Q2 2025 CareDx Inc Earnings Call

<unk> answer session you may registered to ask a question at any time by pressing the star and one on your telephone keypad ebay withdraw yourself from the queue by pressing star into please note. This call is being recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Caroline corner Investor Relations.

Thank you operator good afternoon. Thank you for joining us today earlier today <unk> released financial results for the second quarter 2025, ending June 32025. The release is currently available on the company's website at Www Dot <unk> dot com joining.

Joining me on today's call are John Hanna, President and Chief Executive Officer, and Avatar Jain Chief Financial Officer 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 security laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and he say.

Once contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination 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.

Please stand by your program is about to begin if you should require operator assistance during your conference today, please press star zero.

Risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward looking statements occur.

Accordingly, you should not place undue reliance on these statements for a list and descriptions of the risks and uncertainties associated with our business. Please see our filings with the securities.

And Exchange Commission.

The information provided in this conference call speaks only as of the live broadcast today August six 2025, <unk> disclaims any intention or obligation except as required by law to update or revise any information financial projections or other forward looking statements, whether because of new information future events or otherwise. This call will also include a discussion of certain fine.

Good day, everyone and welcome to today's care DX. Second quarter 2025 earnings call. At this time, all participants are in a listen-only mode later. You will have the opportunity to ask a question during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad, email, withdrawal yourself from the queue by pressing star in 2. Please note, this call is being recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to

You Caroline Corner investor relations.

<unk> measures that are not calculated in accordance with generally accepted accounting principles reconciliation to 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 Thank you Caroline and welcome to everyone. Joining today's call. This week concluded the world transplant Congress.

Thank you, operator. Good afternoon. Thank you for joining us today earlier today. KDX released Financial results for the second quarter, 2025 ending, June 30 202. The release is currently available on the company's website at www.carx.com

<unk> or WTC, the largest global transplant event of 2025 held here in San Francisco, California.

The event, we unveiled our evolved brand identity with a fresh new look that embodies the notion that we are together in transplant with the clinicians and patients we serve.

Joining me on today's call are John Hanna, President and Chief Executive Officer, and Abhishek Jain, Chief Financial Officer. Before we get started, I would like to remind everyone that management will be making statements during this call. That includes 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.

The WTC there were more than 40 abstracts, and 16 oral presentations with scientific data on kidney heart lung and liver demonstrating <unk> advances in AI predictive diagnostics transplant access and organ specific innovation.

And uncertainties I could cause actual results to different materially from those anticipated or implied by these forward-looking statements.

These studies reflect the strength of our scientific collaborations and the growing body of evidence supporting <unk> solutions. We view this breadth of scientific data as a leading indicator of future peer reviewed publications and clinical adoption.

Accordingly, you should not place undue reliance on these statements for a list and descriptions of the risks and uncertainties associated with our business. Please refer to our filings with the Securities and Exchange Commission.

On our WTC micro site at <unk> Dot Com Slash WTC, you can see our new branding view the full list of care Dx abstracts presented this week and sign up to participate in our post conference webinar, highlighting the data presented on <unk> products.

Now onto the quarter.

Throughout my prepared remarks, I will be referencing our presentation posted on the Investor Relations section of our website. We made good progress against our growth drivers and financial Kpis in the second quarter as outlined on slides three and four of our presentation.

The information provided in this conference call speaks only to the live broadcast today. August 6th, 2025 care DX, 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. Thank you, Caroline. And welcome to everyone joining today's call.

Adjusted revenue, which excludes revenue associated with tests performed in prior periods was $90 5 million up 14% year over year.

This week concluded the World Transplant Congress (WTC), the largest global transplant event of 2025, held here in San Francisco, California.

Excluding the prior period test's adjusted EBITDA was $9 1 million compared to an adjusted loss of $300000 last year.

At the event, we unveiled. Our evolved brand identity with a fresh new. Look that embodies the notion that we are together in transplant with the clinicians and patients. We serve

With half of the year completed we are reaffirming the midpoint of our 2025 revenue guidance and narrowing the range to $367 million to $373 million. We continue to expect adjusted EBITDA of $29 million to $33 million.

At the WTC, there were more than 40 abstracts and 16 oral presentations with scientific data on kidney, heart, lung, and liver, demonstrating CareDx's advances in AI, predictive diagnostics, transplant access, and organ-specific innovation.

<unk> will provide additional detail on our guidance in his prepared remarks.

In testing services adjusted testing services revenue was $66 million for the second quarter up 14% year over year as shown on slide five.

These studies reflect the strength of our scientific collaborations and the growing body of evidence supporting care decks Solutions.

We view this breadth of scientific data as a leading indicator of future peer-reviewed Publications and clinical adoption.

We delivered approximately 49500 tests in the second quarter up 13% from the prior year as shown on slide six it was our eighth consecutive quarter of sequential testing volume growth with growth across all three organs heart kidney and lung.

On our WTC micro site at carex.com WTC, you can see our new branding view, the full list of career DX, abstracts presented this week and sign up to participate in our post-conference webinar. Highlighting the data presented on care DX products

In kidney, we have made significant progress expanding surveillance testing protocols on the third quarter 2024 call. We said it would take two to three quarters to turn surveillance protocols back on I am pleased to share that in the second quarter, we surpassed 60 surveillance protocols nationally and kidney.

now, on to the quarter,

Throughout my prepared remarks, I will be referencing. Our presentation posted on the investor relations section of our website,

We make good progress against our growth drivers and Financial kpis in the second quarter as outlined on slides, 3 and 4 of our presentation.

Testing volume grew nearly 20% year over year.

Our growth strategy is working.

To further differentiate our solution in kidney transplant monitoring we launched <unk> plus at this week's world transplant Congress I'll assure plus is an AI driven diagnostic that integrates al assure results in standard of care measures, such as serum creatinine and proteinuria to deliver a personally.

Adjusted Revenue, which excludes Revenue associated with tests performed in Prior periods? Was 90.5 million up 14% year-over-year

is 9.1 million compared to an adjusted loss of dollars last year.

<unk> risk score of rejection.

We plan for Alisher plus to be seamlessly reported with every Alisher result via our epic integrations as we rollout epic connectivity in the second half of the year.

With half of the Year completed, we are reaffirming the midpoint of our 2025 Revenue guidance and narrowing. The range to 367 to 373 million. We continue to expect adjusted ibida of 29 to 33 million.

Abishek will provide additional detail on our guidance, in his prepared remarks.

Multiple abstracts at WTC underscore the clinical utility of <unk>, plus including an abstract by Dr. Romaine Brousseau of the Paris transplant group, who presented data highlighted on slide six from over 3000 patients and 4000 biopsies across 20 <unk>.

In testing services, adjusted testing services Revenue was 66 million for the second quarter up 14% year-over-year as shown on slide 5.

Global centers validating the performance of Alisher, plus risk rejection score and demonstrated that it accurately identifies both subclinical and acute rejection supporting earlier and more precise clinical decision making.

We delivered approximately 49,500 tests in the second quarter up, 13% from the prior year as shown on slide 6. It was our eighth consecutive quarter of sequential testing volume growth with growth across all 3, organs, heart kidney, and lung.

In kidney, we have made significant progress, expanding surveillance, testing protocols.

There were over 30 abstracts on <unk> kidney at the WTC, including an oral abstract highlighted on slide seven of our presentation with new data from the K Oar study presented by Dr. David will jakosky at the UT southwestern Medical school that showed early elevations.

On the third quarter 2024 call, we said it would take 2 to 3 quarters to turn surveillance protocols back on. I'm pleased to share that in the second quarter, we surpassed 60 surveillance protocols nationally, and kidney testing volume grew nearly 20% year-over-year.

Growth strategy is working.

And al assure post transplant are prognostic for graph loss at three years laying the foundation for earlier intervention in immune modulation strategies. This data reinforces the value of our short kidney in early risk stratification and long term management.

To further differentiate our solution in kidney. Transplant monitoring, we launched alash Shore Plus at this week's World transplant Congress.

Okay.

We also had a strong representation in heart transplantation at WTC with nine abstracts, highlighting <unk> products, including five from the shore registry presented by leading institutions, such as NYU University of Washington, Cedars Sinai University of Chicago and UCLA.

Alash Shore Plus is an AI-driven diagnostic that integrates ALSH results and standard of care measures, such as serum creatinine and proteinuria, to deliver a personalized risk score of rejection.

We plan for alisher, plus to be seamlessly reported with every alisher result via our epic Integrations. As we roll out epic connectivity in the second half of the year.

These studies reinforce the clinical value of heart care.

For example, an analysis of 2200 patients in the shore study presented by Dr. Jeff <unk> of Stanford University on slide eight of our presentation shows that in patients with persistently elevated duel positive heart care, where 90% more likely to experience <unk>.

Adverse outcomes post heart transplant, regardless of biopsy results.

Group who presented data. Highlighted on slide 6 from over 3,000 patients and 4,000 biopsies across 20 Global centers, validating the performance of alisher. Plus risk rejection score and demonstrated that it accurately identifies both subclinical and acute rejection supporting earlier and more precise clinical decision-making.

These findings support the use of heart care to reduce reliance on biopsies through multimodal surveillance, combining allomap heart and al assure heart to provide a more comprehensive and predictive view of allograft health.

Commercially reception has been strong for our expanded indication for al assure heart for pediatric patients. There is a movement towards standardized protocol development at a number of pediatric heart transplant centers, who recognize the need for noninvasive testing in this population due to the.

Risks and challenges of biopsy under general anesthesia for pediatrics.

There were over 30 abstracts on alisher, kidney at the WTC including an oral abstract highlighted on slide. 7 of our presentation with new data from the Kor study presented by Dr. David W. Jakowski at the UT, Southwestern Medical School that showed early elevations in alash post-transplant are prognostic for graph loss. At 3 years laying the foundation for earlier, intervention, and immune modulation strategies this data, reinforces the value of alash kidney in early risk stratification and long-term management.

Recently, a youth patient and his mother spoke to our company at a town Hall and shared their near death experience with a surveillance biopsy under general anesthesia.

It is stories like theirs that embolden us to deliver on our mission to create life changing solutions that enable patients to thrive.

We also had a strong representation in heart. Transplantation at WTC with 9, abstracts highlighting care decks products, including 5 from the shore, registry presented by Leading institutions such as NYU University of Washington, Cedar syeni University of Chicago and UCLA.

These studies reinforce the clinical value of Heart Care.

Turning to lung at WTC, Dr. Sam weight of the UCLA lung transplant program presented data on slide nine of our presentation showing the power of precision monitoring with al assure lung.

The study showed that tracking relative changes in al assure lung improved detection of some subclinical lung allograph injury and infection.

This approach demonstrated higher sensitivity and specificity, especially in single lung recipients reinforcing the clinical value of al assure lung and guiding earlier interventions.

For example, an analysis of 2,200 patients in the shore study presented by Jo Dr. Jeff. Tuder of Stanford University on slide 8 of our presentation shows that in patients with persistently elevated, dual positive, Heart Care were 90% more likely to experience adverse, outcomes, post, heart transplant, regardless of biopsy results,

In evidence generation, we made big strides this quarter executing against our market access strategy for publishing evidence expanding medical policy coverage and getting into payer networks.

These findings support the use of Heart Care to reduce. Reliance on biopsies through multimodal surveillance combining allomap, heart and alash Shore. Heart to provide a more comprehensive and predictive view of allag Health.

Commercially reception has been strong for our expanded indication for alash, heart for Pediatric patients.

Today, we announced a significant milestone the first menu script of the K Oar study was published in the American Journal of transplantation.

This study highlighted on slide 10 of our presentation is the largest prospective study of its kind and with 56 participating centers that enrolled over 700 kidney transplant patients who received over 18000 hour short tests in the study.

There's a movement towards standardized protocol development at a number of pediatric heart transplant centers, who recognized the need for non-invasive testing in this population. Due to the risks and challenges of biopsy under general anesthesia for Pediatrics.

The study followed the dark protocol, which prescribes seven tests in year, one and four annually in years, two and three.

Recently a youth patient and his mother spoke to our company at a town hall and shared their near-death experience with a surveillance biopsy under general anesthesia.

The manuscript findings confirm that al assure kidney is a clinically actionable tool that enhances rejection management by showing the alisher kidney levels correlate with rejections severity higher levels associated with ABR and mixed rejection and lower levels linked to border line or <unk>.

It is stories like theirs that embolden us to deliver on our mission to create life-changing solutions that enable patients to thrive.

Turning the lung at WTC Dr. Sam weight of the UCLA. Lung transplant program presented data on slide 9 of our presentation showing the power of precision monitoring with alisher lung.

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This stratification capability positions, Alex short kidney as a critical tool for tailoring immunosuppression and biopsy decisions based on individualized patient risk.

The power of precision monitoring with Alisher Lung.

In the second quarter, we added $4 2 million new covered lives for Allomap heart and became an in network provider with a large commercial health plan in the northeast covering one 2 million lives.

And infection, this approach, demonstrated higher sensitivity and specificity especially in single lung, recipients reinforcing. The clinical value of alisher lung in guiding earlier interventions

The study showed that tracking relative changes in allisheim value of alisher. Lung in guiding earlier interventions

Importantly, our al assure CPT code went live in April and in July at the clinical lab fee schedule meeting.

In evidence generation, we made big strides this quarter executing against our market access strategy for publishing evidence, expanding medical policy coverage, and getting into payer networks.

<unk> Advisory panel voted to crosswalk the code to a similar testing code we.

Today we announced a significant Milestone. The first manuscript of the cor study was published in the American Journal of transplantation.

In evidence generation, we made big strides this quarter executing against our Market access strategy for publishing evidence expanding medical policy coverage and getting into payer Networks.

<unk> The agency will released preliminary pricing recommendations in September and provide the opportunity for public comment.

Today we announced a significant Milestone. The first manuscript of the cor study was published in the American Journal of transplantation.

I would like to spend a few minutes now on the draft LCD policy for molecular testing for solid organ allograft rejection published on July 17th.

The study highlighted on slide. 10 of our presentation is the largest prospective study of its kind and with 56 participating centers that enrolled over 1700 kidney transplant patients who received over 18,000 alash tests in the study.

We view the draft policy is a significant step forward the policy of firms coverage for surveillance testing without a tie to protocol biopsy, which has been the primary focus of our advocacy efforts.

The study followed, the Dark protocol, which prescribes 7 tests in year 1 and 4 annually in years, 2 and 3.

The study highlighted on slide 10 of our presentation is the largest prospective study of its kind, with 56 participating centers that enrolled over 1,700 kidney transplant patients, who received over 18,000 AlloSure tests in the study.

The study followed, the Dark protocol, which prescribes 7 tests in year 1 and 4 annually in years, 2 and 3.

As a reminder, the draft LCD public comment period last for 45 days after publication Medicare rules generally required draft policies to be finalized within one year as outlined on slide 11 of our presentation.

The manuscript findings confirm that alash kidney is a clinically actionable tool that enhances rejection management by showing that alisher kidney levels correlate with rejections severity higher levels, associated with abmr, and mixed rejection and lower levels linked to borderline or tcmr 1A.

We are currently in the public comment period until August 30, <unk> and intend to comment on several aspects of the draft LCD, including allowing clinicians to determine the cadence of surveillance testing based upon established practices and the patients pretest risk of rejection.

The manuscript findings confirm that alash Shore, kidney is a clinically actionable tool that enhances rejection management by showing that alisher kidney levels correlate with rejection severity, higher levels, associated with abmr, and mixed rejection and lower levels. Linked to borderline or tcmr 1A.

This stratification capability positions alash Shore, kidney as a critical tool for tailoring immunosuppression and biopsy decisions based on individualized patient risk.

This stratification capability positions alash kidney as a critical tool for tailoring immunosuppression and biopsy decisions based on individualized patient risk.

The extensive evidence supporting Allomap heart and heart care as a multimodal method that identifies rejection with greater accuracy than cell free DNA or gene expression testing alone.

In the second quarter, we added 4.2 million new covered lives for allomap, heart and became an in-network provider with a large commercial Health Plan in the Northeast covering 1.2 million lives.

In the second quarter, we added 4.2 million new covered lives for allomap heart and became an in network provider. With a large commercial Health Plan in the Northeast covering 1.2 million lives.

And the newly proposed concept of bundled payments for surveillance testing.

importantly, our alash shore, CPT code went live in April and in July at the clinical lab fee, schedule meeting The clfs Advisory panel, voted to crosswalk the code to a similar testing code,

We plan to publish our letter on our website following the close of the comment period.

Today, I would like to provide a framework for how we're thinking about the potential impact of the draft policy.

I'll describe two separate potential scenarios that we have modeled.

In the first scenario, assuming the draft policy is implemented as written with bundled payments for surveillance testing, we estimate the impact of surveillance testing frequency limits to be an approximate $15 million headwind on a full year basis.

With commercial focus on driving adherence to testing protocols, we estimate over time, the proportion of patients that receive more tests than the frequency limits will exceed the proportion receiving fewer tests.

Half of this impact comes from kidney surveillance testing in year, one that exceeds the proposed frequency limit and the other half from heart surveillance testing in years, two and three that exceed the proposed frequency limit.

In the second scenario, if the draft policy were to be finalized without bundled payments for surveillance testing and without frequency limits and the proposed policy to pay for only one molecular test per date of service is maintained such that Allomap heart is effectively no.

We are currently in the public comment period until August 31 and intend to comment on several aspects of the draft LCD, including allowing clinicians to determine the cadence of surveillance testing based on established practices and the patient's pre-test risk of rejection.

Longer reimbursed as a part of heart care, we estimate the impact to be an approximate $30 million headwind on a full year basis.

Importantly, we continued to drive protocol adoption and adherence which has been demonstrated to improve patient outcomes and have not changed how we engage and support our customers in response to the draft policy.

The extensive evidence supporting Allomap heart and Heart Care, as a multimodal method, identifies rejection with greater accuracy than self-reported data or gene expression testing alone.

And the newly proposed concept of bundled payments for surveillance testing.

We plan to publish our letter on our website, following the close of the comment period.

Once the draft is finalized and we have a clear estimate we will update our long range financial expectations.

Today, I would like to provide a framework for how we are thinking about the potential impact of the draft policy.

I'll describe 2 separate potential scenarios that we have modeled.

Moving on to our operational excellence initiatives, we are continuing to improve our enterprise infrastructure and business processes to operate more efficiently such that revenue growth outpaces operating expenses as we scale, we made progress with the launch of our Epic instance, which we believe.

In the first scenario, assuming the draft policy is implemented. As written with bundled payments for surveillance testing. We estimate the impact of surveillance testing frequency limits to be an approximate 15 million headwind on a full year basis.

It will be a key differentiator, making it easier for health care providers to order al assure in Allomap testing and received test results, we anticipate going live with three pilot sites through epic aura in the third quarter and plan to make a broader push for epic integration starting in the fourth.

With commercial focus on driving adherence to testing protocols, we estimate over time. The proportion of patients that receive more tests than the frequency, limits will exceed the proportion. Receiving fewer tests.

Quarter.

In the second quarter, we continued to make progress with revenue cycle management driving confidence in future testing ASP growth.

Half of this impact comes from kidney surveillance testing in year. 1 that exceeds the proposed frequency limit and the other half from heart surveillance testing in years 2 and 3 that exceed the proposed frequency limit

As illustrated on slide 12 of our presentation. We have now implemented 100% of RCM workflows and are performing 100% of patient insurance eligibility verifications.

in the second scenario, if the draft policy were to be finalized without bundled payments for surveillance testing and without frequency limits

and the proposed policy to pay for only 1 molecular tests, per date of service is maintained

As a result of these and other changes to our processes, we have driven improvements across various RCM kpis, including a 60% reduction in claims submission time.

Such that allomap heart is effectively no longer reimbursed as a part of Heart Care, we estimate the impact to be an approximate 30 million headwind on a full year basis.

A 45% increase in prior authorization success rate.

And 800 basis point reduction in claims rejection rate.

And at 160% improvement in total appeals volume since last December these.

Importantly, we continue to drive protocol adoption and adherence, which has been demonstrated to improve patient, outcomes and have not changed how we engage and support our customers in response to the draft policy.

These behind the scenes wins are key leading indicators for longer term ASP growth and are beginning to be reflected financially cash collections in the second quarter accelerated to 105% of adjusted testing services revenue and payment per test is increasing across.

once the draft is finalized and we have a clear estimate, we will update our long range, Financial expectations,

All tests and all payer classes.

Moving on to our operational excellence initiatives. We are continuing to improve our Enterprise infrastructure and business processes to operate more efficiently, such that Revenue growth, outpaces, operating expenses as we scale.

I'll now turn to patient and digital solutions, which includes our transplant pharmacy software tools and remote patient monitoring services.

In the second quarter, we reported revenue of approximately $12 8 million, representing 19% growth compared to last year as highlighted on slide 13 of our presentation.

We made progress with the launch of our epic instance, which we believe will be a key differentiator making it easier for health care providers to order alash Shore. And allomap testing and receive test results.

Our go to market strategy of solution selling is working and we continue to see our patient and digital solutions, helping to unlock growth opportunities for testing services.

We anticipate going live with three pilot sites through Epic Aura in the third quarter and plan to make a broader push for Epic integration starting in the fourth quarter.

In the second quarter, we continue to make progress with revenue cycle management driving confidence. In future testing, ASP growth.

In the quarter, we released an update to our quality reporting software Zinn coffee.

That now includes an Iota program performance.

Composite score calculation that accounts for growth in transplant volume, Oregon utilization rates and patient outcomes.

As Illustrated on slide 12 of our presentation, we have now implemented, 100% of RCM workflows and are performing 100% of patient. Insurance eligibility verifications

We have received very positive feedback on the tool with more than 70 transplant programs participating in our educational webinar.

as a result of these and other changes to our processes, we have driven improvements across various RCM kpis, including a 60% reduction in claim submission time

And although a centers year, one performance will not be calculated until July 2026, our quality reporting tool enables them to monitor performance in real time throughout the year.

A 45% increase in prior authorization success rate.

An 800 basis point reduction in claims rejection rate.

Turning now to lab products, which includes PCR kits for rapid deceased donor HLA typing Ngls kits for transplant recipient HLA typing globally, and IBD monitoring assays for solid organ and stem cell transplant recipients outside of the U S revenue of 11.

And a 160% improvement in total appeals volume since last December.

<unk> 8 million was up 12% year over year, driven by sales of our Allo CTX are next generation sequencing HLA typing kits for organ recipients.

These behind the scenes, winds are key, leading indicators for longer term, ASP growth, and are beginning to be reflected financially cash collections. In the second quarter accelerated to 105% of adjusted testing services, revenue and payment per test is increasing across all tests and all pair classes.

In summary, we had a strong second quarter executing across all of our key drivers, including our go to market strategy evidence generation and operational excellence now I will turn the call over to Abishag to share more details on our second quarter financial results.

I'll now turn to patient and digital Solutions which includes our transplant. Pharmacy, software tools and remote patient monitoring services.

Thank you John and good afternoon, everyone.

In my remarks today, I will discuss our second quarter financial results and revised 2025 guidance.

Representing 19% growth compared to last year, as highlighted, on slide 13 of our presentation. Our go to market strategy of solution. Selling is working and we continue to see our patient and digital Solutions helping to unlock growth opportunities for testing services.

Unless otherwise noted my comments will focus on non-GAAP results.

For further information please refer to GAAP to non-GAAP reconciliations in our press release earnings presentation, and <unk> SEC filings.

in the quarter, we released an update to our Quality Reporting software, zinc, copy, that now includes an Iota program performance,

We reported revenue of $86 7 million, which included a $3 million write off associated with test performed in prior periods down 6% year over year.

Composite score calculation that accounts for growth and transplant volume or can utilization rates and patient outcomes.

Excluding that adjustment our adjusted revenue of $90 5 million grew 14% year over year on a comparable basis.

We have received very positive feedback on the tool with more than 70, transplant programs, participating in our educational webinar,

Testing services revenue as reported was $62 million down 13% year over year.

And although a center's year 1 performance will not be calculated until July 2026, our Quality Reporting tool, enables them to monitor performance in real time throughout the year.

In the quarter as we took a write off of $2 8 million.

<unk> 5 billion clean for which we do not expect to collect additional payments.

With the improvement <unk> outline in all ostium processes, we do not expect this to recur in future periods.

As a reminder.

We recognized $13 2 million in revenue for the test performed in five period in the second quarter of 2024.

Turning now, the lab products which includes PCR kits for Rapid deceased donor HLA typing NGS kits for transplant recipient HLA typing globally and ivd monitoring assays for solid organ and stem cell transplant. Recipients outside of the US revenue of 11.8 million was up, 12% year-over-year driven by sales of our Alle TX our next Generation sequencing.

Adjusting to exclude impact associated with test performed by period testing services revenue was $65 9 million up 14%.

HLA typing kits for organ, recipients.

We delivered approximately 49500 test results in the second quarter up 13% year over year.

This marks our eighth consecutive quarter of sequential testing services volume growth.

In summary, we had a strong second quarter executing across all of our key drivers including our go to market strategy, evidence generation, and operational excellence. Now, I'll turn the call over to abishek to share more details on our second quarter Financial results.

Thank you, John, and good afternoon everyone.

Patients in just the solutions revenue was $12 8 million up 19% year over year product revenue was $11 8 million up 12% year over year.

In my remarks today, I will discuss our second quarter of financial results and revised 2025 guidance.

Our adjusted to exclude the impact of test performed in prior periods, our non-GAAP gross margin improved 340 basis points to 74%.

Unless otherwise noted, my comments will focus on non-gaap results.

For further information, please refer to Gap to non-applicant Creations in our press release earnings presentation and recent SEC filings.

Our adjusted testing services non-GAAP gross margin was 77, 6% in the second quarter compared with 76, 4% in the second quarter of last year.

We reported revenue of 86.7 million, which included a 3.8 million, write off associated with tests performed in Prior periods down 6% year-over-year.

120 basis point improvement was primarily driven by strong volume growth and continued efficiencies in our lab operation.

That adjustment adjusted revenue of 90.5 million grew 14% year-over-year on a comparable basis.

Patient and distant solutions non-GAAP gross margin for the quarter was 39, 5% compared with 36, 7% last year.

With our core business solutions, and pharmacy contributed to gross margin expansion with improved pricing and operational efficiencies.

Testing services, Revenue as reported was 62 million down, 13% year-over-year in the quarter. As we took a right off of 3.8 million associated with prior, period. Claims for which we do not expect to collect additional payments.

Excluding our crop pharmacy occupation in defense solutions non-GAAP gross margin at least 70%.

With the improvements on outline in our RCM processes. We do not expect this to record in future periods.

That product gross margin was 63, 9% up 17 points compared to 47, 1% last year.

As a reminder, we we recognize 13.2 million in revenue for the test performed in Prior periods. In the second quarter of 2024,

The improvement was primarily driven by annual price increases.

With negotiations with our suppliers to reduce cost of goods sold and an intentional shift in sales mix within our <unk> portfolio towards 96, plex kits, which have better margins.

adjusted to exclude impacts associated with tests performed in criteria testing services, Revenue was 65.9 Million up 14%.

We delivered a proximately 49,500 test results in the second quarter up 13% year-over-year.

Moving down the P&L non-GAAP operating expenses were $56 7 million compared to $55 2 million in the same period last year.

Is consecutive quarter of sequential testing services volume growth.

The increase was primarily driven by investments in sales and marketing to advance our commercial and go to market strategy and accelerating growth.

Patient and distal Solutions. Revenue was 12.8 million up 19% year-over-year product, Revenue was 11.8 million up, 12% year-over-year,

We continue to manage our operating expenses whether year over year operating expenses growth of 2% was well below adjusted revenue growth of 14%.

To exclude the impacts of tests performed in prior periods, our non-GAAP gross margin improved 340 basis points to 70.4%.

Okay.

Excluding the impact of tests performed in <unk> period, our adjusted EBITDA was $9 1 million in the second quarter compared to when our district EBITDA loss of <unk> 3 million in the second quarter of 2024.

Adjusted testing services, non-gaap growth margins was 77.6% in the second quarter compared to 76.4% in the second quarter of last year.

The improvement was driven by revenue growth and operational leverage which contributed to better gross margin and improved non-GAAP operating expenses as a percent of revenue.

The 120 basis, point Improvement was primarily driven by strong volume growth and continued efficiencies in our lab operations.

Turning to cash we generated $10 million in cash from operating activities in second quarter.

Patient, industrial Solutions, non-gaap gross, margins. For the quarter was 39.5% compared to 36.7% last year.

Ended the quarter with $186 million in cash and cash equivalents with no debt.

Both our core digital Solutions and Pharmacy, contributed to gross margin expansion with improved pricing and operational efficiencies.

Following a $50 million repurchase of approximately 5% of our outstanding shares.

I'll turn next to updated guidance.

Excluding our transplant Pharmacy or patient industrial Solutions. Non-cap growth margin, reached 70%.

With half of the completed we are narrowing our full year 2025 revenue guidance to $367 million to $373 million compared with $2 $65 million to $375 million previously.

Points compared to 47.1% last year.

The midpoint of guidance remains the same.

Turning to the underlying drivers of revenue guidance, we anticipate our first volume to grow mid teens year over year.

The Improvement was primarily driven by annual price increases successful negotiations with our suppliers to reduce cost of goods sold. And then in intentional shift in sales mix within our India's portfolio, towards 96 Flex kits, which have better margins.

On testing volume sequential growth by quarter, we continue to expect 2% to 3% growth in the third quarter and 5% to 6% growth in the fourth quarter of 2025.

Moving down, the p&l non-gaap operating. Expenses were 56.7 million compared to 55.2%.

We estimate full year <unk> of approximately <unk> 60 per test are adjusting for revenue associated with test performed by Peter.

The increase was primarily driven by investments in sales and marketing to advance our commercial, go to market strategy and accelerating growth.

This does not assume any changes to Medicare coverage.

We expect our patient and digital solutions to grow in the low twenties and lab products revenue to grow in the mid teens for the full year.

We continue to manage our operating expenses well year over year operating expenses. Growth of 3% was well below, adjusted Revenue, growth of 14%.

Okay.

We expect our full year non-GAAP gross margin to be approximately 70% and operating expenses to be approximately $235 million and we expect adjusted EBITDA to be between 29 and $33 million.

Excluding the impact of tests performed in Prior periods, but just a bit I was 9.1 million in the second quarter compared to when our just a bit of a loss of 0.3 million in the second quarter of 2024.

With that I'll now turn the call back over to John Thank you Avishai.

The Improvement was driven by Revenue growth and operational leverage, which contributed to better growth margins and improved non-gaap operating expenses, as a percent of Revenue.

Before closing our prepared remarks, I would like to announce today that Abishag Jane is retiring from his role as CFO of care Dx on behalf of the board all of our employees and the clinicians and patients we serve I want to thank <unk> for his outstanding leadership over the past four years <unk> maintained disciplined.

Turning to cash, we generated 10 million in cash from operating activities. In second quarter, we ended the quarter with 186 million in cash and cash equivalents with no debt.

Following a 50 million repurchase of approximately 5% of our outstanding shares.

Management through a turbulent time and as the steward that returned us to growth and profitability.

I'll turn next to updated guidance.

The company is stronger today than when he took the helm and I want to thank him and wish him all the best.

<unk> will continue to support the company on a consulting capacity to ensure a smooth transition.

With half of the Year completed, we are narrowing fully a 2025 Revenue guidance, to 367 to 373 million, compared to 365 to 375 million previously.

The midpoint of guidance Remains the Same.

We are also announcing today the appointment of Nathan Smith as CFO.

<unk> is a veteran of the molecular diagnostics industry.

Turning to the underlying drivers of Revenue guidance. We anticipate our test volumes to grow mid teens year over year.

He was with myriad genetics for 14 years in leadership roles, including senior Vice President of IR Finance and Treasury.

<unk> VP of F PNA and corporate controller. Most recently Nathan served as CFO for several private equity backed companies Nathan will begin with <unk> Tomorrow August 7th and I look forward to introducing him to you all.

On testing volumes sequential growth by quarter. We continue to expect 2 to 3% growth in the third quarter and 5 to 6% growth in the fourth quarter of 2025.

We estimate fully your ASP of approximately 1360 per test or adjusted for Revenue. Associated with this performed in Prior periods.

This does not assume any changes to medical coverage.

And now I would like to ask the operator to open the line for questions.

Certainly and at this time, if you would like to ask a question. Please press the star and one on your telephone keypad, you may remove yourself from the queue at any time by pressing star to.

We expect our patient in this solutions to grow in the low 20s and lab products Revenue to grow in the mid teens for the full year.

Once again that is star and wanted to ask a question and we will pause for a moment to allow questions to queue.

We expect our fully a non-gaap growth. Margin to be approximately 70% and operating expenses to be approximately 235 million.

And we expect a just a debit or to be between 29 and 33 million.

And we will take our first question from Tycho Peterson with Jefferies. Please go ahead.

With that. I'll now turn the call back over to John. Thank you abishek.

Hi team. Thanks, so much this is lauren on for Tycho.

One from me around the LCD, you really nicely laid out kind of some of the scenarios that you expect to happen.

Potential headwinds kind of thats going to come with them.

What is this scenario or kind of what is the topics of discussion that you kind of want to bring forward into that public.

Kind of Forum, where you would see a scenario in terms of kind of baseline margin or kind of improvement.

Before closing our prepared remarks, I would like to announce today that abishek, Jane is retiring from his role as CFO at KDX on behalf of the board, all of our employees and the clinicians and patients. We serve. I want to thank abishek for his outstanding leadership over the past 4 years, abishek maintained discipline financial management through a turbulent time and is the steward that returned us to growth and profitability.

Maybe talk a little bit about that.

The company is stronger today than we when he took the helm, and I want to thank him and wish him all the best.

Yes. Thanks for the question Lauren I think as we said in our prepared remarks. There are three topics that we will focus our comments on including.

Abishek will continue to support the company on a Consulting capacity to ensure a smooth transition.

The frequency of testing and allowing providers to determine the appropriate frequency for a patient.

We are also announcing today, the appointment of Nathan Smith as CFO.

The evidence supporting heart care as a product that improves the care of heart transplant patients and the need for multi modality testing and then the third is the newly introduced con.

Concept of bundled payments and we intend to publish our comment letter on our website when the comment period ends.

Nathan is a veteran of the molecular Diagnostics industry, he was with Myriad genetics for 14 years in leadership roles, including senior vice, president of ir finance and treasury SVP of fpna and corporate controller. Most recently, Nathan served as CFO for several private, equity-backed, companies Nathan will begin with care acts tomorrow, August 7th and I look forward to introducing him to you all.

Great. Thank you I'll hop back in the queue.

And now I would like to ask the operator to open the line for questions.

Certainly.

Thank you and our next question comes from Brandon <unk> with Wells Fargo. Please go ahead.

Hey, Thanks, Good afternoon, guys I appreciate the color on the kidney test volume growth in the quarter.

And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the Queue at any time by pressing star 2.

Data you can share with us on Heartland long and with respect to the epic launch I think last quarter, you talked about having that mostly rolled out by <unk> now seems to be more of a second half event.

Once again, that is star and 1 to ask a question and we will pause for a moment to allow questions to queue.

And we will take our first question from Tau Peterson with Jeffrey's. Please go ahead.

Talk to you the complexities that might be involved in that and maybe what youre trying to derisk.

Yes, Thanks, Brandon I appreciate the questions.

With heart and long both grew well on the quarter.

Long, obviously is a smaller proportion of our overall volume, but we saw nice nice steady movement in heart in the second quarter. We also have the big <unk> The International Society of heart and lung transplant in the second quarter. So people end up being out of the out of the clinic for a week to do that so.

And potential headwinds kind of that's going to come with them.

What is this scenario? Or kind of what is the topics of discussion that you kind of want to bring forward into the the public, um, kind of forum, where you would see a scenario in terms of kind of Baseline margin or kind of improvement? Um, maybe talk a little bit about about that.

We still see continued growth in transplant volumes picked up in the second quarter and that's.

That's been a positive for us I'll, let Keith talk a little bit about the epic implementation and what the timeline looks like Theyre great. Thanks, John Yeah. We're online we're about two months ahead of anybody who's ever implemented epic we took over our instance in June we initiated our pilot program shortly thereafter, which will be for.

Our centers.

Live in the third quarter by the end of the year, we expect to have 10% of our volume and then we're building out our pipeline and our plan to roll out to try to get to 50% adherence.

Yeah, thanks for the question Lauren. I think, as we said in our prepared remarks, there are 3 topics that we'll focus our comments on including, uh, the frequency of testing and allowing providers to determine the appropriate frequency for a patient. Um, the evidence supporting Heart Care as a product that improves the care of heart transplant patients and the need for multimodality testing and then the third is the newly introduced, uh, concept of bundled payments. And we, we intend to publish our comment letter uh on our website when the comment period ends.

Great, thank you. I'll hop back in the queue.

Through rapid or as a connector.

At the end of next year.

Thank you. And our next question comes from Brandon coyer with Wells Fargo, please go ahead.

Does that help Brandon.

Answer your question.

Yes. Thank you.

Thank you and once again, if you would like to ask a question. Please press the star and one on your telephone keypad now Andrew.

And we will take our next question from Mark Massaro with BTG. Please go ahead.

Okay.

Dan on for Mike Thanks for taking my questions.

Hey, thanks. Good afternoon, guys. Um, I appreciate the color on the kidney test, volume growth in the quarter. Any data you can share with us on Heart and Lung? With respect to the Epic launch, I think last quarter you talked about having that mostly rolled out by Q2. Now, it seems to be more of a second half event. Can you just kind of talk through the complexities that might be involved in that and maybe what you're trying to de-risk? Thanks.

I just wanted to start off and see if there is any change to the rfps that you established.

Last year as a result of the draft LCD.

Hi, David Thanks for the question, we're not providing an update to the MRP and until we get greater clarity on the final LCD.

Okay, Yes.

That's understandable.

And then just curious about the $30 million headwind that you cited.

The second scenario that you laid out.

My understanding that a good chunk of Allomap heart with Standalone.

And so it was not associated with health care at all so I'm just curious what your assumptions were.

And informing that $30 million headwind.

Yes. Thanks. Thanks for the question I think we've said consistently that the attachment rate.

<unk> heart care is upwards of 90%.

Yeah. Thanks Brandon. Appreciate the questions. Uh, you know, with with heart and long both grew. Well on the quarter uh, long obviously is a smaller proportion of our overall volume. But we saw, you know, nice nice steady movement and heart in the second quarter, we also have the big ishlt. The international Society of heart and lung transplant in the second quarter. So people end up being, you know, out of the out of the clinic for a week to do that. So uh, we we still see continued growth and you know transplant volumes picked up in the second quarter and uh that's been a positive for us. I like Keith talk a little bit about the Epic implementation and what the timeline looks like their great. Thanks John. Yeah we're on line. We're about 2 months ahead of anybody who's ever implemented epic. We took over our instance. In June, we initiated our pilot uh, program shortly thereafter which will be for centers to go live and the third quarter.

So that would that would indicate that if that second scenario were to come to fruition.

Then that that Allomap heart revenue potentially wood.

The end of the year, we expect to have 10% of our volume and then we're building out a pipeline and a plan to roll out to try to get to 50%, uh, adherence uh, through epic, or as a connector.

By the end of next year.

Go away and Thats, how we calculated that $30 million headwind.

Does that help Brandon?

To answer your question.

Okay. Okay. That's helpful color.

Yes, thank you.

I guess just squeeze in one last one.

You talked about.

Great you talked about the progress.

Thank you. And once again, if you would like to ask a question, please press the star and 1 on your telephone keypad now.

Just how should we be thinking about maybe update us.

And we will take our next question from Mark. Msaro with btig, please go ahead.

Roughly.

What percentage.

Valens versus forecast.

Just asking because it would be helpful to get some metrics around.

How that's trending.

Yes, we haven't split that out.

And answer. Mark, thanks for taking the questions. Um so I just wanted to start off and see if. Um there was any change to the lrp that you established um last year um as a result of the drop down CD.

But it is shifting since the <unk>.

August of last year retraction of the draft policy that attempted to.

Hi Divya. Thanks for the question. Uh, we're not providing an update to the lrp until we get greater Clarity on the final LCD.

Limit surveillance testing only in scenarios, where youre doing a protocol biopsy and that clarity.

Effectively drove behavior change in the market, which has allowed us to implement those surveillance protocols.

And drive up kidney testing overall by the 20% nearly 20% year over year.

Okay. Um yeah. That's understandable. Um and then just curious about um the 30 million headwind um that you signed in the second scenario that you laid out. Um it was my understanding that um a good chunk of alamat heart uh was run a standalone um and so it was not associated with heart care at all. Um so I'm just curious um what your assumptions were.

Um, and informing that 30 million type 1.

So we're not we're not breaking that out but.

It certainly is a dynamic where we see <unk>.

Yeah, thanks. Thanks for the question. I think we've said consistently that the attachment rate

Significant movement toward surveillance over four cause testing as a function of the all of those protocols being implemented.

Of Heart. Care is upwards of 90%.

Okay perfect. Thanks, so much for taking my questions.

Thank you.

Thank you and there are no further questions at this time. This does conclude today's presentation. Thank you for your participation you may disconnect at anytime.

And so that would that would uh indicate that if that second scenario were to come to fruition then that that allomap heart Revenue potentially would uh go away. And that's how we calculated that 30 million headwind.

Perfect. That's helpful color. Um, if I could just squeeze in 1, last 1, um, you talked about

Um, just how should we be thinking about maybe an updated split on roughly? Um,

What percentage, uh, our surveillance versus score cause, um, just asking because it would be helpful to get some metrics around, um, how that's trending.

Yeah, we we haven't split that out. Uh, but it is Shifting since the uh, August of last year, retraction of the the draft policy that attempted to you know, limit surveillance testing only in scenarios where you're doing a protocol biopsy and that Clarity, uh, effectively drove, you know, Behavior change in the market, which is allowed us to implement those surveillance protocols and drive up kidney testing overall, uh, by the 20% nearly 20% year-over-year. Um, so we're not, we're not breaking that out. But, you know, it's certainly is a dynamic where we see, uh, significant movement toward surveillance over 4 Cause testing as a function of those all those protocols being implemented.

Okay, perfect. Thanks so much for taking the questions.

Thank you. Thank you.

Thank you. And there are no further questions at this time. This does conclude today's presentation, thank you for your participation. You may disconnect at any time.