CareDx at Jefferies Global Healthcare: Strategic Growth and Market Focus

On Thursday, 05 June 2025, CareDx Inc. (NASDAQ:CDNA) presented at the Jefferies Global Healthcare Conference 2025, highlighting its Q1 2025 performance and strategic outlook. The company reported robust revenue growth and a strong financial position, while also acknowledging challenges in patient adherence to testing protocols. CareDx aims to expand its market share in the transplant sector through strategic product launches and operational improvements.

Key Takeaways

• CareDx reported an 18% year-over-year revenue growth and a 12% increase in testing volumes for Q1 2025.
• The company ended the quarter with $231 million in cash and no debt, completing a $50 million stock repurchase program.
• CareDx projects 2025 revenues between $365 million and $375 million, with a three-year goal of $500 million in revenue by 2027.
• The company’s growth strategy focuses on product expansion, evidence generation, and operational excellence.
• Challenges include improving patient adherence to testing protocols, currently averaging 50%.

Financial Results

• Revenue Growth: CareDx achieved an 18% year-over-year increase in revenue for Q1 2025.
• Testing Volumes: The company saw a 12% growth in testing volumes during the same period.
• Cash Position: CareDx concluded the quarter with $231 million in cash and no debt.
• Stock Repurchase: A $50 million stock repurchase program was completed, with another $50 million authorized.
• Revenue Guidance: The company anticipates 2025 revenues between $365 million and $375 million, aiming for $500 million in revenue and a 20% adjusted EBITDA margin by 2027.

Operational Updates

• Go-to-Market Strategy: New products and extensions, such as AlloSure for heart pediatrics, are being launched.
• Evidence Generation: CareDx is publishing data to enhance payer coverage and reimbursement.
• Operational Excellence: The company is restructuring its RCM function and implementing Epic Aura to streamline operations for transplant centers.
• Testing Protocol Adherence: Current adherence to testing protocols is around 50%, with efforts underway to improve this rate.

Future Outlook

• Revenue Growth Anticipation: CareDx forecasts a 15% year-over-year growth rate, driven by market expansion, customer adoption, and product pipeline contributions.
• IOTA Program: The Increasing Organ Transplant Access Program is expected to provide a significant tailwind.
• Epic Implementation: The full launch of Epic Aura is expected this quarter, with integration in Q3 and Q4, setting the stage for growth in 2026.

Q&A Highlights

• ASP Dynamics: Testing services revenue growth is projected to be 17%, with volume and ASP growth contributing significantly.
• New CPT Code: This code will enable contracted rates once payer coverage is secured.
• Commercial and RCM Hiring: The commercial team expanded by 30 headcount in Q4 to boost pipeline and sales.
• Buyback Program: The buyback was deemed prudent given the company’s strong cash generation.
• M&A Views: CareDx remains open to bolt-on acquisitions in adjacent business areas.
• Competitive Dynamics: The market remains shallowly penetrated, offering growth opportunities for all competitors.

For more detailed insights, please refer to the full transcript below.

Full transcript - Jefferies Global Healthcare Conference 2025:

John Hanna, President and CEO, CareDx: Good morning. I’m John Hanna, the president and CEO at CareDx. Thank you all for joining us today. This is our safe harbor statement. We may make forward looking statements during the presentation.

Please refer to the safe harbor on our website. At CareDx we’ve built an experienced leadership team in the molecular diagnostics market to drive profitable growth. We have six fifty employees globally, 180 driving our commercial growth in the marketplace. We have about 100 scientists and researchers building the next generation of solutions for transplant care and management, and about 80 software programmers building our software solutions tools that help transplant centers operate more efficiently to treat more patients in the marketplace. We’ve outlined three primary drivers of growth for 2025, beginning with our go to market strategy that includes launching new products and product extensions like AlloSure for heart pediatrics patients that allows us to address the entire market in heart transplant.

Evidence generation, including the publication of data that allows us to drive payer coverage and reimbursement of our products. And operational excellence where we’re focused on restructuring and growing our RCM function, implementing Epic Aura to make it easier to do business with us from transplant centers, and driving up our gross margins in our IVD lab products kit business. Q1, we had an 18% growth in revenue year over year. Our testing volumes grew by 12%. We ended the quarter with 231,000,000 in cash and no debt.

Earlier this week, we announced that we completed stock repurchase program, including buying back 5% of our outstanding shares and spent about $50,000,000 in that program. And our board authorized another 50,000,000 stock repurchase program as we continue to try to return value back to shareholders. Q1 twenty five was our seventh consecutive quarter of testing services volume growth. And so everything we do at the company, whether it be software services, our pharmacy business, our lab products, is all geared toward driving testing services volume, which is over 75% of our revenue, and we’ve seen a really great growth rate in our testing services since Q2 of twenty twenty three. The transplant market is about a $50,000,000,000 market in The United States from organ procurement through the procedure itself and post transplant follow-up care, including pharmaceutical care and diagnostic testing.

We do roughly forty six thousand transplants in The United States annually, so we spend approximately a million dollars per transplanted organ in The United States. This is a high acuity condition and a high cost procedure for which transplant centers are willing to pay for services to make them more efficient, to drive more transplant volume and treat more patients. Transplant is typically considered to be a profitable service line within hospitals, so they’re looking for solutions to help them drive the volume of that care. At CareDx, we performed approximately a million monitoring assays through our testing services business to look for transplant organ rejection. Seventy percent of transplant centers in The United States use one or more of our software solutions.

We sell and distribute about 200,000 HLA tests annually around the globe. These are our IVD kits that match deceased donor organs with recipients. And we fill about 150,000 prescriptions a year through our transplant pharmacy for patients that have undergone an organ transplant, whether that be their immunosuppression medications, steroids, and other meds that those patients are on. So CareDx is truly the established solutions provider for transplant centers and today captures a relatively small portion of all the dollars spent in this market. But we have a long road ahead of us and a long runway ahead to continue to drive our growth in this market.

The transplant market itself is growing organically across each of the organs that we’re currently indicated for. We’ve listed here the five year CAGR for those volumes, and those volumes are growing as a result of two factors. One is technology innovation in the market and the use of tools like perfusion that allows an organ to survive longer outside of the body so that it can be moved across the country if needed and transplanted into a patient that’s a better match, let’s say here in New York City versus a patient in California. And then the second is government programs that are driving the adoption and growth of more transplantation. In particular in the kidney space, we spend about $40,000,000,000 a year as a society on dialysis, and kidney transplantation is a curative procedure for patients that have kidney failure.

In The US today, there are about ninety thousand patients on the kidney transplant wait list, and the IOTA program, the Increasing Organ Transplant Access Program implemented by the government that goes into effect July one of this year, is intended to drive further utilization of available kidneys and the growth of kidney transplantation to move patients off of dialysis to a curative procedure. This is all a tailwind to our growth as a company because we anticipate that this CAGR will continue into the future. As I said, we offer a synergistic portfolio of solutions to these transplant centers starting on the front end with organ matching. We provide IVD kits to match deceased donor organs to recipients. We provide software to help manage the wait list of patients that are trying to get a transplant at a center.

We provide software and support inside of the transplant center for the procedures they perform, including a transplant EMR system. We have a quality reporting software that allows for dashboarding and monitoring how the center is doing from an outcomes perspective. And we also provide staff augmentation services. So if a transplant center has a challenge with particular issue, we will deploy individuals that have expertise in transplant system management to help them get their program to where they want it to be. And then post transplantation, where the bulk of our revenue is generated through our graft health assessment testing services.

We also have tissue based diagnostics and we offer remote patient monitoring services which are particularly needed in lung transplantation where monitoring of the patients 20 fourseven and their spirometry values are really important to managing the health of those patients. Well, the reason why we offer all of these solutions to the center is that it enables us to have a closer relationship to our customer. And ultimately centers that utilize three or more of our patient and digital solutions have a 50% higher capture rate of patients that get transplanted and get on our testing services and we generate two times the revenue from those centers than a center that uses less than three of our digital and patient solutions. And so for me this is really a proxy of how well integrated we are into that transplant center and how good of a relationship we have with that account in order to drive our testing services growth. The other factor we’re focused on is patient adherence to testing protocols.

Each of our products has a specific protocol on how the testing should be utilized and the way that it is validated. In heart and lung, our testing protocol is to do 11 tests in the first year, four in the second, and four in the third. And then in kidney, it’s seven in the first year, four in the second, and four in the third. We find on average that across each of our indications there’s about a 50% adherence to that testing protocol. And we see an opportunity to drive adherence in the market rate either through engaging with the transplant center on how they’re utilizing the test or engaging directly with the patient on helping schedule their blood draw and ensure that that sample is collected and delivered to CareDx because we are their lab provider of choice.

Our pipeline is all oriented toward fueling additional growth in our current in line products. This year we launched AlloSure for simultaneous pancreas and kidney transplantation, which is a growing indication. This is for patients that have kidney failure and need a kidney transplant, but they’re also an insulin dependent diabetic. And so in these patients you’ll do both a kidney and pancreas transplant simultaneously and cure both their CKD and the diabetes in one procedure. And we validated our tests to do that and so now that can be used in the clinic.

The second product extension for ’25 was AlloSure Heart Pediatrics. And so our test is now validated for patients of any age that have undergone a heart transplant all the way down to pre age one. And that’s really important because it allows us to go after capturing the entire TAM for that market, not just the adult patients. We have a number of products that we’re intending to launch that are complementary to AlloSure Kidney to drive more kidney transplantation adoption. And the one I’ll highlight that is closest to market is our histoMAP assay, which allows clinicians to differentiate between antibody mediated rejection and cellular rejection off of a tissue biopsy using a gene expression analysis.

And we’re very excited about the launch of that product later this year. We continue to focus on evidence generation inside of the company to drive payer coverage and ASP appreciation for our products. Here what we’re showing is in each of our products the proportion of claims that we submit that are covered under medical policy. And I’ll give you some examples of why this is important. So for BlueCosh BlueShield federal employees based on our SURE study that was published in the Journal of Heart and Lung Transplantation in 2024, they issued a positive coverage policy for AlloSure Heart.

So all federal employees that are under the Blue Cross plan now have access to that testing and the testing gets paid when it’s submitted. Additionally, Highmark Blue Cross issued a positive coverage policy for AlloSure Kidney based on a Nature in Medicine publication in June of ’twenty four demonstrating in a very large patient population the impact that AlloSure kidney can have on improving the yield of rejection on biopsy and post treatment of those patients. And so we continue to push forward with evidence generation to drive coverage growth. We have four key trials that are driving this evidence in heart, kidney, lung, and in our pipeline in cell therapy. And what I’ll note here is the size of these studies.

So in heart, our five year follow-up trial at 67 centers has enrolled over 2,700 patients. In kidney, 56 centers, over 3,600 patients with three years of follow-up. And we recently completed enrollment in our ALLOMO trial which is 500 patients targeting five year follow-up at 19 sites. And I’m going to talk in a few minutes here about cell therapy, which is the core of our pipeline of longer term product development where earlier this year we read out the first year results of an interim of two year trial where we’ve enrolled three zero seven patients at 11 sites to look at surveillance of recurrence of hematologic malignancies in patients that have undergone a stem cell transplantation. We believe the cell therapy opportunity is significant for CareDx.

There are over 5,600 trials ongoing worldwide looking at cell therapy in various indications including blood based cancers and solid tumors, autoimmune disorders, and other areas. The centers that do cell cell therapy transplantation, are the same centers that do solid organ transplant. So it’s the same channel and market that we’re addressing, about two twenty centers and 140 that are accredited to deliver cell therapy or CAR T therapy in The US. We have two products that are addressing unmet needs in this market. First on the left hand side is our product we call Alacel, which monitors for the pharmacokinetics of cell therapy delivery.

So when the patient gets that new graft, it monitors for the expansion of the cells and then retraction of the cells in the body which is prognostic for the efficacy of the therapy and can drive treatment decisions in the short term immediately post infusion. And then our other product is Allaheme, which again is for patients that have had a hematologic malignancy and undergo an allogeneic stem cell transplant. And it monitors for cancer recurrence in those patients and is very sensitive for picking up that recurrence so the patient can be treated by the clinician to try to increase the immune response to that potential recurrence of the hematologic malignancy. We’ve guided for $20.25 dollars 3 60 5 million to $375,000,000 in top line revenue. We also provided in October of last year a three year guide that includes achieving $500,000,000 in revenue and 20% adjusted EBITDA margin in 2027.

And we have reiterated this guidance and continue to be on track to deliver on these numbers as a company. We anticipate achieving this growth rate of 15% year over year through a number of factors including our anticipation of 5% growth of the overall transplant market, 7% growth in our volume through customer adoption of our products and driving patient adherence, 3% appreciation in our ASP, and 1% of revenue growth from pipeline products, mainly the SPK, AlloSure Heart Pediatrics and other products to support it. And our stem cell products are beyond the three year guide that we’ve provided for growth. And so in summary, we’ve put in place a really strong team. We’ve identified significant opportunities to grow our revenue in the market and we are launching innovative solutions to resolve unmet medical needs transplantation.

Thank you.

Tycho: We got about ten minutes for q and a here. And maybe, John, just to kind of pick up where you left off, you gave that long term guidance. Help us bridge the gap in the near term. I think you guided for 5% to 6% sequential growth. What’s kind of baked in this year for ASPs for the new indications you’re launching?

: Yeah. I can take that particular question, Tycho. So what we have guided in 2025 that our overall revenues are going to grow at about 12% on a year over year basis. And excluding the one timers, our revenue growth for the testing services business would be 17%. About 14% to 15% of that volume growth in the testing services will come from 14% to 15% is the volume growth and about 2% to 3% is the ASP growth for the testing services business.

And the other two businesses are going to grow in the mid teens.

Tycho: And then I guess just thinking about ASP Dynamics, you’ve got the newly issued CPT code right on April 1. Maybe talk about that versus, you know, what kind of additional publications you need to kind of drive, for for, you know, for the further coverage.

John Hanna, President and CEO, CareDx: Yeah. We certainly want to continue to drive publications to be in the game on gaining additional payer coverage. We’ve had a number of successes through 2024 and into ’25 on this with commercial payers, And we continue to push on that because it’s really important to get to full market payer coverage adoption. The new CPT code is really important for us because it enables us, once we do get payer coverage to flip that into a contracted rate. So for example, in the first quarter we said on our call that we had a large Blue Cross plan in the Southeast that had covered AlloSure kidney.

And because we got that new CPT code, they brought us into the network and priced the code. And now it just makes it easier for us to submit those claims and get paid and reduce the DSOs on those claims.

Tycho: And you’ve been hiring, I think in billing, you know, and and and maybe just talk a little bit about the, you know, the return on some of those incremental hires, and then also commercial hiring.

John Hanna, President and CEO, CareDx: Yeah. We’ve been focused on both. So I’ll start with commercial. We increased our commercial organization by about 30 headcount in the fourth quarter. And that was important because we wanted to add both in marketing team members to help drive the pipeline, do the market shaping activities, ensure that the product spec was correct and that R and D was building the product to spec to meet the market needs, particularly in the cell therapy space.

And then on the sales side, we wanted to increase our density of reps in the field to make sure they had a fewer number of transplant centers to focus on and really focused on selling deeply into those accounts, drive protocol adoption, particularly in kidney. We saw strong adoption between September November of last year of kidney protocols, that continued through the fourth quarter and into the first quarter of this year. On the RCM side, we’ve scaled up that team significantly. We were outsourcing parts of that work. I have a philosophy that no one’s going to care more about how much money we collect than we do, and of course our investors.

And so we insource that function in the company to make sure we had all the workflows ironed out, that we were doing eligibility verification, prior authorization, claim submission, appeals, follow-up activities such that we can ensure that we get paid as much as we possibly can on every single claim And we reduce the denial rate for administrative reasons, like lack of prior authorization. So we feel like we’ve made a lot of progress there from an organizational and workflow and business process perspective. That’s gonna take four to five quarters or so to play out in ASP because anything we do this quarter, it’s gonna take a couple of quarters to collect that revenue and then for it to age into our accrual window.

Tycho: Get a good reaction yesterday on the buyback announcement, you know, 50,000,000. Talk a little bit about, you know, the the thought process behind that, how you’re balancing that with internal, and and, you know, what’s the view on m and a too?

John Hanna, President and CEO, CareDx: Yeah. We felt like we had a really good first quarter. February, March, and April testing services volumes were very strong, and we are in line and reiterated our guidance for the year. And we felt like we have made substantial investments in commercial operational excellence and our innovation pipeline and thus felt like given where we were trading at, it was prudent to go ahead and execute our buyback program. We bought back about 5.5% of outstanding shares, which we think was the right thing to do given the cash generation that the company has been executing on over the past several quarters.

Tycho: And just to follow-up on M and A, views on bolt on deals.

John Hanna, President and CEO, CareDx: Yeah. We’re going to continue to look across the market for opportunities. We think that we have a really strong pipeline in cell therapy to continue the growth rate of the company beyond 2027. But if we see opportunities to add on additional products that are adjacent to what we do today, either in the hematologic malignancy space or in transplant in some way, we’ll take a a good look at those because we do have a really strong balance sheet and, of course, no debt.

Tycho: You’ve got the Epic launch really kind of going live, full launch this quarter. Talk about what you expect in terms of lift from them.

John Hanna, President and CEO, CareDx: Yeah. I mean, if you talk with other labs across the country, they’ve seen a nice lift as a result of Epic implementation, somewhere around five to 10% volume increase due to the ease of ordering in the system. We are on pace to complete our Epic implementation midyear and then begin integrating with customers in the third and fourth quarter. So I think the epic work that we’re doing today really sets us up for 2026 growth opportunity.

Tycho: And they’re obviously dominant, but there are others out there, flat iron, etcetera. Are you going to be doing other kind of similar implementations?

John Hanna, President and CEO, CareDx: We’ll certainly look at that. As you recall, we sell a transplant EMR system ourselves. And so we see Epic in sixty to eighty percent of transplant centers across the country. The balance use the CareDx system, and we’re partnered with Cerner on that. So any Cerner system typically uses the CareDx, what we call our Otter EMR system.

And so we have a really strong integration with those centers already today, and the Epic work is trying to fill out the balance and make it easy for them to do business with CareDx.

Tycho: Maybe could you just touch on iota? You know, it’s set for July 1. How do you think about, you know, the roll up rollout in terms of the back half of the year ramp?

John Hanna, President and CEO, CareDx: Yeah. We we have seen over the past two to three quarters relatively flat volume in kidney transplantation year over year. And we believe that this is partially in anticipation of Iota and prepping to have capacity to grow the volume of kidney transplantation starting in the second half of twenty twenty five. That program creates a composite metric or score for centers that includes their absolute growth rate of kidney transplantation, the utilization of available kidneys to them. Because in The US we unfortunately discard about twenty percent of the kidneys that are harvested.

They end up not getting utilized in patients. And then the third metric is around one year graft survival. And so the programs that are in the IOTA group will be stacked ranked on that metric, on that composite metric, and then paid differentially on their performance. We are going to launch and have talked about our program for quality reporting and dashboarding, software, that it will integrate those IOTA metrics and allow centers to see real time where they are in the stack rank based on that composite score and their transplant volume and care quality outcomes over the six years of that program as it’s implemented. So we’re looking forward to that, and we do think it’ll be a tailwind in the future.

Tycho: Maybe one last one in a closing minute here. Just competitive dynamics. I think one of your competitors talked about gaining some share on organ health. What are you seeing in the field competitively?

John Hanna, President and CEO, CareDx: Yeah. It’s a it’s a this market is very shallowly penetrated overall. We think there’s a lot of runway in each of the three organs where we’re indicated. And so there are other companies in this space that are growing as we are growing. And we think there’s a phenomenal opportunity for us to achieve our three year guide and the growth rate that we’ve laid out to investors.

Tycho: Great. I think we’ll leave it at that. Thanks.

John Hanna, President and CEO, CareDx: Great. Thanks so much, Ravi.

: Thanks. Thank you.

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