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Good afternoon, everyone. Welcome to the CareDx, Inc. Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, you will have the opportunity to ask questions during our question-and-answer session. [Operator Instructions] Also, today's call is being recorded. [Operator Instructions] Now at this time, I'll turn things over to Ms. Caroline Corner, Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good afternoon. Thank you for joining us today. Earlier today, CareDx released financial results for the year ending December 31, 2024. The release is currently available on the company's website at www.caredx.com. John Hanna, President and Chief Executive Officer; and Abhishek Jain, Chief Financial Officer, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including, without limitation, 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 risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. 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 to the live broadcast today, February 25, 2025. CareDx disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections or other forward-looking statements, whether because of new information, future events or otherwise. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliations 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. In early January, we preannounced our fourth quarter and fiscal year 2024 financial results, highlighting what was a transformational year for CareDx. I want to start by congratulating the approximately 650 employees globally at CareDx for supporting the care of transplant patients from the early stages of establishing a donor to recipient match all the way through post-transplant monitoring, sometimes for the rest of the patient's life. We impacted the lives of over 50,000 patients in 2024 and in 2025, look forward to continuing to deliver on our mission to create life-changing solutions that enable transplant patients to thrive. In the fourth quarter, we reported quarterly revenue of $86.6 million, up 32% year-over-year. Positioned to build upon that performance, we reiterate our 2025 guidance of $370 million in revenue and our target to exit 2027 with $500 million in revenue and 20% adjusted EBITDA. At CareDx, we continue to drive gains in positive adjusted EBITDA due to revenue growth and disciplined management of our operating expenses and achieved $9.8 million in adjusted EBITDA in the fourth quarter and $27.8 million for the full year. We generated $22 million in cash from operations in the fourth quarter and ended the year with a cash balance of $261 million and no debt. We are committed to long-term profitable growth. And in 2025, we expect an adjusted EBITDA gain of between $29 million and $33 million. I'm going to highlight several accomplishments from the fourth quarter and then turn to the key growth drivers for 2025, which you should anticipate hearing from me providing further commentary on throughout the year. In Testing Services, we delivered approximately 45,500 tests in the fourth quarter, up 14% from the prior year. The fourth quarter was our sixth consecutive quarter of sequential testing services growth. We again experienced testing services volume growth across all organs, heart, kidney and lung. Testing services revenue was $63.8 million for the fourth quarter, up 37% year-over-year. We completed our plan to add 30 sales and marketing team members to promote and sell our transplant solutions. We also completed the addition of 20 team members to our billing organization to drive greater collections and expand our ASP. We will continue to invest in our commercial operations where we see an outsized opportunity to drive growth by further penetrating the market. We continue to make strides in payer coverage. In the fourth quarter, we expanded AlloMap Heart coverage from beginning at month 6 post-transplant to month 2 post-transplant by 21 million commercial lives and added 12.2 million new commercial covered lives for AlloSure. For the full year 2024, we added or expanded coverage for 28 million lives for AlloMap Heart and added 36 million new commercial covered lives for AlloSure. This coverage and disciplined revenue cycle management will continue to drive our ASP in future quarters. Moving on to our patient and digital solutions, which includes our transplant pharmacy, software tools and remote patient monitoring services, we reported revenue of approximately $11.4 million in the fourth quarter, representing 18% year-over-year growth. We continue to see strong synergies between patient and digital solutions and our testing services offerings. When accounts use 3 or more CareDx patient and digital solutions, they have a 50% greater new patient capture rate for our testing services. In the fourth quarter, our digital solutions team in collaboration with our partner, Leidos, was awarded a contract by the U.S. Department of Health and Human Services that provides us the opportunity to bid on projects associated with the Organ Procurement and Transplant Network, or OPTN, modernization initiative. This multiyear initiative aims to modernize the data collection, reporting, organ allocation and other facets of the organ transplant system to better serve the more than 100,000 individuals on the national organ transplant wait list. This partnership leverages CareDx's deep expertise in transplant software development, data science and AI and Leidos' experience in health systems and large-scale health IT programs. We are proud to be a part of this initiative, which has the potential to expand access to organ transplants. Moving on to lab products, which includes PCR kits for rapid disease donor HLA typing and NGS kits for transplant recipient HLA typing globally and IVD monitoring assays for solid organ and stem cell transplant recipients outside of the U.S. We reported revenue of $11.4 million, representing 23% year-over-year growth. Sales of our industry-leading AlloSeq Tx NGS-based HLA typing kits for organ recipients primarily drove this growth. In December, the results of a multicenter prospective study of our AlloSeq cell-free DNA IVD kit, which included 580 transplant patients from 3 referral centers in Europe was published in the Journal Transplant International. The study demonstrated that AlloSeq cell-free DNA detects allograft rejection consistent with our AlloSure donor-derived cell-free DNA lab-developed test in the U.S. Today, approximately 5% of CareDx revenue come from outside the U.S. However, there are over 18,000 kidney, 2,000 heart and 2,000 lung transplants performed annually across the European Union alone. We look forward to these data expanding adoption of AlloSeq cell-free DNA for detecting allograft rejection in the same labs that use our industry-leading AlloSeq Tx 17 NGS HLA typing assay. The transition to NGS in HLA labs globally for HLA typing and the detection of allograft rejection will continue to drive growth in our lab products business. 2024 was a truly transformational year at CareDx, and we believe we are well positioned for continued profitable growth in 2025. I now want to highlight what we view to be our key drivers of growth in 2025 that enable us to achieve our 3-year long-range plan, and that we've laid out in our presentation. Number one is our go-to-market strategy to provide solutions to transplant centers across the care continuum to drive testing services volume growth. Our pharmacy, digital and lab products are synergistic to growing our testing services adoption. Number two, evidence generation to expand payer coverage. We continue to demonstrate the testing services we provide improve patient health outcomes and provide significant value to the health care system. Evidence generation, coverage and coding allow us to achieve in-network status and improve payment and ASP. And number three, operational excellence to scale our business profitably, including business process optimization, which allows us to have revenue growth outpace operating expense growth and generate cash. Throughout 2025, we anticipate achieving significant milestones in each of these areas. First, in go-to-market strategy, through our synergistic offering of our patient and digital solutions, we anticipate continued adoption in surveillance testing with AlloSure Kidney, namely the IOTA program, which we anticipate will be implemented by CMS in July of 2025 is the current focus of most kidney transplant centers nationally. The program provides both upside and downside risk payments for transplant centers. The 2 program metrics of importance are growing kidney transplant volumes and the organ acceptance rate at each center. Both of these metrics may drive centers to perform more complex transplant cases, which may increase the risk of rejection. These patients may require more regular monitoring, which we believe AlloSure Kidney is well positioned to support. Each performance year of the IOTA program is assessed independently, so it is crucial that a transplant center understand their IOTA score in real time. CareDx's upcoming release of our quality reporting software, XynQAPI, is designed to specifically allow transplant centers to monitor their IOTA performance score in real time with no manual data entry required. This digital tool is an example of how our synergistic solutions are enabling sales engagements around expanding the use of our AlloSure surveillance testing services and is anticipated to be released prior to the July 2025 start of the IOTA program. Another example of our patient and digital solutions that are driving engagement in kidney surveillance testing is the anticipated launch of our medication therapy management program through our CareDx transplant pharmacy. A key reason why transplant patients undergo organ rejection is the lack of adherence to their immune suppression medications, which are often the result of symptoms of drug-to-drug interactions. The CareDx transplant pharmacy is launching a medication therapy management program in the first half of 2025 to support those patients in particular, individuals with a less than ideal allograft match that are on a higher dose of immune suppression medication with greater side effects. In addition, we intend to launch several new products this year, including in testing services, AlloSure Heart for pediatric patients under the age of 15, AlloSure Kidney for simultaneous pancreas and kidney transplant patients, which is primarily performed for patients with insulin-dependent diabetes and renal failure and our HistoMap Kidney assay, a gene expression profiling test for determining molecular subtype of organ rejection such as antibody-mediated rejection. In our patient and digital solutions, we intend to expand the launch of AlloView, an AI risk prediction model for kidney allograft rejection. And in lab products, we plan to provide commentary on the ongoing launch of our Assign 2.0 software that pairs with our AlloSeq Tx 17 NGS assay for HLA typing and later in the year, the launch of Score 7, our next-generation software for rapid PCR HLA testing. Moving to evidence generation. I will start with kidney. In the fourth quarter, study investigators submitted the first of several anticipated manuscripts from the KOAR registry, a long-term follow-up study of nearly 4,000 patients who underwent kidney transplantation. We anticipate those data will be published in the second half of 2025, and the second KOAR manuscript is expected to be submitted in the second quarter of 2025. The major conference in kidney transplantation and additional abstract data that will lay the groundwork for future publications occurs in August of this year, the World Transplant Congress in San Francisco. In heart, we anticipate the second manuscript from the SHORE registry to be submitted in the first half of 2025 and to be published in the second half of 2025. And in lung, we expect the manuscript to be submitted for publication in the second half of 2025. The International Society for Heart and Lung Transplantation, or ISHLT meeting is taking place in April 2025, where we expect data presented in abstract form to drive future publications in heart and lung. These data in kidney, heart and lung will be the catalyst for additional commercial payer coverage for AlloSure as we continue to build the evidentiary library that demonstrates AlloSure testing changes clinician behaviors and improves patient health outcomes in each indication. Switching to our pipeline and CareDx's AlloHeme assay for hematologic malignancies. An interim 1-year readout of the 2-year AlloHeme ACROBAT trial to monitor for minimal residual disease recurrence for patients with hematologic malignancies that have undergone an allogeneic stem cell transplant was presented at the Tandem cell transplant and cell therapy meetings last month. These interim data demonstrate AlloHeme detects relapse, a clinically meaningful time ahead of standard of care approaches. We anticipate further interim readouts of this trial throughout 2025 at scientific conferences. These data supporting AlloHeme [ph] will build the foundation for our future Medicare coverage submission following the completion of the ACROBAT trial in 2026. In operational excellence, we are improving our enterprise infrastructure and business processes to operate more efficiently such that revenue growth outpaces operational expense as we scale. We have rebuilt our revenue cycle management team and look forward to seeing the impact that may have on ASPs in future quarters. And a key initiative in our supply chain operations is to increase the gross margins of our lab products business. If you recall, as a first phase, we transitioned AlloSeq Tx 17 manufacturing from Fremantle Australia to contract manufacturers in the U.S. and EU to reduce COGS [ph] and we now are taking additional steps in supply chain and manufacturing processes to improve our gross margin profile by the end of 2025. And with that, I will now turn the call over to Abhishek to share more details on the fourth quarter and full year financial results and 2025 guidance. Abhishek?

Thank you, John. In my remarks today, I will discuss our fourth quarter and full year 2024 financial results before turning to 2025 guidance. Unless otherwise noted, my remarks will focus on non-GAAP results. For further information, please refer to GAAP to non-GAAP reconciliations in our press release, earnings presentation and recent SEC filings. Let me start with the key financial highlights. We reported full year 2024 revenue of $334 million, up 19% year-over-year, exceeding the high end of our updated guidance. We delivered approximately 176,000 test results in 2024, up 6% year-over-year. Test volumes grew 14% year-over-year in the fourth quarter to approximately 45,500 tests, representing the sixth consecutive quarter of sequential testing services volume growth. Testing Services revenue was $249.4 million, up 19% year-over-year. Patient and Digital Solutions revenue was $43.6 million, up 18% year-over-year and products revenue was $40.8 million, up 22% year-over-year. We reported an adjusted EBITDA gain of $27.8 million in 2024 compared to an adjusted EBITDA loss of $38 million in 2023. Finally, we generated cash of $38 million in 2024 from operations, ending the year with $261 million in cash, cash equivalents and marketable securities and no debt. Moving to the details, starting with gross margin. Our non-GAAP gross margin for the full year was 69.4%, up 280 basis points as compared to non-GAAP gross margin of 66.6% in 2023. The gross margin expansion was primarily driven by testing services. Our non-GAAP testing services gross margin was 78.9% in 2024 compared to 74% in 2023. The improvement in testing services gross margin was driven by volume growth, ASP expansion as well as continued efficiencies in managing our lab operations. Our Patient and Digital Solutions non-GAAP gross margin for '24 was 35% as compared to 36% in 2023. Excluding our transplant pharmacy, which has a lower gross margin profile, our Patient and Digital Solutions non-GAAP gross margin for '24 was 59%. Our products non-GAAP gross margin for '24 was 49% as compared to 54% in 2023. Moving down the P&L. Non-GAAP operating expenses for the year were $212 million, down approximately $21 million from 2023, demonstrating the continued discipline in managing our operating expenses. The reductions in our operating expenses were driven principally by a reduction in legal spend. Earlier this week, the District Court reversed the jury decision in the patent litigation case brought by our competitor overturning the prior $96 million verdict. In our year-end 2024 GAAP financial statements, we reversed the $96 million accrued liability recorded in 2023, resulting in a positive GAAP net income of approximately $52.5 million for 2024. Our adjusted EBITDA gain for the full year was $28 million as compared to adjusted EBITDA loss of $38 million in 2023. Adjusted EBITDA margin improved from a loss of 14% in 2023 to a gain of 8% in 2024. The improvement in adjusted EBITDA was driven by revenue growth and operational leverage, which contributed to better gross margins and non-GAAP operating expenses as a percent of revenue. Turning to our cash balance. We ended the year in a strong position with cash, cash equivalents and marketable securities of $261 million and no debt, an increase of approximately $26 million year-over-year. The increase in our cash balance was driven by strong cash flow from operating activities. Given the strong cash position and our confidence in the business, our Board authorized another share buyback program in February 2025 of up to $50 million over 2 years. As a reminder, we repurchased approximately $29 million worth of shares in a previously approved share buyback program that expired in December 2024 at an average price of $19.4 [ph] over a 2-year period. Turning to guidance. We expect our revenue to be in the range of $365 million to $375 million in 2025. The midpoint of our '25 guidance assumes approximately 17% growth from our adjusted '24 revenue of $316 million. Our adjusted 2024 revenue excludes the $17 million in revenue associated with tests performed in prior periods. Let me now provide more details on our '25 guidance. For testing services, we anticipate our test volumes to grow mid-teens year-over-year. We estimate our ASP to be approximately $1,360 a test on a blended basis for the full year. We do expect to see some seasonality in our testing volumes. Additionally, in the first quarter so far, we have seen impacts from L.A. fires, snowstorms and having midweek New Year holiday. We expect a modest growth of 2% to 3% in the first quarter, 5% to 6% in second quarter, 2% to 3% in the third quarter and 5% to 6% growth in the fourth quarter of 2025. On ASP, we expect 1335 test for Q1 '25 growing proportionately throughout the year. Also, this does not assume any changes to Medicare coverage. Our Patient and Digital solutions and lab products revenue is expected to grow in the mid-teens year-over-year, approaching approximately $100 million in total. We expect our non-GAAP gross margin to be approximately 70% for the full year 2025. We're expecting our operating expenses to be approximately $235 million, an increase of approximately 11% year-over-year. We expect our adjusted EBITDA gain for the full year 2025 to be between $29 million and $33 million. Q1 is generally our soft quarter due to reset of employee benefits, such as 401(k) matching, payroll taxes, et cetera. Q1 of '25 will also have a full quarter impact of recent hires. We expect a low single-digit adjusted EBITDA in Q1, mid-single digit in Q2, high single digit in Q3 and remaining in Q4 of 2025. With that, I will now turn the call over to John to deliver closing remarks.

Thank you, Abhishek. At CareDx, we are deeply proud of the work we do to support the care of patients on their journey to a curative transplant. Earlier this month, we were honored to have Meryl

Thank you, Mr. Hanna. [Operator Instructions] We go first this afternoon to Matt Sykes of Goldman Sachs.

Hey guys, congrats on the quarter. This is Prashant on for Matt. So you previously talked about multi-solution customer accounts generating more testing services revenue. Can you talk about your efforts in converting your existing accounts with less than 3 solutions to 3 or more solutions versus acquiring new customer accounts?

Yeah. Thanks for the question, Prashant. And yes, absolutely. So as we talked about in our prepared remarks, in our Patient and Digital solutions, we're really focused on our XynQAPI product for quality reporting and dashboarding that enables, in particular, kidney transplant centers to monitor their performance leading into the IOTA program where they now have the new metrics to assess. And then in addition, we shared how we're working on launching a medication therapy management program, which really is geared toward assisting patients that are having those pesky drug-to-drug interactions that cause them to skip taking immune suppression, which can lead to rejection. And so these types of patient and digital solutions, as they become more adopted at transplant centers across the country, we believe they're synergistic and will drive the use of AlloSure, be it in kidney, heart or lung. And as we've talked about since our Investor Day in October, we have put together a commercial team here that is focused on selling our total portfolio of solutions into each account. And so we really think this is going to be a catalyst for continuing to drive growth in 2025.

Got it. That's helpful. And then my follow-up is, can you talk about the impact on ASPs that launching these tests like AlloSure Heart Pediatric and AlloSure Kidney for simultaneous kidney and pancreas transplantation will have? I imagine you may initially have to provide some tests without reimbursement. So how large of a dilutive impact, if at all, will this have on gross margins in 2025?

Yeah. Thanks for the question, Prashant. I think that those 2 indications, in particular, AlloSure Heart Peds and AlloSure Kidney for simultaneous pancreas kidney are relatively smaller indications, but very important and high acuity conditions, right? So a pediatric patient undergoing a heart transplantation, we anticipate that we'll be paid on those claims consistent with how we're paid on other commercial claims for AlloSure Heart and for AlloSure Kidney when a patient undergoes a simultaneous pancreas and kidney transplant. So we're not providing any guidance that, that would have an impact negatively or positively on gross margins for '25.

Thank you.

Thank you. We go next now to Tycho Peterson at Jefferies.

Hey. This is Noah on for Tycho. Congrats on the quarter. I wanted to ask about litigation, particularly with the reversal, what is the path forward from here? If you're no longer on the hook for the $96 million and you have $200 million in cash, how are you kind of thinking about capital allocation from there? I know you have the buyback authorization, but also what kind of options are there in organic and also M&A. Thanks.

Yeah. Thanks, Noah, for the question. The path forward with any IP litigation, we anticipate that it will likely be appealed. However, our assessment is that having those patents invalidated is significant such that we reverse that accrual and believe along with our audit partners that, that was the appropriate thing to do at this time. In terms of your second question around the share buyback and capital allocation, it doesn't change our perspective on this, which I think we've talked about for several quarters. First and foremost, we're going to continue to reinvest in the business where we see opportunities for continued growth. Second, we'll look for strategic opportunities in the marketplace adjacent to transplant and in that transplant plus field that we've described. And then third, if we don't see any opportunities to invest in the business or do strategic transactions, then we'll go to share buybacks, right, and buy back shares as appropriate.

Great. That's helpful. And then for my follow-up here, if I could just ask on new hires. I think you noted that you completed that in 4Q. And so I'm wondering about the ramp to see impact from new hires, particularly how that will play out first half versus second half in 2025.

Absolutely. We typically see the new hire ramp in this space to be roughly 6 months to get them fully ramped up and effective in the field. As Abhishek commented in our prepared remarks, we've seen a little bit of disruption here in Q1 from weather and fires and events like that. But that also has given us time to really focus on training, call planning, field strategy and the teams out there hitting the pavement, and we expect to have a stronger quarter in Q2.

Thank you. We'll go next now to Mark Massaro at BTIG.

Hey, guys. Thank you for taking the questions. Congrats on a good quarter. I wanted to hit the topic of prior period collections. Maybe Abhishek, can you clarify how much might have hit in Q4? And then I think I heard you say the number for full year '24, but can you just repeat that? And then as we think about 2025, is there any contribution for prior period collections in the guidance?

Thanks for the question, Mark. So on your first question, the Q4 revenue includes about $2.2 million in revenue, which is associated with the test that were outside of Q4. And what I've also called out that throughout the 2024, we recognized about $17 million in revenue. That was the test those were the tests that we had done prior to 2024. So that's the second part of the question. And the third and the last piece, Mark, in 2025 guidance, we are not baking in contribution from these one-timer tests, and that stays one of the upsides.

Okay. That's very helpful. And then I think I heard you guys talk about mid-teens volume for 2025 and ASPs of 1360. I'd be curious to try to understand how much of that mid-teens volume is baking in increased surveillance testing? And then maybe more broadly, what are you seeing now that we're into the month of February. What are you seeing in the marketplace for surveillance testing here in Q1?

Yeah. Thanks for the question, Mark. Thanks for joining the call today. Yes, we do believe that surveillance testing is going to contribute substantially to that mid-teens volume growth. In Q4, kidney testing outpaced all other organs, and we continue to have institutions that are turning on surveillance protocols through the quarter. And those institutions move at their own pace, right? So as I've said previously, it's going to take us probably 2 to 3 quarters to turn those protocols back on. And then it's going to take time for new patients to get started on protocol and that volume to build through the course of the 12 months following the initiation of that protocol. So we're on that journey. We feel really good about it. And going forward, that is a primary focus, right, of our team in having those discussions and engagements and working through the workflow to get those protocols turned back on.

Okay. Great. And then one last quick one. It looks like you just provided a $5 million buffer on the guidance. I think you preannounced a rev guide of $370 million, and now it's $365 million to $375 million. Maybe just the rationale for that. Maybe it's due to weather or other variability. But can you also just explain what you think some of the levers are to the upper end and the lower end of the guide?

Yes. So at the midpoint of our guide, the $370 million what we have basically called out, of course, the mid-teens, the 17% growth from the adjusted 2024 revenue. And if I were to kind of bridge the low end and the high end of the guide, that's about $5 million difference. And I'm kind of assuming plus/minus 1% on the volume, plus/minus 0.5 percentage point on the ASP, and there is a small portion in the nontesting services. That basically makes up the $5 million.

All right. Thanks for taking the questions.

Yeah. No, it's a great question. And I think on the upside, it's really about the speed at which surveillance in kidney comes back on and how effective we are with the new billing organization that we've built with a focus on operational excellence to go out and collect cash. As you know, our reimbursement rate at 1360 that we suggested for the year is less than half of our Medicare reimbursement rate. And so we think there's a lot of opportunity there, but it's very difficult to forecast ASP, but it's something we're really focused on here in the organization.

Great. Thanks, guys.

Thank you. We go next now to Bill Bonello at Craig-Hallum.

Hey, guys. Thanks a lot. A couple of questions. First of all, just following up on the ASP front, that assumes it's pretty flat, which I get makes total sense in terms of a guide. But what kinds of things you talked about adding and sort of reorganizing the billing team. And you obviously made really good strides last year. So can you just kind of lay out for us a little bit what some of the opportunities or the most important opportunities you have to improve revenue capture?

Yeah, absolutely. Thanks for the question, Bill, and thanks for joining today. We brought in a new leader for the team to kind of up-level the skill set across the organization. And it's really about understanding what are the dials and knobs that can drive cash collection and billing. What are the right appeal letters to get claims denials overturned? What are the steps in the process? Are we appealing the claims in a timely manner so that we don't miss the timely filing deadline. There's a lot of what I would call like industrial engineering operations work that goes into the billing workflow and processes in these organizations, and we needed to revamp ours and really get tight on what we're doing so that we can collect cash. And we think it's going to have an impact. We feel really good about the leadership team we've put in place and the talent we've been hiring. And now we're kind of turning towards, okay, we got to improve our systems and business processes in order to be able to collect that money. Do you have the appropriate teams in place that the individuals know which claims to work on and which ones are going to hit timely filing. So a lot of that detailed blocking and tackling is what we're working on right now.

That's really helpful. And just as a follow-up on that, from the systems standpoint, I mean, I don't know what you guys use as a billing and collection system. But is it - are the systems you have sort of capable of implementing those sorts of tools? Or is part of what you're going to be doing sort of upgrading the systems themselves?

Yeah. The system is capable of it. We just upgraded our license and the modules we were using and then you can customize workflows in the system. So a lot of what we were doing was very basic out of the box previously and the team was under-resourced, and they were just collecting what they could. And so we came in and said, hey, the return here way outsizes the spend. Let's build up the team, let's upgrade the system, let's ensure we have the right talent that can build out the workflows and go execute and collect what's left there on the table. And of course, we're - as I've said repeatedly, it's hard to forecast ASP appreciation because you're kind of like looking in the rearview mirror stuff. But we've done this before. This team has done this before, and we feel really good about what we're putting in place to be best-in-class. And so we think we have upside opportunity there if we execute appropriately.

Excellent. That's really helpful. And then just completely switching gears. On KOAR, can you just remind us -- I know you can't speak to the results, obviously, but can you just kind of remind us of the study objectives and maybe the endpoints that you were looking for or evaluating? I guess what I'm trying to get at is just remind us why this is such an important study.

Yeah, it's an important study because, as you know, Bill, with all of these products, the more evidence you build, the weight of the evidence becomes important. The size of the study, the number of patients enrolled, is it prospective, retrospective? Is there a control group? All these things are evaluated by payers. And typically, when we launch these products, you see single center studies, no control groups, retrospective. And now we've got several multicenter studies, no control groups, relatively retrospective by and large. And so KOAR is a prospective multicenter study of nearly 4,000 patients with a control group evaluating the efficacy of AlloSure Kidney to detect rejection ahead of other standard of care tools like serum creatinine, proteinuria, ultrasound, clinical signs and symptoms. And really solidify that the use of the product is the best way to guide physician management of these patients, be it observation or biopsy, which has a much higher yield of rejection when you're managing the patient with AlloSure than without.

That's helpful. And if I could just ask one follow-up, and I promise I'll get back in the queue, but to that. Just as we think about the whole reimbursement situation and one of the issues being at least a perception maybe that initially, these tests were introduced to be done instead of biopsy, although I think we know in kidney, that doesn't make a ton of sense. But this study, I mean, this is not set up. I mean the comparison point is other clinical laboratory tests. It's not that the comparison point isn't biopsy. Is that accurate? Or is that not the case?

Yeah. I mean I think the intended use of AlloSure Kidney is to identify rejection in order to clinically manage patients. And so the goal of the study is not to avoid biopsies. The goal is to manage patients effectively such that when a biopsy is performed, the yield of rejection is much higher than in a patient who undergoes a biopsy that's not guided by AlloSure.

Perfect. Okay. Thank you very much.

Thank you.

We'll go next now to Andrew Cooper at Raymond James.

Hey, everybody. Thanks for the question. Maybe just first starting a little bit on the P&L. Abhishek, I think you called out legal spend down really kind of helping the EBITDA. You don't back that out. Looking at the run rate here in 4Q as a starting point, even if we adjust for some of the new hires and comp increases you get at the start of the year, why isn't that the right starting point? Why couldn't we see something higher than that kind of $29-plus million guidance framework that you're laying out right now?

Yeah. No, that's a great question, Andrew. And there are two pieces to this. Number one, on the adjusted EBITDA, the way I start to look at that we did $28 million in adjusted EBITDA in 2024. So I backed out the $70 million in revenue that basically we called out the revenue pertaining to the period prior to 2024. So you adjust for that, you arrive at about $10 million in adjusted EBITDA and the midpoint of our adjusted EBITDA guidance for 2025, that's $31 million. So that $21 million drop on a $56 million increase in the revenue on a comparable basis, that's about like 37%, 38% of incremental margin drop to the bottom line. And given the fact that we are making the investments to scale our operations, I believe that, that's a pretty good number to kind of drive the adjusted EBITDA profitability, specifically to achieve our goal of $100 million in 2027. And on your legal question part, the legal spend is already down in 2024. So that's not going to be impacting your 2025 because you've already kind of seen the impact of that lower expense in 2024 itself, if that makes sense? Or maybe I'm missing anything otherwise.

No, that's helpful. And then I know somebody already asked on surveillance trends. So I don't want to get into kind of the nitty-gritty of where exactly are we right now. But when we think at a higher level and you think about some of the things you talk about in IOTA and updates to the procurement and utilization of organs and things like that. These should all kind of be pointing people towards some of the reasons that AlloSure and/or AlloMap are used. So when you think about the guide, when you think about the long term, how much of a lift can programs like that, can that focus really drive to drive that penetration from kind of where it is in new patients today to something substantially higher. And I guess knowing that IOTA is, like you said, John, on a 1-year sort of basis, why can't that happen a little bit faster?

Yeah. I mean we're pushing, Andrew. I don't disagree with you. And I think any conversations that I've had with the administration about this or our team has had with the administration is that, yes, they understand that these testing are important to monitor for patients, especially when you're asking centers to use more organs that are being allocated to them that they previously would turn down and that those patients are going to be at increased risk of rejection when those organs are utilized. And so we think there's a huge role for our services, particularly in the context of the IOTA program. And we're having active conversations across the country with transplant centers that are going to be a part of that program around everything from our digital tools, our HLA matching, our new score - I'm sorry, our new HLA matching software to ensure that they have all the tools they need to manage those patients effectively and maintain high-quality patient health outcomes post transplantation.

Okay. Helpful. And then maybe just one last one. I know Bill asked a little bit on ASP, but I just want to kind of dig a little deeper on how you think about the ROI of, for example, the incremental heads. And I ask that with kind of in the back of my mind, if we back out the $2.2 million in 4Q, you're at about a little north of 1350 from an ASP perspective. You should get some momentum with those incremental heads, hopefully. So when you think about that ROI, I mean, is this just an abundance of caution in the guidance? Or is there some other sort of offset here to where from a mix perspective or something like that, we should think about that couple of dollars of lift as being a success?

Yeah, Andrew. So you're spot on there that if you were to back out the $2.2 million from the Q4 revenues, then the ASP would be roughly 1350-ish, and we are looking at 1360 for the full year. So we're baking in what we have initially told that we are anticipating our ASPs to be growing in the low single digit. And of course, as John kind of called out that as we are building this team, as we bring in the new leader as well as we look for the system improvements on our RCM side, that basically stays an opportunity for us to kind of grow. So we'll see as to how this pans out, but these are the numbers for now.

Okay, great. I'll stop there. Thank you.

Thank you. We go next now to Mason Carrico at Stephens.

Hi, guys. Sorry if I missed this, but could you update us on the number of protocols you have in place today? Any wins worth calling out year-to-date?

We didn't provide a protocol number, Mason. I think that's something that the organization did previously and then discontinued. And in Q3, we gave the number that we saw in that initial period post the reduction of the restrictive language in the LCD just to provide investors with some insight that this was starting to move in earnest.

Okay. Well, maybe if you could at least give us a little bit of insight into what you're seeing so far. I know you guys have talked about it taking a few quarters for these protocols to start pulling through surveillance volumes, but you also called out kidney outpacing other organs in the quarter. So could you just give us a sense of how much of your surveillance volume that you're seeing today is coming from centers with protocols versus the broader market, just starting to utilize them in that way? Are you seeing an increase in patient testing frequency at those centers, particularly the centers that were early to adopt a protocol versus your broader patient base?

Yeah. That's a great question, Mason. I'm happy to break that down. I think, yes, we are seeing movement, and it's very consistent with what I've previously described, which is that when a center does initiate a protocol, they're going to initiate that protocol in newly transplanted patients. And thus, we're seeing a ramp-up in volume at those centers, consistent with the volume of transplants that they're performing on a monthly basis and then those patients transitioning from being incident transplant patients to prevalent patients on an ARTS protocol of 744. In addition to that, we are and I appreciate your question here because I think it's sometimes missed and not understood well that the lack of a protocol does not mean that a center or a clinician does not use donor-derived cell-free DNA testing for surveillance purposes. So of our surveillance testing volume, some of it comes from centers with protocols and some of it comes from centers that don't have protocols, but individual clinicians that believe in the test and the impact that it has on patient outcomes because they've had that case where they've detected subclinical rejection using AlloSure, performed a biopsy, found that rejection and treated that patient effectively and we're able to save that graft. So there are believers like that all over the country that are managing patients with kidney transplants today, and we continue to work with those clinicians to make sure that their patients have high-quality outcomes.

Got it. Thanks, guys.

Thank you. We go next now to Eduardo Martinez at H.C. Wainwright.

Good afternoon. This is Eduardo on for Yi Chen. A quick question. I guess you've talked about it already about the pharmacy management for the patients suffering from these drug-drug interactions with these immunosuppressants and trying to improve their adherence to some of these drugs. Do you have any more details about what strategies you're planning on implementing? Is it going to be like text reminders or whatever it may be? Just hoping to get some more color on the strategy there.

Yeah. Thank you for the question, Eduardo, and for joining the call. Yes, we have digital tools where we do text-based medication reminders. We have a medication program that is used by many transplant centers where at the point of discharge, the clinician is able to download effectively like a PDF document that's specific to that patient, what their immunosuppression regimen is along with all the other medications they take, and it summarizes the drug-to-drug interaction so that the clinician can walk the patient through prior to discharge that information and then they're followed with a phone app, a consumer app that the patient utilizes that has reminders on using the medication. So that's our digital solution. In addition to that, we have a specialty pharmacy that we operate as a business that delivers specialty therapeutics to patients that have undergone a transplant and the pharmacists at that specialty pharmacy, we're launching a more high-touch MTM program where the pharmacists interact directly with the patients and have that consultative discussion in a setting where perhaps the transplant center, the hospital or health system they're in, their pharmacists aren't really transplant specialists, right? And they're not trained to deal with those patients in a specific way. And so that clinician can refer - he or she can refer their patients to the CareDx transplant pharmacy to be managed in a more high-touch way. And we see that today, particularly in higher-risk patients, right, that perhaps don't have a good match or it was a compromised organ or maybe the patient has a concomitant health condition that complicates that medication drug-to-drug interaction issue.

Great. That's really helpful. And then pivoting more towards - you mentioned the 1-year interim readout for the hematopoietic stem cell transplantation study. I'm curious what the time line is on that study and kind of launch and what kind of vision you guys have for that product?

Yeah, absolutely. So it's a 2-year study, 2-year follow-up study. And in February, at the Tandem cell therapy meeting, there was a 1-year interim readout of data. And so there's another year of follow-up required in that study, but it is nearly fully enrolled. And so we anticipate talking about the launch of that product in upcoming calls as we get closer to the conclusion of that trial, the write-up of that data and its submission for Medicare coverage.

Great. Great. And I guess one final curiosity is as you guys are now thinking about capital allocation, and you mentioned about strategic partnerships, M&A opportunities, you have any thoughts on xenotransplantation? Any interest in partnerships in that area?

CareDx has a number of partnerships in xenotransplantation. We have a product specifically for the monitoring of xeno grafts that has been utilized in nearly all of the xenotransplants that have occurred to date. So we have partnerships with each of the companies developing those modified organs and the transplant centers that are performing those procedures.

Okay. That's great. That's really helpful. That's all the questions for me. Thank you.

Great. Thank you.

We go next now to Thomas DeBourcy at Nephron Research.

Hi, guys. Can you hear me all right?

We can hear you Thomas.

Okay. Great. My question relates to, I guess, your kidney data for this year in KOAR. And I was curious, I guess, in terms of what that incremental data adds to, I guess, your existing evidence base. I think it has real-world outcomes in it. And so is there a potential, I guess, to drive greater protocol compliance and/or drive, I guess, additional payer wins as well? Thanks.

Absolutely. Thanks for the question. I think the answer is yes to both. There are many clinicians that are nonbelievers in donor-derived cell-free DNA testing and are waiting for more data to be published on these products before they adopt them. So like with any medical technology, there's an adoption curve that's a long cycle. And so continuing to publish well-designed large multicenter prospective trials is important both for clinician adoption and of course, for payer coverage, as I highlighted earlier. So we anticipate, as I described, the initial KOAR manuscript to be published in the second half of 2025. So I think that would really impact payer policies in 2026.

Great. Thank you. Appreciate it.