Medicare draft policy continues coverage for transplant testing

BRISBANE, Calif. - CareDx, Inc. (NASDAQ:CDNA), a profitable healthcare diagnostics company with $346 million in annual revenue and strong liquidity metrics, announced Thursday that a proposed draft Medicare Local Coverage Determination (LCD) would maintain coverage for molecular surveillance testing for kidney, heart, and lung transplant patients without requiring protocol biopsies. According to InvestingPro data, the company maintains a healthy current ratio of 4.11, indicating robust financial stability.

The draft policy, which is open for public comment through August 31, 2025, introduces a bundled payment concept for surveillance testing while continuing current coverage policies. There are no immediate changes to existing coverage as the proposal undergoes review.

"We believe publication of this draft policy solidifies coverage for surveillance testing and supports our longstanding position that our tests improve health outcomes for transplant patients," said John W. Hanna, President and CEO of CareDx, in a press release statement. The news comes as the company’s stock has experienced significant volatility, with InvestingPro analysis showing a 41% decline in the past week, suggesting potential buying opportunities for investors seeking exposure to the healthcare diagnostics sector.

The company, which specializes in non-invasive molecular testing for organ transplant recipients, indicated it is still reviewing the draft coverage and payment policy details. CareDx plans to provide additional information during its upcoming earnings call on August 6.

The draft LCD represents an important development for transplant patients as it recognizes the value of molecular testing for early detection of allograft rejection in solid organ transplants. These tests provide a non-invasive alternative to traditional biopsy procedures.

CareDx noted that it does not expect changes in the utilization of its testing services in response to this draft LCD and plans to participate in the public comment process for the proposed policy.

The company’s testing portfolio includes AlloSure and AlloMap products that help monitor transplant patients for potential organ rejection. With a 26% year-over-year revenue growth and positive net income of $62 million, CareDx appears undervalued according to InvestingPro Fair Value calculations. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, CareDx reported a significant earnings beat for the first quarter of 2025, with earnings per share reaching $0.09, far exceeding the anticipated loss of $0.19. The company’s revenue for the quarter increased by 18% year-over-year, totaling $84.7 million, with testing services revenue rising by 15%. CareDx also announced a new $50 million stock buyback program, following the completion of a previous $50 million repurchase, which accounted for approximately 5% of its outstanding shares. The company remains debt-free, with $231 million in cash, cash equivalents, and marketable securities.

Additionally, BTIG analyst Sung Ji Nam revised the price target for CareDx shares to $30, down from $35, while maintaining a Buy rating. The analyst noted the company’s solid fundamentals and potential for improved results later in the year. CareDx launched new transplant testing products, expanding its market reach, and reiterated its full-year revenue guidance of $365 to $375 million for 2025. The company aims to achieve $500 million in revenue and 20% adjusted EBITDA by 2027. Despite positive financial performance, CareDx’s stock experienced a decline, possibly due to broader market conditions or company-specific challenges.

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