Conference Transcript - CDNA 2026-06-03

Lauren Timmons, Analyst — Jefferies

Okay, thank you everybody for joining us here at the Jefferies Healthcare Conference. My name is Lauren Timmons. I'm on the Life Science Tools and Diagnostics team. Happy to have CareDx here with us today. We have, joining from the team, John Hanna, CEO, and Keith Kennedy, CFO and COO. We're going to do a 10-minute or so presentation to start, and then we'll go into Q&A.

John Hanna, CEO

Great, Lauren. Thank you so much for having us. Thank you to the Jefferies team. I'm John Hanna. I'm the Chief Executive Officer here at CareDx. Please refer to the Safe Harbor statement on our website related to any forward-looking statements in the presentation today. Since I joined CARDIX in 2024, we have built an experienced executive leadership team to drive profitable growth. I'm joined today by Keith Kennedy, our Chief Operating Officer and Chief Financial Officer. We have 750 employees approximately at CareDx, 200 of which are focused on servicing our customers every single day and our patients that we support. We have about 110 scientists and researchers building the next innovations in precision medicine and roughly 80 software programmers building our digital solutions that help practices operate more efficiently. At CARDIX, we're executing on a growth strategy to extend our leadership in precision medicine diagnostics. We're focused on markets where our core competencies give us the right to win. Specifically, we aim to be number one in the markets that we operate in. Markets where patients have a high cost and burden of disease. They're managed by a concentrated group of subspecialty providers. They're managed through repeat testing, where our patient engagement services enable us to pull through adherence to those testing services. And we sell solutions into the practices, integrated testing, digital, and pharmacy. In particular, we've executed against that strategy in transplantation, where we have 25 years of experience bringing innovations to the market. We service over 200 solid organ transplant programs across the U.S. We've performed more than a million molecular tests to monitor for organ rejection. 70% of transplant centers use at least one of our digital solutions. And we filled over 200,000 prescriptions last year for transplant patients, mainly immunotherapy and other products that they take. As a result of this strong presence in the market, we printed a great Q1. Our financial highlights include 39% revenue growth year over year. We had 17% testing services volume growth. Our adjusted EBITDA was $18.9 million on the quarter, and we closed the quarter with approximately $189 million in cash and cash equivalents and zero debt. Specifically, we grew in all of our segments, including testing services, where growth was 48% year over year, patient and digital services was 33%. Our lab products business saw a decline year over year of 4%, mainly due to a pull forward of stocking orders in the fourth quarter. So we had a really strong fourth quarter in the lab products business, which resulted in a decline in the first quarter year over year. As a result of that quarter, we updated our guidance for the full year to $447 to $465 million in revenue, $43 million to $57 million in adjusted EBITDA. Our guide for testing services volume is 224 to 229,000 tests, and we estimate a non-GAAP gross margin of 68% to 71% per quarter and $68 to $70 million per quarter in non-GAAP operating expenses. At CareDX, we're focused on our pipeline and expanding our presence in the marketplace. Our key pipeline initiatives include development and innovation in heme oncology with our Alaheme asset, in solid organ transplant with Alashur liver, and in solid organ kidney transplantation with our tissue-based product Histomab kidney that complements our blood-based Alashur assay on market today. In heme oncology, we're addressing a specific part of the market that is not serviced today. So our aloheme asset is really focused on AML and MDS patients. These are patients when higher risk for relapse undergo a hemipoietic stem cell transplant. And our test aloheme monitors for relapse in the setting of post-stem cell transplant patients, which is a market that is not serviced by existing MRD solutions in heme oncology today. There are approximately 200 bone marrow transplant centers in the U.S. that perform hemipoietic stem cell transplants, and a high degree of overlap between those centers and the centers that do solid organ transplant today. Also, this quarter, we announced the acquisition of Nevaris, a leading solid tumor MRD platform for viral-mediated cancers. Nevaris is a business that fits our strategic growth profile. It's a rapidly growing and reimbursed product, tumor-naive MRD assay for viral-mediated cancers, including head and neck cancer, anal cancer, and gynecologic malignancies. The company has performed over 130,000 tests to date, has a large body of peer-reviewed literature supporting the use of the product, which has led to Medicare coverage for MRD in head and neck and anal cancer. The company has approximately 100 employees in the U.S., has an $1,800 reimbursement rate for Medicare patients, and approximately 100 million covered lives. The Nevaris business did about $34 million in revenue in 2025, and we estimate that that revenue will grow in 2026 and beyond for the next three years at about 30% to 40% year over year. The Nevaris technology is differentiated in solid tumor MRD, particularly for patients that have viral-mediated cancer. It's a tumor-naive assay that can detect cancer with a very high sensitivity and specificity, leading to a strong lead time to detecting recurrence over standard methods. The product has a greater than 95% positive predictive value and negative predictive value for HPV-positive head and neck cancer. The lead time to detect cancer is approximately four months in the published literature, and there are five patents covering the proprietary detection methods in viral-mediated cancers for this product. On the right-hand side of the slide here, you can see a clear separation between patients that had negative Nevaris tests and one or more positive tests and their rate of disease-free survival over time in the Kaplan-Meier curve. With the addition of the Nevaris products, we believe we have a robust multi-indication portfolio now at CareDx covering solid organ transplantation in heart, kidney, lung, and in the future, liver, and then in specialty oncology, where we will be on market with head and neck and anal cancer, in development in gynecologic malignancies, and then in the process of validating our solution, Alaheem, for AML and MDS, and then our final pipeline asset around CAR-T persistence monitoring. Collectively, the addition of the Nevaris portfolio expands our TAM as a company to $12.5 billion across solid organ transplantation, digital inpatient solutions, cell therapy and hematology, and viral-mediated cancers. So thank you very much, and I'll ask Laura to kick us off for questions.

Lauren Timmons, Analyst — Jefferies

Great. Thank you so much. So looking back, maybe let's just start with 1Q Recap. So, you know, you had a great quarter. You raised guidance. I guess maybe speak to some of the levers that you saw in the quarter that kind of resulted in this 39% year-over-year growth and kind of the testing services boom. So talk to some of those, and if that looks sustainable, kind of going into the back half of the year.

Keith Kennedy, CFO

Yeah, Lauren, thanks for your question. Thanks for the invite. It's always great to see you. We were really excited about the first quarter, you know, printing almost a 40% growth year over year. And when we got to CareDx a little under two years ago, we felt like the company was not able to, you know, realize the right to win on the payment side of the house. and what you're seeing the last couple of quarters and we're projecting for the next several quarters is this uplift from the ASP as we've invested in the reimbursement and the revenue cycle management team. So they're always listening to these calls. It's a big shout out to the team for the great work they're doing over there. So that was a big win for the quarter. And then on the testing side, I think the evidence that continues to come out from our shore publication as well as KOR and all the things we're doing on hematology and the development pipeline has really created a lot of buzz in the industry. And so you're seeing a lot of acceleration and stickiness in the volume and adoption across all the major medical centers in transplant. So we're super excited about the relationships and what we're able to do for transplant patients in a non-invasive way and a blood test to deliver for them. And I think that's first and foremost. us. It's about the patient care. So we're really excited about that and what we've been able to deliver. And then on the margin side, John and I learned 10 years ago that you have to lock in long-term agreements when you're running a lab at this scale and volume. So we have long-term pricing around our agreements. We have a great relationship with Illumina. We think Illumina is a great provider in this market. So we think our margins are very stable in the 70% range. And then on EBITDA, we think the discipline around that is around the scaling and the fact that we sell to a limited number of transplant centers, so 200 to 250 transplant centers. So we don't have to address 10,000 physicians and build a sales force around that. Our sale has a lot to do with the patient care in transplant. There's a lot of hands-on activity that's required in transplant. So as a diagnostic company, we have software and services that are beyond just Kalia testing. And I think that's part of what makes us special and what we offer to patients.

Lauren Timmons, Analyst — Jefferies

And I guess going off of that as well and part of the stickiness, you know, you talked about launching into Epic Aura and kind of the Vant AI-powered analytics platform to support the business. Maybe talk about how these workflows and solutions help to drive adoption.

Keith Kennedy, CFO

Yes, we've learned something over a couple of companies. John and I sit, we're podcast people. So we've learned that we want to be on the leading edge of providing information to physicians, our customers, and to the patients. So like Vantix, you'll hear John talk about that on the calls around our AI and digital solutions. And we have someone that's worked with us for a decade building that platform. And that's really about helping the physicians and patients understand population management and what's going on inside the population. And then inside the company, we really are transforming all the systems and data inside our company so that our leaders have real-time information at their hands to operate the And I think you're seeing that in the financial results. And so all this stuff matters. And so we went to Epic, John and I have, you know, you almost have to go to them. They only have 10 salespeople in all of Epic. So you have to go and they have to want to be a partner with you. And we went into this asking Epic to help us deliver a great user experience for our transplant centers. And that's been our focus is around the quality and the integration with the transplant center. So the physicians have ease of order and use and access to our test. And I think we've done that.

Lauren Timmons, Analyst — Jefferies

And that's great. We'd love to kind of transition and talk about Nevaris. You know, it's a deliberate move into solid tumor MRD. We'd love to kind of hear your thoughts on why this viral targeted approach is the right fit for your business model and kind of the expectations there.

John Hanna, CEO

Yeah. So, you know, we really like what the team has done at Nevaris. I think they've done an excellent job building a great business. And, you know, we decided that we were going to take a selective approach to the solid tumor MRD market in a way that was differentiated where we had a right to win. And Nevaris has a differentiated technology that has a higher, you know, sensitivity, specificity, detection rate for these patients that have HPV positive cancer. And we felt like that really fit our business model in having that right to win, being very high cost, high burden of disease patients. And we felt like we could bring our core capabilities in building awareness and belief in the product in the clinician community, as well as pulling through adherence to the repeat testing regimen and getting access to blood in a way that, you know, on their own, they can't because it's not as scaled a business, right? Right. And so we have a national mobile phlebotomy network. We have patient coordinators that help schedule these blood draws and make sure that patients have access to getting their testing. So, you know, this really fits and aligns with our core competencies and our expectations there are just that. Right. That we have, you know, quite a bit of synergies, of course, in the back office, all the GNA things we do. but then applying our core competencies to the Nevaris business to really accelerate its growth into the future and I think there's a lot of opportunity to do that from you know evidence generation evangelizing the product and really patient engagement to ensure you get that repeat

Lauren Timmons, Analyst — Jefferies

testing cadence. And you talked about the 4.5 billion TAM split between 3 billion and 1 billion for MRD and AIDS diagnosis. Could you talk a little bit about the two segments and kind of how you plan to penetrate further into each of those? Yeah, that's a great question. So right

John Hanna, CEO

now, the bulk of the Nevaris business is really driven by head and neck cancer. So it's a one indication. The company and the product is covered for anal cancer. And so I think there's a lot of opportunity there to drive adoption in that setting. And we think there's a lot of runway way to go here in just the solid tumor MRD indication, which as you pointed out is a billion dollar TAM as we discussed on the call. But there's also the aid to diagnosis indication, which I think unlocks really something interesting around the strategy here. So in aid to diagnosis, and we'll talk about head and neck specifically, patients present with difficulty swallowing, persistent sore throat, a neck mass, and getting tissue and making a diagnosis is challenging there. And the Nevaris product enables the clinician to order a blood-based test that has a high sensitivity and specificity for diagnosing head and neck malignancy. And so in the setting of trying to perform a biopsy or not getting adequate tissue, the Nevaris test can augment that diagnostic product and get the patient on the right treatment earlier. And so we see the opportunity to capture patients there at the point of diagnosis and then pull through the repeat testing as they transition in that multidisciplinary care team to the medical oncologist or the radiation oncologist for definitive treatment and then follow up. And I think that's something that's really special about this product and its ability to provide value across that diagnostic continuum to that care team. And you talked about they did about

Lauren Timmons, Analyst — Jefferies

$34 million in revenue in 2025, expected to grow annually 30 to 40 percent. How are you using CareDX's existing commercial infrastructure and to kind of accelerate that trajectory?

John Hanna, CEO

Yeah, it's really about those core competencies I described. So, you know, we have a very strong marketing organization that understands how to position these products, how to build belief and awareness in the products in the marketplace. We have our CareDx Cares team, which is our team that interacts with patients and with care centers to help work out the workflow around ordering and reporting of results. They work with patients to schedule their blood draws for their recurring tests. And then, of course, we talked a second ago about Epic integration. So we've already made an investment as a company in our Epic Aura instance and integration, and we can now add the Navaris order set into that instance to enable those centers to be able to order seamlessly through their Epic interface. And you talked about the business being neutral to

Lauren Timmons, Analyst — Jefferies

EBITDA in 2026. Could you talk about some of the levers or operational integration steps needed to

Keith Kennedy, CFO

become EBITDA creative? Yeah. So first thing we're, we're focused in on is making sure the employees, you know, feel a part of the care DX team and our care DXers. So that's, that's first and foremost. Um, they have great relationships with customers. So I think there's a, a commercial strategy and Jessica's working on that with the team as we're going through the integration process so we've developed a full integration plan and then we've essentially developed a one year roadmap that's broken out to six months and then longer than six months so some things such as cyber security and these things that i have to deal with in the back of all this are you know you you can't shut down a lab you have to run the lab in flight so there's things like that that we're integrating the accounting taking a private company to a public company and things like that but the commercial go-to-market motion is probably the most important thing other than the first and always the most important thing is the employees and making sure the employees are taken care of you know they're paid well they're paid on time and they're you know they're part of the overall

Lauren Timmons, Analyst — Jefferies

care dx strategy would love to touch on uh the nav dx data briefly so four month median lead time 95 percent ppv and npv how are those stats like resonating with the ordering physicians yeah i

John Hanna, CEO

think they resonate strongly so in our our market research you know in our diligence of the of the company you know we found like an overwhelming receptivity to the product um and really just a you know a common sense approach from clinicians right if these patients have uh if they're hpv positive, having a test that literally detects that tissue modified virus in the blood is naturally going to be more sensitive and specific than a, you know, a tumor informed approach. And so the willingness to order was very high when you present them with, you know, this, this product profile. And so we think, we think that gives differentiation. Obviously there's a, there's a lot of competition in that market, right, in the MRD, solid tumor MRD market. And so building awareness is something that really needs to be focused on here in driving adoption of the

Lauren Timmons, Analyst — Jefferies

product. And we're excited for that. And I guess to round out on NAVDX, so you have Medicare coverage and you have a pipeline of other indications that are kind of in the works. Maybe talk a little bit about timeline in terms of next steps for those indications as well.

John Hanna, CEO

Yeah, I think that in particular, gynecologic MRD is the priority. And that's an indication where, you know, a high proportion or high percentage of the cancers, even higher than in head and neck, are HPV driven. And so the assay is a little bit different because the number of HPV variants that are present in cervical cancer is much more broad than in head and neck cancer so the company's been doing some development in that regard but once that's complete we'll move on to validation and then you know submit for coverage for that indication so i think that that's the next step

Lauren Timmons, Analyst — Jefferies

for us and we're really focused that's great and maybe transitioning to alohem so you recently presented really compelling to your acobat trial data maybe talk a little bit about the differentiation of this test in AML and MDS? Yeah. So, you know, we're really excited about

John Hanna, CEO

Alahim. This is a program that's been underway inside the company for some time. And when I got to CARDIX, you know, I looked at the pipeline and this asset really stood out to me as being both differentiated and in an area of really high unmet medical need. Because as I stated earlier, Your AML is really a space where there is no other solution, right? And so as we talk to clinicians, they're very excited about the product. It is a tumor-naive product that is universal, is what I'll call it. So any patient that has had AML or MDS and undergoes an HCT stem cell transplant, the assay applies. and it's a very elegant way for looking for relapse detection that is very sensitive and specific in that setting and these are patients whom you know when they have a relapse the onset of that relapse is very rapid and often not a good outcome for the for the individual unfortunately And so having the ability to give a clinician a month or so or two months of lead time ahead of that relapse event, which is typically detected via bone marrow biopsy, which, as you can imagine, doesn't happen that frequently. So having a blood test to be able to test more frequently and get lead time to be able to intervene, I think is really going to be a game changer in this setting. and it's something that, as I described, when I got to the company and then went out and talked with KOLs about this indication, I got very excited because they were so excited about the product. So we've put a lot of focus inside of the company in advancing this pipeline asset and we're very pleased to see the trial read out. Our goal for 2026 is to get the manuscript in print on that trial. and then complete all of our analytical verification work so we can submit for New York state approval and for our coverage for the product and really get underway in a real way

Lauren Timmons, Analyst — Jefferies

in early 2027. And you talked about the TAM for allogeneic HTT being about 1 billion. Given that cell therapy is delivered by like a highly specialized group of centers, like what's your targeted commercial rollout strategy look like? Yeah, because the product does not yet

John Hanna, CEO

have coverage and we do anticipate, you know, it's going to take time. So I think I provided guidance that, you know, likely 2028 will see coverage for that product. We're going to be very targeted in what we do. And so we're very focused right now on clinician education around the trial, how it was designed, the patients that were enrolled, what the initial data readout said. and then as we you know launch commercially we'll selectively do that in accounts where you know we have a strong relationship perhaps we have epic integration like i'm really excited about the concept of launching a product natively through epic aura integration and seeing how that adoption curve goes relative to something that's launched you know in a portal or on paper or something like that. And we're going to try to build that market in a material way such that when coverage is gained, we see a material benefit from a revenue perspective. And I guess

Lauren Timmons, Analyst — Jefferies

looking holistically at the pipeline, including Alisher, Liver, HistoMap, how does Alahim fit into your broader prioritization of R&D investments over the next three years?

John Hanna, CEO

I mean, it's the number one focus right now from a pipeline perspective. And, you know, fortunately, we had already invested in the Acrobat trial. So when I arrived at the company, the trial was still in process and nearing conclusion. And the team did an excellent job in the design of that trial. And it really, you know, resulted in fantastic data as was presented on the call in February. So that's our number one priority. We, you know, I talked about Alisher in liver transplantation, where we've also run a clinical validation trial. We're still collecting follow-up data there and hope to have that, you know, more ironed out here later this year and have more visibility into what that looks like. And then Histomath is a product that we have made significant investment over the past several years we have one manuscript already in press on that we have a second one that is forthcoming and we think this is a real game changer because you know there really is no ffpe based tissue assay gene expression assay for transplant rejection subtyping post biopsy and while like in many other indications you know histology is the gold standard it often is inconclusive right and so you have patients where there's a lot of uncertainty as to how to treat and in solid organ transplantation in kidney in particular, there's a very clear, you know, defined pathway for treating based on subtype of disease. And in cases where that's ambiguous, I think histomap is going to create

Lauren Timmons, Analyst — Jefferies

a lot of value. That's great. And on that topic as well, AlloShare Plus with the AI-derived rejection score, as well as histomap kidney, how do these advanced risk stratification tools resonate with clinicians? And is that accretive to ASP in any way to have these add-ons?

John Hanna, CEO

Yeah, I don't think about it as accretive to ASP. I think about it really as rounding out our solution in kidney transplantation. Alisher Plus has been very well received. And for those that aren't aware, this is a product that was validated in over 2,000 patients in a trial. And it's an AI-derived algorithm that gives a patient-specific risk of rejection score. So Allisure tells you the percentage of donor-derived cell-free DNA. Allisure Plus takes that Allisure result along with other blood-based markers as well as clinical variables and derives a risk score for that patient at that point in time. And so it really gives clinicians an idea of like, okay, am I flirting here with like a very high risk patient or is this still relatively low risk of rejection given the myriad of variables that they have to consider for that individual? And so I think of these, you know, Alisher Plus as providing more information as well as histamap kidney post-biopsy providing more subtype information to the clinician. there is a pathway for being paid on histamap kidney and you know we're very optimistic about that because it is a you know tissue-based test where the biopsy is inconclusive so that's very clear but i i don't i wouldn't think about it as accretive to aloshore asps and i guess in the last

Lauren Timmons, Analyst — Jefferies

minute here on aloshore liver you kind of talked about expanding into new indication what's the timeline and commercialization there and how large is this specific market relative to your existing

John Hanna, CEO

organ franchises yeah we haven't given a timeline yet because we're still wrapping up the trial right we've got to see is the trial positive what are the results say you know what exactly is that indicated patient population and use case but i think later this year as we make progress there we'll come out and share more around our plans you know the beauty of this is we're already in you know, nearly every abdominal transplant program in the United States. And these programs do liver and kidney. It's the same surgeons, it's the same group, same departments. And so we really think that there's a significant opportunity there if we can figure out, you know, the right indication of use for the product. Great. Thank you guys so much. Thank you, Lauren.