in the second quarter, compared to 73% in the second quarter of 2023. However, adjusted for the $13.2 million in revenue associated with tests performed in prior periods, the testing services gross margin was 76%.

Speaker Change: Due to the strong overall performance in the second quarter, we are raising our school year 2024 revenue guidance to $320 million to $328 million from our prior guidance of $274 to $282 million.

Speaker Change: Moving to the details, starting with gross margins. Our non-gap testing services gross margin was 81% in the second quarter compared to 73% in the second quarter of 2023.

Speaker Change: Adjusted for the $13.2 million in revenue associated with tests performed in prior periods, testing services gross margin was 76%.

Abhishek Jain: Our patient and research solutions non-GAAP gross margin for the second quarter was 37%, up from 33% in the second quarter of 2023. Excluding our transplant pharmacy business, which has a lower gross margin profile, our digital and patient solutions business non-gap gross margin for the second quarter was 59%. Our products business non-gap gross margin was 47% in the second quarter, down from 59% in the second quarter of 2023 and flattish compared to 46% last quarter. Moving down the P&L.

Speaker Change: Our patient and resource solutions non-GAAP gross margin for the second quarter was 37%, up from 33% in the second quarter of 2023.

Abhishek Jain: Excluding our transformative business that has a lower growth margin profile, our distal and patient solutions business non-GAAP growth margin for the second quarter was 59%. Our product's business non-gap growth margin was 47% in the second quarter, down from 59% in the second quarter of 2023 and flat edge compared to 46% last quarter. Moving down the PNL, non-GAAP operating expenses for the second quarter were 55.2 million, down approximately 3.7 million from the second quarter of 2023 and up 2.9 million from the previous quarter. The quarter of our quarter increase was associated with confidence spent and are in the spend associated with clinical trials.

Speaker Change: Excluding our transplant pharmacy business that has a lower gross margin profile, our digital and patient solutions business non-gap gross margin for the second quarter was 59%.

Speaker Change: Our products business non-gap gross margin was 47% in the second quarter, down from 59% in the second quarter of 2023 and flattish compared to 46% last quarter.

Abhishek Jain: Non-GAAP operating expenses for the second quarter were $55.2 million, down approximately $3.7 million from the second quarter of 2023 and up $2.9 million from the previous quarter. The quarter over quarter increase was associated with conference spend and R&D spend associated with clinical trials. Reported Adjusted EBITDA gains for the second quarter of 2024 were $12.9 million compared to reported Adjusted EBITDA losses of $10.4 million in the second quarter of 2023 and a loss of $1.9 million in the previous quarter. Excluding the $13.2 million revenue associated with tests performed in prior periods, we were adjusted with a neutral this quarter.

Speaker Change: Moving down the P&L, non-GAAP operating expenses for the second quarter were $55.2 million, down approximately $3.7 million from the second quarter of 2023 and up $2.9 million from the previous quarter.

Speaker Change: The quarter over quarter increase was associated with conference spend and R&D spend associated with clinical trials.

Abhishek Jain: Reported adjusted a bit again for the second quarter of 2024 was 12.9 million compared to reported adjusted a bit a loss of 10.4 million in the second quarter of 2023 and a loss of 1.9 million in the previous quarter. Excluding the 13.2 million revenue associated with tests performed in prior periods, we were adjusted a bit a neutral this quarter.

Speaker Change: Reported Adjusted EBITDA gains for the second quarter of 2024 was $12.9 million compared to reported Adjusted EBITDA loss of $10.4 million in the second quarter of 2023 and a loss of $1.9 million in the previous quarter.

Speaker Change: Excluding the $13.2 million revenue associated with tests performed in prior periods, we were adjusted with a neutral this quarter.

Abhishek Jain: Turning to cash, we generated 18.9 million in cash from operations and entered the quarter in a firm position with cash, cash equivalents, and marketable securities of 228.9 million and no debt. Turning to guidance based on the healthy performance across all businesses in the second quarter of 2024 and the anticipated growth in the second half of the year, we are raising our full year revenue guidance to 320 to 328 million. Jain. The midpoint of our 2024 guidance assumes testing services volume growth in the high teens and revenue growth in the mid 20s, year-over-year for the second half of 2024.

John Walter Hanna: Turning to cash, we generated $18.9 million in cash from operations and ended the quarter in a strong position with cash, cash equivalents, and marketable securities of $228.9 million and no debt. Turning to guidance, based on the healthy performance across all businesses in the second quarter of 2024 and the anticipated growth in the second half of the year, we are raising our full year revenue guidance to $320 to $328 million. The midpoint of our 2024 guidance assumes testing services volume growth in the high teens and revenue growth in the mid-20s year-over-year for the second half of 2024.

Speaker Change: Turning to cash, we generated 18.9 million in cash from operations and ended the quarter in a strong position with cash equivalents and marketable securities of 228.9 million and no debt.

Speaker Change: Turning to guidance.

Speaker Change: Based on the healthy performance across all businesses in the second quarter of 2024 and the anticipated growth in the second half of the year, we are raising our full-year revenue guidance to $320 to $328 million.

Speaker Change: The midpoint of our 2024 guidance assumes

Speaker Change: Testing services volume growth in the high teens and revenue growth in the mid-20s year-over-year for the second half of 2024.

Abhishek Jain: The difference in our assumptions between volume and revenue growth rates is driven by ASP expansion. We are assuming approximately $1,300 per test as our blended ASP for the second half of 2024. No change in medical coverage, products business to grow high teams year-over-year and our patient and distal solutions business to grow in low double digits year-over-year. We expect our growth margin to be approximately 67 to 68 percent, driven by the improved testing services growth margin. Due to the improved revenue expectations and growth margin, we expect our adjusted EBITDA gain for the full year 2024 to be between 9 million and 15 million.

John Walter Hanna: The difference in our assumptions between volume and revenue growth rates is driven by ASP expansion. We're assuming approximately $1,300 per test as our blended ASP for the second half of 2024. No change in medical coverage, products business to grow high double digits year over year, and our patient and digital solutions business to grow in low double digits year over year. We expect our gross margin to be approximately 67 to 68% driven by the improved testing services gross margin.

Speaker Change: The difference in our assumptions between volume and revenue growth rates is driven by ASP expansion.

Speaker Change: We're assuming approximately $1,300 per test as our blended ASP for the second half of 2024.

Speaker Change: No change in medical coverage. Products business to grow high teens year over year and our patient and distal solutions business to grow in low double digits year over year.

Speaker Change: We expect our gross margin to be approximately 67 to 68 percent, driven by the improved testing services gross margin.

John Walter Hanna: Due to the improved revenue expectations and gross margin, we expect our adjusted EBITDA gain for the full year 2024 to be between $9 million and $15 million, compared to the previously guided EBITDA loss of $14 million to $25 million. I would like to now turn the call over to John to deliver his closing remarks.

Speaker Change: Due to the improved revenue expectations and gross margin, we expect our adjusted EBITDA gain for the full year 2024 to be between $9 million and $15 million, compared to the previously guided EBITDA loss of $14 million to $24 million.

Abhishek Jain: Compared to the previously guided EBITDA loss of 14 million to 24 million.

John Hanna: I would like to now turn the call over to John to deliver close-in remarks.

Speaker Change: I would like to now turn the call over to John to deliver closing remarks.

John Hanna: Thank you, Abhishek. As we conclude our prepared remarks, I want to highlight the remarkable progress our team here at CareDx has made over the past year, translating into significant top-line and bottom-line growth. We stand in a strong position entering the second half of 2024.

John Walter Hanna: As we conclude our prepared remarks, I want to highlight the remarkable progress our team here at CareDx has made over the past year, translating into significant top line and bottom line growth. We stand in a strong position entering the second half of 2024.

John: Thank you, Abhishek.

John: As we conclude our prepared remarks, I want to highlight the remarkable progress our team here at CareDx has made over the past year, translating into significant top-line and bottom-line growth. We stand in a strong position entering the second half of 2024.

John Hanna: Prior to concluding the call, I want to share that CareDx will be hosting an investor day early in the fourth quarter, where we will provide insights into our long-term growth strategy. A public advisory of the specific date and location will be released in the coming weeks.

Operator: Prior to concluding the call, I want to share that CareDx will be hosting an investor day early in the fourth quarter, where we will provide insights into our long-term growth strategy. A public announcement of the specific date and location will be released in the coming week. And with that, I would like to ask the operator to open the line for questions. At this time, if you would like to ask a question, please press star 1 on your telephone.

Speaker Change: Prior to concluding the call, I want to share that CareDx will be hosting an Investor Day early in the fourth quarter, where we will provide insights into our long-term growth strategy. A public advisory of the specific date and location will be released in the coming weeks.

Unknown Executive: And with that, I would like to ask the operator to open the line for questions.

Speaker Change: And with that, I would like to ask the operator to open the line for questions.

Unknown Executive: At this time, if you would like to ask a question, please press star 1 on your telephone keypad. To withdraw yourself from the queue, you may press star 2. Once again, to ask a question that is star 1 now.

Operator: At this time, if you would like to ask a question, please press star 1 on your telephone keypad. To withdraw yourself from the queue, you may press star 2. Once again, to ask a question, that is star 1 now. One moment while we queue. We'll take our first question from Bill Bonello on Craig Hallam. Your line is open.

Speaker Change: At this time, if you would like to ask a question, please press star 1 on your telephone keypad. To withdraw yourself from the queue, you may press star 2. Once again, to ask a question, that is star 1 now.

Unknown Executive: One moment will be queue.

Speaker Change: One moment while we queue.

Bill Benello: We'll take our first question from Bill Benello of Craig Hallum. Your line is open.

Speaker Change: We'll take our first question from Bill Bonello of Craig Hallam. Your line is open.

William Bishop Bonello: Hey guys, really nice looking quarter. Congratulations. A couple of things. So on prior period collections, not at all surprising, given the efforts that you've been making, but, you know, last quarter, I think you had about $3.7 million, and you thought maybe that was clean up, and now you have another $13 million. And, you know, I get that you don't want to include it in the guidance, but how should we think about that on a go-forward basis? I mean, are there still more opportunities to go back and collect on prior period billing?

Bill Benello: Hey guys, really nice-looking quarter. Congratulations. A couple of things.

William Bishop Bonello: Hey guys, really nice looking quarter, congratulations.

Abhishek Jain: So, on the prior period collections, none at all; surprising given the efforts that you've been making. But you know, last quarter, I think you had about 3.7 million. And you thought maybe that was clean up. And now you have another 13 million. You know, it's there. I get you don't want to include it in the guidance, but how should we think about that on a go-forward basis?

William Bishop Bonello: A couple of things. So, on the prior period collections, not at all surprising given the efforts that you've been making, but, you know, last quarter I think you had about $3.7 million, and you thought maybe that was clean up, and now you have another $13 million, you know, is there, I get you don't want to include it in the guidance, but how should we think about that on a go-forward basis? I mean, is there more opportunities still to go back and collect on prior period billing?

Abhishek Jain: I mean, is there more opportunity still to go back and collect on prior period billing?

Abhishek Jain: Hi Bill. This is Abhishek.

Abhishek Jain: Hi Bill, this is Abhishek from this side. I'll take this question.

John Hanna: I'll take this question. So you're right. We basically had a good collection. This particular quarter, and we recognized 13 million dollars for the prior period. And from the guidance standpoint, what we have done this time around is include in the high end of our range. Some improved collections that will help us in getting higher revenues, and that's baked in in the guidance. That's the first part.

William Bishop Bonello: Hi Bill, this is Abhishek this side. I'll take this question. So you're right, we basically had a good collection this particular quarter and we recognized $13 million for the prior period.

Abhishek Jain: So you're right, we basically had a good collection this particular quarter, and we recognized $13 million for the prior period. And from the guidance standpoint, what we have done this time around, we are including in the high end of our range some improved collections that will help us in getting higher revenues, and that's baked in. That's the first part. And the second part is the overall size of this particular opportunity, and what we are seeing is that, based on some of these successes that we have seen in the last one year or so, the overall pool of such opportunities is kind of decreasing. And that's the reason we decided to kind of bake in some wins from this particular area at the high end of the guidance.

William Bishop Bonello: And from the guidance standpoint, what we have done this time around...

William Bishop Bonello: We are including in the high end of our range.

William Bishop Bonello: Some...

William Bishop Bonello: Improved collections that will help us in getting higher revenues and that's baked in in the guidance. That's the first part. And the second part is on the overall...

John Hanna: And the second part is on the overall size of this particular opportunity. And what we are seeing is that, based on some of the successes that we have seen in the last one year or so, the overall pool of such opportunities is kind of decreasing. And that's the reason we decided to kind of bake in some wins from this particular area in our high end of the guidance.

William Bishop Bonello: [inaudible]

William Bishop Bonello: Some wins from this particular area in our high end of the guidance.

Bill Benello: Okay, that's really helpful.

John Walter Hanna: Okay, that's really helpful. And then, can you just tell us what you're seeing in terms of surveillance testing in kidney? Are physicians still behaving as though the draft Moldex LCD is the policy? Or are you starting to see some, you know, reversion back to increased surveillance?

Bill Benello: And then can you just tell us what you're seeing in terms of surveillance testing in kidney?

Speaker Change: Okay, that's that's really helpful. And then can you just tell us what you're seeing in in terms of surveillance testing in in kidney? Are physicians still behaving as though the draft MoldyX LCD is is the policy? Are you starting to see some, you know, reversion back to increase surveillance testing?

Bill Benello: Are physicians still behaving as though the draft moldy X LCD is the policy?

John Hanna: Are you starting to see some, you know, reversion back to increased surveillance testing?

John Hanna: Hi, Bill, it's John.

John Walter Hanna: Hi Bill, it's John.

Robert Woodward: Thanks so much for the question. We continue to see that clinicians are using the test and being more comfortable with the scenarios in which it can be used for cause. They have not changed their behavior relative to surveillance testing in anticipation of the draft LCD finalization.

Speaker Change: Hi Bill, it's John . Thanks so much for the question. We continue to see that clinicians are using the test and being more comfortable with the scenarios in which it can be used for cause.

Speaker Change: They have not changed their behavior relative to surveillance testing in anticipation of the draft LCD finalization.

Bill Benello: Okay, and then if I can ask one last question, just any thoughts going into to ban for this September possible that we could see an update to classification that references, you know, the under derived cfDNA?

John Walter Hanna: Thanks so much for the question. We continue to see that clinicians are using the test and are more comfortable with the scenarios in which it can be used for cause. However, they have not changed their behavior relative to surveillance testing in anticipation of the draft LCD finalization.

Speaker Change: Okay, and then if I can ask one last question, just any thoughts going into BAMF this September , possible that we could see an update to classification that references, you know, donor-derived CFDNA?

John Walter Hanna: Okay, and then if I can ask one last question, just any thoughts going into BAMF this September, is it possible that we could see an update to classification that references, you know, donor-derived CFDNA? I'm going to ask Robert to respond to that. I think that is something that they've talked about over the years. It's unclear.

Robert Woodward: I'm going to ask Robert to respond to that. I think that is something that they've talked about over the years. It's unclear when that might happen as far as, you know, something coming out in a guidance, even if it is discussed, that would be, you know, in the future publication.

Unknown Executive: I'm going to ask Robert to respond to that.

Speaker Change: I'm going to ask Robert to respond to that.

Robert: I think that is something that they've talked about over the years. It's unclear when that might happen. As far as, you know, something coming out in the guidance, even if it is discussed, that would be, you know, in a future publication. So that's not short term.

Bill Benello: So that's not short term. Okay, thanks a lot.

Unknown Executive: Okay, thanks a lot. I appreciate it.

Speaker Change: Okay. Thanks a lot. Appreciate it.

Operator: We'll take our next question from Tycho Peterson of Jeffrey's.

Tyco Peterson: We'll take our next question from Tyco Peterson of Jeffries.

Speaker Change: We'll take our next question from Tycho Peterson of Jefferies.

Kayla: Hi guys, this is Kayla on Third Echo.

Kayla: Hi guys, this is Kayla on Thirtecho. Thanks for asking the questions.

Kayla: Thanks for seeking a question.

Speaker Change: Hi guys, this is Kayla on Thirteco. Thanks for keeping the questions.

Kayla: I just wanted to start off with the IOTA program. You've mentioned potential reimbursement changes that could come down the line from the program. Assuming the program starts in 2025 and is successful, how soon could reimbursement changes be proposed, and what changes would you be hoping to see?

Kayla: I just want to start off with the IoT program. You've mentioned potential reimbursement teams that come down the line from the program. Assuming the program starts in 25 and it's successful.

Speaker Change: I just wanted to start off with the IOTA program. You've mentioned potential reimbursement changes that could come down the line from the program. Assuming the program starts in 2025 and is successful, how soon could reimbursement changes be proposed and what changes would you be hoping to see?

Kayla: How think of reimbursement to be proposed and what changes would be hoping to see.

Kayla: Can you repeat the question that you're referring to the IOTA program and reimbursement? Yeah, you've talked about some potential reimbursement model changes that could come down the line from the program. I guess what kind of changes could we see and when?

Unknown Executive: Can you repeat the question? Are you referring to the IOTA program and reimbursement?

Speaker Change: Can you repeat the question? You're referring to the IOTA program and reimbursement?

Kayla: Yeah, you've talked about some potential reimbursement model changes that could come down the line from the program. I guess what kind of changes we could see and when?

Speaker Change: Yeah, you've talked about some potential reimbursement model changes that could come down the line from the program. I guess, what kind of changes could we see and when?

Alex: Yeah, I'm going to ask Alex to talk about the IOTA program. Thanks.

Alex: Yeah, I'm going to ask Alex to talk about the IOTA program. Thanks. Sure. So thanks for the question. You know, this is a long-term program for roughly half PD transplant centers. And the penalties and rewards, so to speak, are really built into that program. It's still in discussion, and a lot of comments have now come in. And so those ups and takes and gives and puts will happen as part of the IOTA program that is specific to those centers that are in the IOTA program.

Alex: Sure. So, thanks for the question. You know, this is a long-term program for roughly half of kidney transplant centers. And the penalties and rewards, so to speak, are really built into that program. It's still in discussion, and there are a lot of comments that have now come in. And so those ups and takes and gives and puts will happen as part of the IOTA program that's specific to those centers that are in the IOTA program.

Speaker Change: Yeah, I'm going to ask Alex to talk about the IOTA program. Thanks. Sure, so thanks for the question. You know, this is a long-term program for roughly half kidney transplant centers.

Alex: And the penalties and rewards, so to speak, are really built into that program.

Speaker Change: It's still in discussion, and a lot of comments have now come in, and so those ups and takes and gives and puts will happen as part of the IOTA program that's specific to those centers that are in the IOTA program.

Alex: Okay, the helpful. And then will the centers that are involved to be able to stick with the past. They are currently using.

Kayla: Okay, that's helpful. And then will the centers that are involved be able to stick with the test they are currently using? Say maybe like AlloShare versus Prospera? Or will there be an effort to standardize testing for the centers participating in the program? And anything worth calling out that CNA could do to defend or pick up share as the market expands? I think it's important to realize that

Speaker Change: Okay, that's helpful. And then, will the centers that are involved be able to stick with the tests they are currently using, say maybe like AlloShare versus Prospera, or will there be an effort to standardize testing for the centers participating in the program, and anything worth calling out that CUNA can do to defend or pick up share as the market expands?

Alex: Maybe like, I'll show you versus pro Sarah, or will there be an effort to standardize testing for the center of the program and anything worth calling out that you need to do to defend or pick up share as the market. I think it's important to realize that this program is to incentivize more utilization, organs, right? It's to help patients, and centers are going to make decisions on how to do that. And here at CareDx, we have tools. We have evidence-driven solutions that can help them do that. And so we're thinking that we're in a very good position to help them execute on their strategies.

Unknown Executive: I think what's important to realize that this program is to incentivize more utilization of organs, right? It's to help patients, and centers are gonna make decisions on how to do that. And here at CareDx, we have tools, we have evidence-driven solutions that can help them do that. And so we think that we're in a very good position to help them execute on their strategy.

Speaker Change: I think what's important to realize is that this program is to incentivize.

Speaker Change: more utilization, organs, right, it's to help patients and centers are going to make decisions on how to do that and here at CareDx we have tools, we have evidence-driven

Speaker Change: solutions that can help them do that. And so we're thinking that we're in a very good position to help them execute on their strategies.

Matt Sykes: We'll move next to Matt Sykes of Goldman Sachs. Your line is open.

Operator: We'll move next to Matt Sykes of Goldman Sachs. Your line is open. Hey guys.

Speaker Change: Thank you.

Speaker Change: We'll move next to Matt Sykes of Goldman Sachs. Your line is open.

Prashanth: Hey guys, this is Prashanth on for Matt. Congratulations on the quarter, and thanks for taking the question. So, first, given how transplant volumes have trended for the first half of this year, it seems like for kidney and heart transplant volumes, transplant volumes are trending flattish to low single-digit growth for the second half when you annualize that first half number in 2024. How are you thinking about this trend and the upside remaining for growth throughout the remainder of the year?

Prashant Kota: Hey guys, this is Prashant from Matt. Congrats on the quarter, and thanks for taking the question. So first, given how transplant volumes have trended for the first half of this year, it seems like for kidney and heart transplant volumes are trending flatish to low single-digit growth for the second half when you annualize that first half number in 2024.

Speaker Change: Hey guys, this is Prashant on for Matt. Congrats on the quarter and thanks for taking the question. So, first, given how transplant volumes have trended for the first half of this year,

Prashanth: It seems like for kidney and heart, transplant volumes are trending flattish to low single-digit growth for the second half when you annualize that first half number in 2024. How are you thinking about this trend and the upside remaining for growth throughout the remainder of the year?

Prashant Kota: How are you thinking about this trend and the upside remaining for growth throughout the remainder of the year?

John Hanna: Yeah, thanks for the question, Prashant. I mean, I think that there's plenty of opportunity for us to continue to grow as a business, regardless of the quarter of recorder trends and transplant volume. In general, we see volume increasing year over year. And we're going to continue to monitor that, and we anticipate with the IOTA program that was addressed in the last question that we're going to continue to see the trend go in that upwards direction.

Unknown Executive: Yeah, thanks for the question, Prashan. I mean, I think that there's plenty of opportunity for us to continue to grow as a business, regardless of the quarter over quarter trends and transplant volume. In general, we see volume increasing year over year, and we're going to continue to monitor that. And we anticipate with the IOTA program that was addressed in the last question that we're going to continue to see the trend go and go in that upward direction.

Speaker Change: Yeah, thanks for the question, Prashan. I mean, I think that there's plenty of opportunity for us to continue to grow as a business.

Speaker Change: regardless of the quarter-over-quarter trends in transplant volume.

Speaker Change: volume increasing year over year. And we're going to continue to monitor that. And we anticipate with the IOTA program that was addressed in the in the last question that we're going to continue to see the trend go and go in that upwards direction.

Prashant Kota: Got it, thanks.

Unknown Executive: Got it, thanks. And then just a question on single versus multimodal testing. So your main competitor in the space is involved with this approach as well. Can you just quantify the market for multimodal testing? And how much share have you been capturing? How is that projected to evolve going forward?

Prashant Kota: And then just a question on single versus multi-modality testing. So your main competitor in the space is involved with this approach as well.

Prashan: Got it, thanks. And then just a question on single versus multi-modality testing.

John Hanna: Can you just quantify the market for multi-modality and how much share have you been capturing?

Speaker Change: So your main competitor in the space is involved with this approach as well. Can you just quantify the market for multimodality and how much share have you been capturing? How is that projected to evolve going forward?

John Hanna: How is that projected to evolve going forward? Well, I think we've built a strong base of evidence that supports multi-modal testing in heart transplantation, that dual, positive, Alamab heart, and Alashore heart identify rejection at a higher rate than a single test. In particular, donor drive, self-read DNA alone and that dual negative results, patients are less likely to get biopsy and have significant fewer rejection events. And so the evidence is very strong there, and the adoption of multi-modal testing is high. And I think we've previously said upwards of 90% of patients that undergo a testing from CAREDX for heart transplant, get heart care.

Unknown Executive: I think we've built a strong base of evidence that supports multimodal testing in heart transplantation, that dual positive ALIMAP heart and ALISHORE heart identify rejection at a higher rate than a single test, in particular donor-derived cell-free DNA alone, and that dual negative results patients are less likely to get biopsy and have significantly fewer rejection events. And so the evidence is very strong there, and the adoption of multimodal testing is high, and I think we've previously said upwards of 90% of patients that undergo testing from CareDx for a heart transplant get heart care.

Speaker Change: I think we've built a strong base of evidence that supports

Speaker Change: Multimodal Testing in Heart Transplantation.

Speaker Change: that dual positive ALIMAP heart and ALISHORE heart.

Speaker Change: Identify rejection at a higher rate than a single

Speaker Change: test.

Speaker Change: In particular, donor-derived cell-free DNA alone, and that dual negative results...

Speaker Change: patients are less likely to get biopsy and have

Speaker Change: Significant Fewer Rejection Events.

Speaker Change: And so the evidence is very strong there, and the adoption of multimodal testing is high.

Speaker Change: And I think we've previously said upwards of 90% of patients.

Speaker Change: that undergo a testing from CareDx for heart transplant get heart care.

Prashant Kota: Got it.

Unknown Executive: Got it. And then, if I could squeeze one last one in, so how do the market sizes for Histomap and Euromap compare with the market for Allomap Kidney given they're all gene expression profiling tests for kidney transplants? That's a great question.

Prashant Kota: And then, if I could squeeze one last one. So how do the market sizes for HISTOMAP and EuroMAP compare with the market for Alamab kidney given their all gene expression profiling tests for kidney transplant monitoring? That's a great question.

Speaker Change: Got it. And then if I could squeeze one last one. So how do the market sizes for Histomap and Euromap compare with the market for Allomap kidney given they're all gene expression profiling tests for kidney transplant monitoring?

Unknown Executive: That's a great question. We're going to be addressing future pipeline products at our investor day in the fourth quarter. So we'll hold on that question until that time.

John Hanna: We're going to be addressing future pipeline products in our Investor Day in the fourth quarter. So we'll hold on to that question until that time.

Speaker Change: It's a great question. We're going to be addressing future pipeline products in our Investor Day in the fourth quarter, so we'll hold on that question until that time.

Prashant Kota: Got it. Thank you.

Speaker Change: Got it. Thank you.

Andrew Cooper: Our next question is from Andrew Cooper of Raymond James. Hey everybody, thanks for the question.

Operator: Our next question is from Andrew Cooper of Raymond James.

Speaker Change: Thanks.

Speaker Change: Our next question is from Andrew Cooper of Raymond James.

Andrew Harris Cooper: Hey everybody, thanks for the question. Maybe first just... You know, the scope of this step up kind of quarter over quarter in volumes was impressive. Has anything changed? You know, I know you kind of touched on it a little bit in terms of an inflection point, which I think was the word used in one of the prepared remarks. So just would love kind of what you think is really driving continued adoption from here as we see some of the noise settle down over the last year.

Andrew Cooper: Many first just, you know, the scope of this step up kind of quarter of recorder and volumes was impressive. Has anything changed? You know, I know you've kind of touched on it a little bit in terms of an inflection point, I think was the word used in one of the prepared remarks. So just would love kind of what you think is really driving that continue. We've continued adoption from here as we see some of the noise settled down over the last year.

Speaker Change: Hey everybody, thanks for the question. Maybe first, just, you know, the scope of this step up, kind of quarter over quarter in volumes, was impressive.

Andrew Harris Cooper: Has anything changed? I know you kind of touched on it a little bit in terms of an inflection point, I think was the word used in one of the prepared remarks. I just would love kind of what you think is really driving that continued adoption from here as we see some of the noise settle down over the last year.

Alex: Yeah, thanks for the question. I'm going to ask Alex, our President of Patient Testing Services, to answer that.

Andrew Cooper: Yeah, thanks for the question.

Alex: I'm going to ask Alex, our President of Patient Testing Services, to answer that.

Andrew Harris Cooper: Yeah, thanks for the question. I'm going to ask Alex, our president of patient testing services, to answer that.

Alex: Yeah, thanks, Andrew. You know, we are leading through innovation and clinical evidence. That hasn't changed.

Alex: You know, we are leading through innovation and clinical evidence that hasn't changed. And I think as you look to see how our differentiation is emerging in the market, you heard about HeartCare, and we were talking about Shure. Consistently, it's that type of evidence and us advocating for a center-by-center approach to make sure that we're executing on our strategy. So, you know, while we see the growth and we're pleased, this is something that is really baked into our strategy and our go-to-market.

Alex: Yeah, thanks, Andrew.

Alex: You know, we are leading through innovation and clinical evidence. That hasn't changed.

John Hanna: And I think as you look to see how our differentiation is emerging in the market, you heard about heart care. We're talking, talking about sure. We're consistently, it's that type of evidence and us, and us advocating for out of center by center approach to make sure that we're actually doing our strategy. So, you know, while we see the growth and we're pleased. This is something that is really baked into our strategy and our go to market. Okay, helpful.

Alex: And I think as you look to see how our differentiation is emerging in the market, you heard about heart care, we were talking about shore.

Alex: Is that type of evidence?

Alex: and us advocating.

Alex: for a center-by-center approach to make sure that we're executing on our strategy. So, you know, while we see the growth and we're pleased, this is something that is really baked into our strategy and our go-to-market.

John Walter Hanna: Okay, helpful. And then maybe I think, John, I think you commented in response to Bill, something in terms of clinicians getting a little bit more comfortable with some of the four causes. Could you just elaborate a little bit more on that and kind of whether it's in regards to what the disruption really has been when it shouldn't have been or kind of what you meant by that comment and what you're seeing from that, in that regard? Yeah, sure, Andrew.

Andrew Cooper: And then maybe I think John and you commented in response to Bill, something in terms of clinicians getting a little bit more comfortable on some of the four calls uses.

Speaker Change: Okay, helpful. And then...

John: Maybe, I think, John , I think you commented in response to Bill something in terms of clinicians getting a little bit more comfortable on some of the four cause uses. Could you just elaborate a little bit more on that and kind of?

John Hanna: Could you just elaborate a little bit more on that and kind of whether it's in regards to what this disruption really has been when it shouldn't have been or kind of what you met by that comment and what you're seeing from that from that regard. Yeah, sure, Andrew. Thanks. Thanks for the question. I think this reflects on what Alex was commenting on a second ago, which is that under the coverage criteria today in the Medicare program, there are a number of scenarios where the test can be ordered for cause. It could be as a result of clinical signs and symptoms. It could be the result of another pre-test that was performed, such as a serum creatinine being elevated.

John: whether it's in regards to what the disruption really has been when it shouldn't have been or kind of what you meant by that comment and what you're seeing from that from that regard. Yeah, sure, Andrew. Thanks for the question. I think this reflects on what Alex was commenting on a second ago, which is

John Walter Hanna: Sure, Andrew. Thanks for the question. I think this reflects on what Alex was commenting on a second ago, which is that under the coverage criteria today in the Medicare program, there are a number of scenarios where the test can be ordered for cause. It could be as a result of clinical signs and symptoms. It could be the result of another test that was performed, such as serum creatinine being elevated. Or it could be as a result of trying to monitor a change in immunosuppression levels for the patient.

Speaker Change: It under the coverage

Speaker Change: There are a number of scenarios where the test can be ordered for a cause. It could be as a result of clinical signs and symptoms. It could be the result of another pre-test that was performed, such as a serum creatinine being elevated.

John Hanna: It could be as a result of trying to monitor a change in immunosuppression levels for the patient. And so what Alex and his team have done, you know, quite successfully, has been to educate clinicians at the centers around these scenarios. In which the testing is medically both appropriate has utility and is considered reasonable and necessary under the policy so that they can utilize it in those settings. And that is driving to some degree our growth as a company as they become more and more comfortable with those four cause scenarios and ordering it in those scenarios.

Speaker Change: It could be as a result of trying to monitor a change in immunosuppression levels for the patient. And so what Alex and his team have done, you know, quite successfully has been to educate clinicians at the centers around these scenarios in which the testing is medically both appropriate, has utility, and is considered reasonable and necessary under the policy so that they can utilize it in those settings. And that is driving, to some degree, our growth.

John Walter Hanna: And so what Alex and his team have done, you know, quite successfully, is to educate clinicians at the centers around these scenarios in which the testing is medically both appropriate, has utility, and is considered reasonable and necessary under the policy so that they can utilize it in those settings. And that is driving, to some degree, our growth as a company as they become more and more comfortable with those for-cause scenarios and ordering them in those scenarios.

Speaker Change: As a company, as they become more and more comfortable with those four cause scenarios and ordering it in those scenarios.

Andrew Cooper: Okay, helpful maybe just one last one to sneak in out of check.

Abhishek Jain: Okay, helpful. Maybe just one last one to sneak in. Abhishek, I think you said around $1,300 in terms of ASP for the rest of the year. If I back out, if I'm doing the math right, backing out the $1,302 this quarter, you were a little bit north of that in 2Q, and you talk about the $27 million additional lives being added in terms of coverage. So any reason we shouldn't expect that number to kind of trend a little bit higher from here? Or maybe some of the moderating factors?

Speaker Change: Okay, helpful. Maybe just one last one to sneak in.

Andrew Cooper: I think you said around $1,300 in terms of AFP for the rest of the year. If I back out, if I'm doing the math right, backing out the 13 to this quarter, you were a little bit north of that into Q, and you talk about the 27 million additional lives being added in terms of coverage.

Speaker Change: Abhishek, I think you said around $1,300 in terms of ASP for the rest of the year.

Speaker Change: If I back out, if I'm doing the math right, backing out the 13-2 this quarter, you were a little bit north of that in 2Q, and you talk about the 27 million additional lives being added in terms of coverage. So any reason we shouldn't expect that number to kind of trend a little bit higher from here, or maybe what's some of the moderating factors?

Andrew Cooper: So any reason we shouldn't expect that number to kind of trend a little bit higher from here, or maybe what some of the moderating factors. Yeah, the way I'm kind of thinking about this, Andrew, I have baked in some of those pieces in the high end of our guide, not necessarily the midpoint of our guide. So that's how I see. I'm not seeing any kind of a step change here from Q2; it's going to be more flatish at a very high level, the ASP's options.

Abhishek Jain: Yeah, the way I'm kind of thinking about this, Andrew, is that I have baked in some of those pieces in the high end of our guide, not necessarily the midpoint of our guide. So that's how I see, I'm not seeing any kind of a step change here from Q2, it's going to be more flattish at a very high level.

Speaker Change: Yeah, the way I'm kind of thinking about this, Andrew, that I have baked in some of those pieces in the high end of our guide, not necessarily the midpoint of our guide.

Speaker Change: So that's how I see. I'm not seeing any kind of a step change here from Q2. It's going to be more flattish at a very high level, the ASP assumptions.

Andrew Cooper: Okay, great. I appreciate that you had the thoughts, and I'll stop there.

Andrew Harris Cooper: Okay, great. I appreciate the thoughts, and I'll stop there.

Andrew Harris Cooper: Okay, great. I appreciate the thoughts and I'll stop there.

Operator: Thank you. We'll move next to Mason Carrico of Stevens.

Mason Carrico: We'll move next to Mason Carrico of Stevens. Hey guys, congrats on a really strong quarter.

Speaker Change: Thank you. We'll move next to Mason Carrico of Stevens.

Mason Owen Carrico: Hey guys, congrats on a really strong quarter. How much of an impact has the SURE data had on adoption trends? I mean, once your reps put that in front of clinicians and talk through it with them, do you see utilization pick up, whether it's, you know, frequency of testing or a ramp in new ordering clinicians? Yeah, maybe I'll just leave it there.

Mason Owen Carrico: Hey guys, congrats on a really strong quarter.

Mason Carrico: How much of an impact has the short data had on adoption trends? I mean, once your reps put that in front of clinicians and talks through with them. Do you see utilization pickup?

Mason Owen Carrico: How much of an impact has the SURE data had on adoption trends? I mean once your reps put that in front of clinicians and

Alex: Whether it's frequency of testing or a ramp in new ordering clinicians, yeah, maybe I'll just leave it there. Yeah, thanks.

Speaker Change: Do you see utilization pick up, whether it's frequency of testing or a ramp in new ordering clinicians? Yeah, maybe I'll just leave it there.

Alex: Yeah, thanks. This is Alex. Thanks, Mason.

Alex: This is Alex. Thanks, Mason. Ever since I think the introduction of the early data in Prague, this has been a big topic for clinicians around heart transplant and that that is only increased. I think we're in the early days of seeing the impact of shore. This is a 67-center study with 2,800 patients being followed for five years. The amount of data is going to come out of shore is tremendous, and I think we're just starting to see the early studies and the early data. So we're getting started, and that's going to continue for some time.

Speaker Change: Yeah, thanks. This is Alex. Thanks, Mason.

Speaker Change: You know, ever since I think the introduction of the early data in Prague, this has been a big topic for clinicians.

Alex: You know, ever since, I think, the introduction of the early data in Prague, this has been a big topic for clinicians around heart transplantation, and that has only increased. I think we're in the early days of seeing the impact of SHORE. This is a 67-center study with 2,800 patients being followed for five years. The amount of data that's going to come out of SHORE is tremendous. I think we're just starting to see the early studies and the early data. So we're just getting started, and that's going to continue for some time.

Speaker Change: I think we're in the early days of seeing the impact of SHORE. This is a 67-center study with 2,800 patients being followed for five years. The amount of data that's going to come out of SHORE is tremendous.

Speaker Change: And I think we're just starting to see the early studies and the early data. So we're getting started, and that's going to continue for some time.

Mason Carrico: Got it. Okay.

Mason Owen Carrico: Got it. Okay. And could you maybe give us a little bit of color around some of the early conversations you're having with transplant centers around the IOTA model? Has that driven any of the centers to increase their engagement with you guys or start to implement some sort of framework to more broadly utilize some of your offerings?

Alex: And could you maybe give us a little bit of color around some of the early conversations you're having with transplant centers around the IOTA model? Has that driven any of the centers to increase their engagement with you guys or start to implement some sort of framework to more broadly utilize some of your offerings. Any broad color there, I guess.

Speaker Change: got it okay and could you

Speaker Change: Maybe give us a little bit of color around some of the early conversations you're having with with transplant centers around the IOTA model. Has that driven...

Speaker Change: Any of the centers to increase their engagement with you guys or start to implement some sort of Framework to more broadly utilize some of your offerings any in broad color there, I guess

Unknown Executive: Any broad color there, I guess.

Unknown Executive: I think there is certainly increased interest. Centers know this is coming. They're trying to organize themselves, and there are certainly many more questions we're receiving on areas that we are well positioned to help them in.

Alex: I think I think there is certainly increased interest centers notices coming. They're trying to organize themselves, and there's certainly many more questions we're receiving on areas that we are well positioned to help them. Okay.

Speaker Change: I think there is certainly increased interest. Centers know this is coming. They're trying to organize themselves, and there are certainly many more questions we're receiving on areas that we are well-positioned to help them in.

Mason Owen Carrico: Okay, and last one here. I may have missed this, but did you guys call out volume trends across Oregon type during the quarter? Would you be willing to?

Mason Carrico: In last one here, I may have missed this, but did you guys call out volume trends across organ type during the quarter? Would you be willing to? No, we have not called out the volume growth at the organ level, but what we can say may some that we have seen growth across all the organ. Perfect. Okay.

Speaker Change: Okay, and last one here. I may have missed this, but did you guys call out volume trends across organ type during the quarter? Would you be willing to?

Unknown Executive: No, we have not called out the volume growth at the organ level, but what we can say, Mason, is that we are seeing growth across all the organs.

Speaker Change: No, we have not called out the volume growth at the organ level, but what we can say, Mason, that we are seeing growth across all the organs. Perfect. Okay. Thank you.

Unknown Executive: Perfect. Okay. Thank you.

Mason Carrico: Thank you.

Mark Motharo: We'll take our next question from Mark Motharo of DTIG.

Operator: We'll take our next question from Mark Massaro of VTIG.

Speaker Change: We'll take our next question from Mark Massaro of BTIG.

Vivian: Hey guys, this is Vivian.

Vivian An: Hey, guys. This is Vivian An for Mark. Thanks for taking the question. So I understand that we're waiting for a CMS update in the coming weeks. Could you maybe just give us a sense for what the range of outcomes might look in the final LCD, particularly given that the interim shore data is out, and just any dialogue you've had with them since that data came out?

Vivian: I'm from Mars. Thanks for taking the question. I understand that we're waiting for a CMS update in the coming week.

Speaker Change: Hey guys, this is Vivian on for Mark. Thanks for taking the question.

Speaker Change: I understand that we're waiting for a CMS update in the coming weeks.

Vivian: Could you please just give us a sense for how you're thinking about what the range of outcomes might look like in the final LCD, particularly given that the interim short data is out. And just any dialogue you've had with them on that data red. Thanks.

Vivian: Could you maybe just give us a sense for how you're thinking about what the range of outcomes might look in the final LCD, particularly given that the interim shore data is out, and just any dialogue you've had with them since that data read out. Thanks.

John Hanna: Thanks, and you appreciate the question. As I shared in the prepared remarks, we have observed CMS publicly state that they continue to want to provide access to monitoring assays for solid organ transplant rejection. And we anticipate that that policy will be updated here in the coming month. And so we're monitoring for that.

Unknown Executive: Yeah, thanks, Cindy. We appreciate the question. As I shared in my prepared remarks, we have observed CMS publicly state that they continue to want to provide access to monitoring assays for solid organ transplant rejection, and we anticipate that that policy will be updated here in the coming month. And so we're monitoring that. We, as you asked, do regularly communicate with the agency and with our MACs and, of course, have shared with them both the SURE data as well as our Nature Medicine publication on kidney transplant management. So they are diligent about reviewing the literature and the positive results there. And so we'll just continue to await their final policy.

Speaker Change: Yeah, thanks, Cindy. We appreciate the question. As I shared in the prepared remarks,

Speaker Change: We have observed CMS publicly state that they continue to want to provide access to monitoring assays for solid organ transplant rejection and we anticipate

Speaker Change: That policy will be updated here in the coming month.

John Hanna: We, as you asked, we do regularly communicate with the agency and with our max. And of course, have shared with them both the short data as well as our nature, medicine, publication around kidney transplant management. So they are diligent about reviewing the literature and the positive results there. And so we'll just continue to await their final policy. Okay, perfect, understood.

Speaker Change: And so, we're monitoring for that. We, as you asked, we do regularly communicate with the agency and with our MACs, and, of course, have shared with them both the SURE data as well as our Nature Medicine publication around kidney transplant management.

Speaker Change: So they, you know, are diligent about reviewing the literature and the positive results there, and so we'll just continue to await their final policy.

Unknown Executive: Okay, perfect, understood. And just one, just wanted to dig in a little bit more on the prior period collections with a pretty substantial number. So I did hear you guys say that it is contemplated in the high end of the guide to some degree, but you know, should we think about it tapering off sequentially for the remainder of the year? And do the collections include tests just from the prior year? Or do they go back further than that?

Vivian: And just one, just wanted to dig in a little bit more on the prior period collections with a pretty substantial number. So I did for you guys say that it is contemplated in the high end of the guide to some degree, but, you know, should we think about it tapering off sequentially for the remainder of the year and do the collections include tests just in the prior year or do they go back? Further than that? Yeah, so these tests that we're calling out, they definitely go back prior periods. We're not including any tests that we've done in the current quarter in that $13 million number.

Speaker Change: Okay, perfect. Understood.

Speaker Change: And just one, I just wanted to dig in a little bit more on the prior period collections with pretty substantial number. So I did hear you guys say that it is contemplated in the high end of the guide to some degree, but...

Speaker Change: Should we think about it tapering off sequentially for the remainder of the year, and do the collections include tests just from the prior year, or do they go back further than that?

Vivian An: Yeah, so these tests that we're calling out, they definitely go back to prior periods. We're not including any tests that we've done in the current quarter in that $13 million number.

Speaker Change: Yeah, so these tests that we're calling out, they definitely go back prior periods. We're not including any tests that we've done in the current quarter in that $13 million number.

Unknown Executive: And as I was referencing previously, we have seen quite a few wins based on a lot of the effort that we have done in the past many quarters. But we believe that now the available pool of these kind of wins is kind of shrinking. And that's the reason we decided to bake in part of that kind of our expectation on what it may kind of pan out in our high end of the guide.

Abhishek Jain: And as I was referencing previously, we have seen quite a few wins based on a lot of effort that we've done the past many quarters.

Speaker Change: And as I was referencing previously, we have seen quite a few wins based on a lot of effort that we have done in the past many quarters.

Abhishek Jain: But we believe that now the available pool of these kind of wins is kind of shrinking. And that's the reason we decided to bake in part of that kind of our expectation on what it may kind of pan out in our high end of the guidance. Okay, understood.

Speaker Change: But we believe that now the available pool of these kind of wins is kind of shrinking. And that's the reason we decided to bake in part of that kind of our expectation on what it may kind of pan out in our high end of the guidance.

Vivian An: Okay, understood. I'll leave it there. Thank you.

Vivian: I'll leave it there. Thank you.

Operator: We'll take our next question from Yi Chen of HC Wainwright.

Yi Chen: And we'll take our next, we'll take our next question from each end of HC Wainwright. Thank you for taking my questions. On my first question, is when you talk about those tests performing quite serious. Are you primarily talking about maybe one, two, or three quarters in the back, or maybe one to three years in the back?

Speaker Change: Okay, understood. I'll leave it there. Thank you.

Speaker Change: We'll take our next question from Yi Chen of HC Wainwright.

Yi Chen: Thank you for taking my questions. My first question is, when you talk about those tests performed in prior periods, are you primarily talking about maybe one, two, or three quarters in the back, or maybe one to three years in the back?

Yi Chen: Thank you for taking my questions. My first question is, when you talk about those tests performing prior periods, are you primarily talking about maybe one, two, or three quarters in the back, or maybe one to three years in the back?

Yi Chen: Yeah, so there are a couple of components on these tests, each end. One is, of course, what we typically have called out around the Medicare Advantage, where we have been working with these fares. And these tests generally go back multiple years, not necessarily just a few quarters. So that's the first part. And the second part is that, based on how we are seeing these increased collections. And based on our discussions with the pace and everybody, we are kind of recognizing revenue on certain tests, which is actually helping us improving our AS fees in the current quarter and going forward basis.

Unknown Executive: Yeah, so there are a couple of components to these tests, Yi Chen. One is, of course, what we typically have called out around the Medicare Advantage because we have been working with these fares. And these tests generally go back multiple years, not necessarily just a few quarters. So that's the first part. And the second part is that based on how we are seeing these increased collections and based on our discussions with the PACE and everybody, we are kind of recognizing revenue on certain tests, which is actually helping us improve our ASPs in the current quarter and on a go-forward basis. So there are two components.

Speaker Change: Yeah, so there are a couple of components on these tests, Yi Chen. One is, of course, what we typically have called out around the Medicare Advantage, where we have been working with these fares. And these tests generally go back multiple years, not necessarily just a few quarters.

Speaker Change: So that's the first part. And the second part is that based on

Speaker Change: How we are seeing these increased collections and based on our discussions with the peers and everybody, we are kind of recognizing revenue on certain tests, which is actually helping us improving our ASPs in the current quarter and on a go forward basis. So there are two components there.

Yi Chen: So there are two components.

Yi Chen: and Sam.

Abhishek Jain: So, in the near term, for the next two or three quarters, do you expect the top line growth to be primarily driven by test volume growth in the current quarter or better collection of tests performing prior periods on maybe they contribute equal to top line growth? The way we are guiding for the second half each end, we are basically saying that our volume growth is going to be in the high teens and our revenue growth is going to be in mid 20s. So, you can basically say that the majority of the revenue growth is still driven by the volume, but still there is a pretty decent piece because of the ASP expansion, which is baked in in our heavy due guidance now.

Yi Chen: So in the near term, for the next two or three quarters, do you expect the top line growth to be primarily driven by test volume growth in the current quarter or better collection of tests performed in prior periods, or maybe they could contribute equally?

Speaker Change: Thank you.

Speaker Change: So in the near term, for the next two or three quarters, do you expect the top-line growth to be primarily driven by test volume growth in the current quarter or better collection of tests performed in prior periods, or maybe they could contribute equally to top-line

Unknown Executive: The way we are guiding for the second half, Yi Chen, we are basically saying that our volume growth is going to be in the high teens, and our revenue growth is going to be in the mid 20s. So you can basically say that the majority of the revenue growth is still driven by volume, but there is still a pretty decent piece because of the ASP expansion, which is baked in to our revenue guidance now.

Speaker Change: Groups.

Speaker Change: The way we are guiding for the second half, Yi Chen, we are basically saying that our volume growth is going to be in the high teens and our revenue growth is going to be in mid-twenties. So you can basically say that the majority of the revenue growth is still driven by the volume, but still there is a pretty decent piece because of the ASP expansion, which is baked in in our revenue guidance now.

Abhishek Jain: Great.

Yi Chen: Great. Thank you for the clarification.

Speaker Change: Thank you for your attention.

Thomas Deborsi: We'll take our next question from Thomas Deborsi of Nefron Research. Hello.

Speaker Change: Great, thank you for the clarification.

Operator: We'll take our next question from Thomas Deborsey of Nefron Research.

Speaker Change: We'll take our next question from Thomas Deborsey of Nephron Research.

Thomas Deborsey: Hello, thanks for taking the question. I guess I'm going.

Thomas Deborsi: Thanks for taking the question. I guess going still back to the prior period question. So, I just maybe just want to clarify around the incremental coverage. Are you getting a look-back period from either MA plans or commercial plans, you know, I guess, as you negotiate it that we're reversing it. Is that part of what's helping us?

Thomas Deborsey: Hello, thanks for taking the question.

Unknown Executive: Still back to the prior period question. So I just maybe just want to clarify around the incremental coverage. Are you getting a look-back period from either MA plans or commercial plans? You know, I guess as you negotiate network reimbursement, is that part of what's helping this?

Thomas Deborsey: Still back to the prior period question, so I just maybe just want to clarify around the incremental coverage. Are you getting a look back period from

Speaker Change: Either MA plans or commercial plans, you know, I guess as you negotiate a network reimbursement. Is that part of what's helping us?

Abhishek Jain: Yeah, no, that's a great question, Tom. And let me give you an example here that we were we have been having these negotiations with the medical vantage pairs. And one large national pair actually decided to process many of these unpaid claims starting January of 2022. So that's just an example as to sometimes we are able to kind of negotiate with these pairs, some of the claims that we were not being paid in the past. And we're able to get that payment now. Understood.

Unknown Executive: Yeah, no, that's a great question, Tom. And let me give you an example here: we were, we have been having these negotiations with the Medicare Advantage payers. And one large national payer actually decided to process many of these unpaid claims starting January of 2022. So that's just an example as to sometimes we are able to negotiate with these payers on some of the claims that we were not being paid in the past, and we're able to get that payment now.

Speaker Change: Yeah, no, that's a great question, Tom. And let me give you an example here that we were, we have been having these negotiations with the Medicare Advantage payers.

Speaker Change: And one large national payer actually decided to process many of these unpaid claims starting January of 2022.

Speaker Change: So that's just an example as to sometimes we are able to kind of negotiate with these payers some of the claims that we were not being paid in the past and we are able to get that payment now.

Abhishek Jain: And then maybe just as a related follow-up around, you know, faster volume growth, obviously, impressive, you know, even relative to last quarter. And just you mentioned, some of it is related to, I guess, doctors understanding the various situations where they can order the test.

Thomas Deborsey: And then maybe just as a. Unrelated follow-up around, you know, faster volume growth, obviously impressive, you know, even relative to last quarter, and just, you mentioned some of it is related to, I guess, doctors understanding the various situations where they can order the test, you know, do you think overall, maybe across, you know, top transplant centers that there's a greater recognition or just more, more, I guess, maybe, from early adopters, it's shifting towards like maybe the, middle or the majority in terms of transplant doctors adopting you know, monoduric acid.

Speaker Change: [inaudible]

Speaker Change: And then, maybe just as a...

Speaker Change: Unrelated follow-up around, you know, faster volume growth, obviously impressive, you know,

Speaker Change: You know, even relative to last quarter, it just, you mentioned some of it is related to, I guess, doctors understanding the...

Alex: You know, do you think overall maybe across, you know, top translate centers that there's a greater recognition or just more, or I guess maybe from early adopters and shifting towards like maybe the middle or the majority. In terms of translate, doctors adopted, you know, bodhideric acid.

Speaker Change: various situations where they can order the test, you know, do you think overall, maybe across, you know, top transplant centers that there's a greater recognition or just more I guess.

Speaker Change: Maybe from early adopters, it's shifting towards like maybe the middle or the majority in terms of transplant doctors adopting, you know, monoduric acid.

Alex: Yeah, hi, this is Alex. I think it looks like it's a factor of multiple, right? So one of these clinicians is getting more comfortable with ordering for cause. And that's clearly, clearly an area of values they want to use these technologies to help their patients. But the bigger picture is we are early in this adoption cycle of these technologies. If you think about it, you know, Alisher for kidney was launched, you know, six years ago, right. Majority of patients have never had a molecular test to help monitor their transplant. And so when you think about both those trends coming in place, you know, it's certainly a factor, but we have a long way to go on this adoption cycle.

Alex: Yeah, hi, this is Alex. I think it looks at the factors of multiple, right? So one is that these clinicians are getting more comfortable with ordering for cost, and that's clearly an area of value. They want to use these technologies to help their patients. But the bigger picture is that we are early in the adoption cycle of these technologies. If you think about it, you know, AlloSure for kidney was launched, you know, six years ago, right?

Speaker Change: Yeah, hi, this is Alex. I think it looks at the factors of multiple, right? So one is these clinicians are getting more comfortable with ordering for cause.

Speaker Change: And that's clearly clearly an area of value. They want to use these technologies to help their patients.

Speaker Change: But the bigger picture is we are early in this adoption cycle of these technologies. If you think about it, you know, AlloSure for Kidney was launched, you know, six years ago, right? Majority of patients have never had a molecular test.

Alex: The majority of patients have never had a molecular test to help monitor their transplant. And so when you think about both those trends coming into place, you know, it's certainly a factor, but we have a long way to go on this adoption cycle. And that's really what gets us excited about helping patients every day.

Operator: Thank you. This does conclude our question and answer session, as well as our conference for today. You may now disconnect your lines, and everyone have a great day.

Music: ?? ?? ?? ?? ??

Speaker Change: to help monitor their transplant. And so when you think about both those trends coming in place, it's certainly a factor, but we have a long way to go on this adoption cycle, and that's really what gets us excited about helping patients every day.

Alex: And that's really what gets us excited about helping patients every day.

Unknown Executive: Thank you very much.

Unknown Executive: Thank you.

Speaker Change: Great, thank you very much.

Unknown Executive: This does conclude our question and answer session, as well as our conference for today. You may now disconnect your lines, and everyone have a great day.

Speaker Change: Thank you. This does conclude our question and answer session as well as our conference for today. You may now disconnect your lines and everyone have a great day.

Speaker Change: [inaudible]