CareDx Q3 2025 Earnings Call: Contradictions Emerge on Transplant Volumes, IOTA Program Impact, and SHORE Study Influence on HeartCare Adoption

Date of Call: November 4, 2025

Financials Results

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

Guidance:

• Full-year 2025 revenue raised to $372M–$376M.
• Full-year adjusted EBITDA raised to $35M–$39M.
• Full-year non‑GAAP gross margin expected to be ~70%.
• Q4 2025 revenue expected $101M–$105M; implied testing volume 52k–54k.
• Q4 revenue per test guided to $1,400–$1,420 (includes $4M–$6M collections in excess of receivables).
• Q4 adjusted EBITDA expected $10M–$14M; Patient & Digital $15M–$16M; Lab products $12M–$12.5M.

Business Commentary:

* Revenue and Earnings Growth: - CareDx reported total revenue of $100.1 million for Q3 2025, growing 21% year-over-year and 190 basis points increase in non-GAAP gross profit margin to 70.9%. - The growth was driven by record volume in Testing Services and strong performance in Patient and Digital Solutions and lab products.

• Testing Services and Market Penetration:
• Testing Services revenue was $72.2 million, increasing 19% year-over-year, with approximately 50,300 tests delivered, up 13% year-over-year.

• The increase is attributed to growing demand across all three major organs and successful implementation of solution selling strategies.

• Revenue Cycle Management (RCM) and ASP Improvement:

• CareDx achieved significant improvements in RCM KPIs, with over 200% improvement in appeals volume and a 600 basis point reduction in claims rejection rate.

• These improvements resulted in cash collections of 124% of testing services revenue, contributing to an increase in average revenue per test by 5%.

• Operational Efficiency and Infrastructure Enhancements:

• The company continued to advance operational efficiency by launching its EPIC instance, which streamlined ordering processes and reduced order turnaround time by 20%.
• This integration is expected to cover 50% of total volume by year-end 2026, enhancing customer experience and operational efficiency.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted record volume and revenue in testing services, testing revenue of $72.2M (+19% YOY), adjusted EBITDA $15.3M (more than double prior year) and raised full‑year revenue and adjusted EBITDA guidance, signaling confident outlook and operational momentum.

Q&A:

• Question from Margarate Boeye (William Blair & Company L.L.C., Research Division): How durable are the RCM-driven ASP lifts and what runway remains for further ASP improvement?
  Response: RCM wins are durable: base revenue per test rose ~5% over the last six months driven by stronger cash collections, and management expects momentum to continue into Q4 and 2026.

• Question from Margarate Boeye (William Blair & Company L.L.C., Research Division): Can you discuss the EPIC Aura rollout and expected volume uplift?
  Response: About 150 active discussions; expect ~40 centers live in 2026; pilot showed 20% faster order turnaround and 60% fewer specimen holds and management expects a typical ~10% volume uplift when centers go live.

• Question from Vidyun Bais (BTIG, LLC, Research Division): Were there any prior‑period collections in the quarter?
  Response: Yes — approximately $5.9M of cash collections exceeded historical claims recognized in Q3.

• Question from Vidyun Bais (BTIG, LLC, Research Division): Should $1,400 be considered the new ASP floor and how to model remaining upside?
  Response: Use the Q4 ASP guidance of $1,400–$1,420 (management uses revenue per test = total revenue / reported tests) as the modeling metric.

• Question from William Bonello (Craig-Hallum Capital Group LLC, Research Division): Will you continue to call out prior‑period collections and are these consistent with past disclosures?
  Response: Yes — management will continue to disclose prior‑period collections (Q3 included $5.9M) and views these collections as indicative of future period ASP and revenue predictability.

• Question from William Bonello (Craig-Hallum Capital Group LLC, Research Division): Thoughts on macro transplant volume trends and implications for growth?
  Response: Macro transplant volumes are broadly flat; CareDx expects to outpace market penetration and notes kidney acceleration has been delayed (media/IOTA-related) but expects growth over the next 2–3 years.

• Question from Tycho Peterson (Jefferies LLC, Research Division): For Q4 guidance, how much is driven by price/collections vs. volume and any preliminary 2026 comments?
  Response: Q4 guidance reflects both higher volume (52k–54k tests) and higher ASP ($1,400–$1,420 inclusive of $4M–$6M collections); management deferred 2026 commentary pending LCD clarity.

• Question from Tycho Peterson (Jefferies LLC, Research Division): Any modality differences in net price collections (Kidney vs HeartCare vs Lung)?
  Response: HeartCare is mature with higher reimbursement; kidney is fastest‑growing but lower reimbursed; mix differences affect total price modestly (~1–3 percentage points).

• Question from Tycho Peterson (Jefferies LLC, Research Division): When will IOTA become a meaningful tailwind?
  Response: IOTA benefits were expected earlier but were delayed by media‑driven conservatism; management expects pickup beginning in Q4 and more materially into 2026.

• Question from Tycho Peterson (Jefferies LLC, Research Division): If the LCD is finalized, is the $15M surveillance headwind Medicare‑only and will centers change ordering behavior?
  Response: The modeled $15M is a reimbursement headwind (Medicare); management does not expect clinicians to change ordering behavior and did not model utilization declines.

• Question from Harrison Parsons (Stephens Inc., Research Division): Delta in testing frequency at centers with formal surveillance protocols vs. those without?
  Response: Reinitiated protocol promotion (since Aug '24) has driven kidney surveillance growth (~20% YoY); usage is heterogeneous across clinicians but formal protocol adoption is increasing.

• Question from Harrison Parsons (Stephens Inc., Research Division): Any early signs from IOTA such as more compromised organs or shifts to blood‑based monitoring?
  Response: There was earlier adoption of blood‑based monitoring, but no Q3 transplant volume increase attributable to IOTA yet; management expects the program to drive growth over time.

• Question from Brandon Couillard (Wells Fargo Securities, LLC, Research Division): Clarification on prior‑period impact — are Q3 ~$6M and Q4 $4–6M incremental versus prior guide?
  Response: Prior‑period collections are included in the updated guidance; the guide was raised to reflect realization of those collections.

• Question from Brandon Couillard (Wells Fargo Securities, LLC, Research Division): Is softer sequential volume due to market weakness or competition?
  Response: Management attributes the softness to seasonality, not competition; they report account wins and continued kidney business growth (~20% YoY).

• Question from Brandon Couillard (Wells Fargo Securities, LLC, Research Division): Will HistoMap Kidney be a revenue driver and what is the reimbursement path?
  Response: HistoMap is expected to generate incremental but modest revenue (niche companion test used post‑AlloSure biopsy); management sees an LCD pathway (e.g., inconclusive biopsy language) and will provide 2026 revenue detail on the Q4 call.

• Question from Katie (H.C. Wainwright): How has the SHORE study affected test adoption and is the impact lasting?
  Response: SHORE materially boosted HeartCare adoption since initial presentations in 2024; multiple analyses/publications have driven sustained demand and further papers are pending.

Contradiction Point 1

Transplant Volumes and Growth Expectations

It pertains to the company's expectations for transplant volumes and growth, which are crucial for revenue projections and investor confidence.

Can you discuss macro trends in transplant volumes? - [William Bonello](Craig-Hallum)

2025Q3: Transplant volumes have been relatively flat, but we expect growth driven by the IOTA program in the coming years. - [John Hanna](CEO)

What are the potential headwinds from the draft LCD and what topics will you propose in public forums? - [Tycho W. Peterson](Jefferies LLC, Research Division)

2025Q2: We continue to believe the underlying fundamentals of the kidney transplant market, which represents more than 80% of the volume, are strong and we see long-term growth opportunities. - [John Hanna](CEO)

Contradiction Point 2

Impact of IOTA Program on Transplant Volumes

It involves the company's expectations for the impact of the IOTA program on transplant volumes, which is critical for revenue forecasting and strategic planning.

How does the IOTA program impact transplant volumes? - [Tycho Peterson](Jefferies)

2025Q3: The IOTA program was expected to start showing impact in Q3, but media attention slowed kidney transplant growth. - [John Hanna](CEO)

What headwinds does the draft LCD pose and what topics will you address in public forums? - [Tycho W. Peterson](Jefferies LLC, Research Division)

2025Q2: We expect that we'll see some acceleration in kidney transplant volume, driven by the IOTA program in the coming years. - [John Hanna](CEO)

Contradiction Point 3

Impact of The SHORE Study on HeartCare Adoption

It highlights discrepancies in the perceived impact of the SHORE study on HeartCare adoption and volume growth, which are critical for product validation and market penetration.

What impact has the SHORE study had on test adoption and volume growth? - [Unknown Analyst](H.C. Wainwright)

2025Q3: The SHORE study has significantly impacted the adoption of HeartCare, especially after its initial presentation in April 2024. Multiple analyses from SHORE data continue to drive product adoption and validation. - [John Hanna](CEO)

What's the feedback on the IOTA program and its software solution? - [Thomas DeBourcy](Nephron Research)

2025Q1: In late 2024, we saw a pullback in HeartCare ordering following the initial SHORE data presentation in November of 2024. We believe this pullback was a response to the SHORE study, which increased concerns about convalescent organ use. - [John Hanna](CEO)

Contradiction Point 4

ASP Trends and Revenue Predictability

It involves the durability of average selling price (ASP) trends and the predictability of revenue, which are crucial for financial forecasting and investor confidence.

How durable are ASP impacts moving forward? What is the potential for further ASP growth from revenue cycle management initiatives? - [Margaret Boeye](William Blair)

2025Q3: I'm confident in the durability of ASPs due to strong cash collections in the last six months. The recent increase in base revenue per test by 5% supports this. - [John Hanna](CEO)

Was there a gradual increase in surveillance volumes? Are you seeing signs of volume returning during the quarter? - [Will](Goldman Sachs)

2025Q1: We had a 6% increase in ASPs in 2024, and we expect to grow ASPs in 2025, driven by revenue cycle management initiatives and continued expansion into new indications and new procedures. - [John Hanna](CEO)

Contradiction Point 5

Impact of Draft LCD on HeartCare Testing

It focuses on the impact of the draft LCD on HeartCare testing, which could affect revenue and product adoption strategies.

How has the SHORE study affected test adoption and volume growth? - [Unknown Analyst](H.C. Wainwright)

2025Q3: The SHORE study has significantly impacted the adoption of HeartCare, especially after its initial presentation in April 2024. Multiple analyses from SHORE data continue to drive product adoption and validation. - [John Hanna](CEO)

What are the potential challenges from the draft LCD and what topics do you plan to address in the public forum? - [Tycho W. Peterson](Jefferies LLC, Research Division)

2025Q2: We plan to publish our comment letter on our website after the comment period ends. - [John Hanna](CEO)