CareDx Q3 2025 Earnings Call: Contradictions in Revenue Per Test Predictability, EPIC Timelines, HeartCare Impact, and IOTA Program Projections

Date of Call: November 4, 2025

Financials Results

• Revenue: $100.1M, up 21% YOY
• Gross Margin: 70.9%, up 190 basis points YOY

Guidance:

• Full-year 2025 revenue raised to $372–$376M and Adjusted EBITDA to $35–$39M.
• Q4 2025 revenue expected $101–$105M with testing volume 52,000–54,000 tests (midpoint ~53,000).
• Q4 revenue per test $1,400–$1,420, inclusive of $4–$6M of collections in excess of receivables.
• FY and Q4 non-GAAP gross margin ~70%.
• Q4 Adjusted EBITDA $10–$14M; patient & digital revenue $15–$16M; lab products $12–$12.5M.
• 2026 commentary deferred until LCD finalization.

Business Commentary:

* Revenue and Operational Growth: - CareDx reported record total revenue of $100.1 million for Q3 2025, representing a 21% year-over-year increase. - The growth was driven by strong performance in testing services, patient and digital solutions, and lab products, as well as operational improvements, including advances in revenue cycle management.

• Testing Services Expansion:
• Testing services revenue grew to $72.2 million in Q3 2025, marking a 19% increase year-over-year.

• The growth was due to an increase in test volume across heart, kidney, and lung organs, attributed to the company's strategy of solution selling and enhanced relationships with clinicians.

• Revenue Cycle Management Success:

• Significant improvements were noted in key RCM KPIs, with cash collections reaching 124% of testing services revenue in Q3.

• These enhancements were achieved through automation of key RCM processes and improved claim submission and appeals management.

• Product Innovations and Market Leadership:

• CareDx launched HistoMap Kidney, a breakthrough tissue-based molecular test, and showcased several abstracts at the ASN Kidney Week.
• These innovations, along with advancements like the SHORE study, reinforced CareDx's leadership in comprehensive transplant solutions and contributed to market growth and adoption.

Sentiment Analysis:

Overall Tone: Positive

• Management called Q3 a "strong third quarter," reported record testing volume and revenue, total revenue $100.1M (+21% YOY), adjusted EBITDA $15.3M (more than double prior year), and raised full-year revenue and EBITDA guidance, citing durable RCM-driven collections and operational wins.

Q&A:

• Question from Andrew Brackman (William Blair): How should we think about the durability of RCM impacts on ASPs and the runway for further ASP lift from RCM initiatives?
  Response: RCM drove a ~5% increase in base revenue per test in Q3 via record cash collections on historical claims; management expects this ASP improvement and greater predictability to continue into Q4 and into 2026.

• Question from Andrew Brackman (William Blair): How should we think about the rollout of Epic Aura integrations for 2025 and 2026?
  Response: About 150 active discussions; expect ~40 centers to go live in 2026; typical uplift ~10% when live; Boston Children’s pilot showed operational benefits (20% faster order turnaround, 60% fewer specimen holds) but not enough implementations yet for broad real-world uplift proof.

• Question from Mark Massaro (BTIG): Were there any prior period collections in the quarter?
  Response: Yes — approximately $5.9M of cash collections exceeded historical claims were recognized in Q3.

• Question from Mark Massaro (BTIG): Should we treat the $1,400 ASP level as a new floor and how should we think about remaining upside?
  Response: Use the guided Q4 ASP of $1,400–$1,420 as the modeling basis; the company prefers the revenue-per-test metric (total revenue divided by total reported tests) to reflect fundamentals and reduce out-of-period volatility.

• Question from William Bonello (Craig-Hallum): Is the $5.9M prior-period collection consistent with past disclosures and will you keep calling it out?
  Response: Yes — they will continue to disclose prior-period collections; Q3 cash collections were 124% of recognized revenue and these collections are viewed as indicative of future period ASP.

• Question from William Bonello (Craig-Hallum): Thoughts on macro transplant volume trends and implications for growth?
  Response: Transplant volumes are broadly flat year-over-year (~±1%); CareDx expects to outpace market penetration as it’s still early innings, and IOTA-driven kidney volume acceleration hasn’t materialized yet but is expected over the next 2–3 years.

• Question from Tycho Peterson (Jefferies): How much of the Q4 guide raise is price vs. collections vs. volume, and any preliminary thoughts on 2026?
  Response: Q4 midpoint assumes ~53k tests (~+17% YoY) and ASP $1,400–$1,420 inclusive of $4–$6M collection benefit; 2026 commentary deferred until LCD clarity.

• Question from Tycho Peterson (Jefferies): If the LCD is finalized, is the $15M surveillance headwind Medicare-only and will clinicians change ordering behavior?
  Response: The modeled $15M is a reimbursement headwind (Medicare-focused); management does not expect to change clinician ordering behavior and continues to promote established surveillance protocols.

• Question from Mason Carico (Stephens): What's the delta in testing frequency at centers with protocols versus without, and are readopting centers trending higher?
  Response: Since reinitiating promotion of kidney surveillance in Aug 2024, protocol readoption has driven kidney surveillance growth (~20% YoY); adoption is growing but heterogeneous across and within centers.

• Question from Brandon Kuyard (Wells Fargo): To confirm, is the ~$6M in Q3 and the $4–$6M in Q4 incremental relative to prior guidance?
  Response: Yes — prior-period collections are included in the updated guidance; the guide was raised to reflect collection of that prior-period revenue.

• Question from Brandon Kuyard (Wells Fargo): Is recent softness in volumes a seasonal issue or competitive?
  Response: Management attributes softer August/September volumes to seasonality (very strong July followed by softer months), not increased competition; they are gaining accounts and returning centers to surveillance.

• Question from Brandon Kuyard (Wells Fargo): Will HistoMap Kidney be a revenue driver and what reimbursement path is needed?
  Response: HistoMap Kidney should generate revenue but will be much smaller than AlloSure since it’s used on biopsy tissue after an elevated AlloSure; company expects a reimbursement pathway (LCD language for inconclusive biopsies) and will pursue coverage.

• Question from Ye Chen (HC Wainwright): Can you quantify the SHORE study's impact on adoption and is that impact lasting?
  Response: SHORE materially accelerated HeartCare adoption beginning in 2024 and has driven strength in heart transplant business; subsequent analyses and publications continue to reinforce its lasting adoption impact.

Contradiction Point 1

Revenue Per Test and Future ASP Predictability

It involves differing statements on the predictability and stability of revenue per test, which is crucial for investor predictions of future revenue and ASP growth.

How long will the ASP increase from revenue cycle management initiatives last, and what is the potential for future ASP growth from additional products? - Maggie Bowie (William Blair)

2025Q3: The recent increase in revenue per test by 5% reflects strong cash collections, which are indicative of future revenue. The RCM function's performance enhances ASP predictability and is expected to continue through 2026. - John Hanna(CEO)

Has there been any change to the LRPs established last year due to the draft LCD? - Mark Anthony Massaro (BTIG)

2025Q2: We're not providing an update to the LRP until we get greater clarity on the final LCD. - John Hanna(CEO)

Contradiction Point 2

EPIC Launch Timeline and Impact

It involves differing statements on the timeline and expected impact of the EPIC launch, which is a significant strategic initiative for the company.

Can you update on the Epic Aura integration rollout and expected trends for 2025 and 2026? - Maggie Bowie (William Blair)

2025Q3: We have 150 active discussions with hospitals and centers, with plans to go live with about 40 centers in 2026. Integrations have reduced order turnaround time by 20% and specimen holds by 60%, enhancing our relationships and expected to drive volume increases. - John Hanna(CEO)

Last quarter, you mentioned completing the rollout by Q2, but now it's shifted to the second half. Can you explain the complexities involved and the risks you're addressing? - Brandon Couillard (Wells Fargo)

2025Q2: EPIC implementation is ahead of schedule. We expect 4 pilot sites to go live in Q3 and to have 10% of the volume by year-end. By the end of next year, we plan to have 50% of the volume using EPIC. - John Hanna(CEO)

Contradiction Point 3

HeartCare Adoption and Revenue Impact

It involves differing statements on the adoption and revenue impact of HeartCare, which is a key product for the company.

Can you quantify the SHORE study's impact on test adoption or volume growth? - Ye Chen (HC Wainwright)

2025Q3: The SHORE data has significantly impacted heart transplant business growth, showing strength in adoption of HeartCare since April 2024. Multiple analyses of the dataset have supported product adoption and are expected to continue impacting growth. - John Hanna(CEO)

Can you clarify the assumptions behind the $30 million headwind in the second scenario, given that AlloMap Heart is a standalone product unrelated to HeartCare? - Mark Anthony Massaro (BTIG)

2025Q2: The attachment rate of HeartCare is upwards of 90%, indicating that if the second scenario were to come to fruition, AlloMap Heart revenue could go away, leading to that $30 million headwind. - John Hanna(CEO)

Contradiction Point 4

Surveillance Testing Growth Expectations

It involves differing expectations for the growth trajectory of surveillance testing volumes, which are critical for revenue projections and market positioning.

What is the difference in patient testing frequency between centers with and without protocols? - Mason Carico (Stephens)

2025Q3: Since August 2024, we've seen growth in surveillance testing, driven by the readoption of surveillance protocols. There is heterogeneity in testing within some centers, with significant growth in AlloSure Kidney usage. - John Hanna(CEO)

Could you elaborate on the impact of surveillance volume growth and our current position in this process? - Will (Goldman Sachs)

2025Q1: We are seeing signs of surveillance volume recovery. Progress was made in the fourth and first quarter. We expect continued growth in testing volumes. - John Hanna(CEO)

Contradiction Point 5

Impact of IOTA Program on Transplant Volumes

It involves differing expectations for the impact of the IOTA program on transplant volumes, which are crucial for market growth and revenue forecasting.

How will the IOTA program affect transplant volumes, and will it become a significant tailwind? - Tycho Peterson (Jefferies)

2025Q3: The IOTA program is a six-year program, and we expect a pickup in volumes beginning this quarter, with more material impact anticipated in 2026. - John Hanna(CEO)

What are the procedure volume expectations, and do they need to increase to reach the high end of the guidance range? - Brandon Couillard (Wells Fargo)

2025Q1: We are on track with our guidance, despite softer transplant procedure volumes. We anticipate an uptick in procedures with the IOTA program's initiation. - John Hanna(CEO)