CareDx, Inc. Q3 FY2026 earnings call

• Pipeline Advancement: Alloheme (cell therapy recurrence monitoring) remains on track for CLIA readiness by year-end with a planned commercial launch in Q1 2027. The ACROBAT trial manuscript has been submitted for peer review.
• Histomap Kidney: A second independent validation study published in Transplantation demonstrated robust concordance with rejection categories and identified distinct risk subgroups in microvascular inflammation (MVI), showing a >3-fold difference in graft loss risk. CLIA readiness activities are ongoing for broader availability in 2027.
• Specialty Oncology Integration: Following the July 1, 2026 acquisition of NavDx, CareDx is expanding its field team to drive adoption, integrating ordering into Epic Aura by January 1, 2027, and moving 100% of revenue cycle management (RCM) in-house on October 1, 2026.
• Evidence Generation: In oncology, Phase II studies presented at ASTRO show NavDx can guide radiation de-escalation in HPV-driven head and neck cancer, with early data indicating high control rates and reduced treatment burden. In transplantation, CAOR Registry data shows AlloSure results predict graft loss risk in borderline biopsy cases, and a multinational trial showed molecular monitoring reduced invasive biopsies by 49% without compromising outcomes.
• Go-to-Market Execution: Transplant testing volume grew 21% in the quarter. The company launched a patient portal with over 5,000 registrations and aims to have half of all transplant orders flow through EMR integrations by year-end. Lung transplant testing is growing rapidly due to high surveillance needs and the integration of remote monitoring tools like Allosphere.

Testing Services: Revenue was $119 million, representing an increase of 65% year-over-year and 19% sequentially. This segment now accounts for 86% of total revenue (up from 72% in the prior year quarter). Excluding out-of-period revenue, testing services revenue increased 58% year-over-year. Within this segment, transplant revenue grew 39% year-over-year, while specialty oncology revenue contributed $12.5 million (growing 37% year-over-year on a comparable basis). Patient and Digital Business: Revenue grew 31% year-over-year and 5% sequentially. Lab Products: This business was sold on June 30, 2026, so no current period revenue is reported; historical results are included for illustrative comparison.

• Full Year 2026 Revenue Guidance: Increased by $30 million to a range of $520-$530 million (midpoint $525 million), representing approximately 38% year-over-year growth.
• Full Year 2026 Adjusted EBITDA Guidance: Increased by $23 million to a range of $90-$100 million (midpoint $95 million), or approximately 18% of revenue.
• Q4 2026 Implied Model: Total revenue expected to be $131-$141 million (midpoint $136 million), including ~$8 million in out-of-period revenue. Testing services revenue is modeled at $112-$122 million. Test volumes are projected at 76,000-80,000 (midpoint 78,000), comprising 61,000-63,000 transplant tests and 15,000-17,000 specialty oncology tests.
• Long-Term Growth Rates: Management reaffirmed expectations for solid organ transplant business to grow ~15% year-over-year and NavDx to grow 30-40% annually through 2027.

• Forward-Looking Statements: Results may differ materially from anticipated outcomes due to uncertainties in evidence generation, regulatory approvals (CLIA/CMS), and market adoption.
• Revenue Cycle Management: Payers may resist payment, requiring continuous effort to secure rightful reimbursement; out-of-period revenue collections are subject to variability.
• Clinical Adoption Risks: New products (Alloheme, Histomap) depend on successful clinical validation and payer coverage decisions; failure to demonstrate clinical utility could impact launch success.
• Operational Integration: Integrating NavDx operations and culture post-acquisition presents execution risks, though RCM workflows have already been centralized.

Q: Analyst Kyle Mixon asked about the impact of the August LCD decision on physician behavior, testing frequency, and volume visibility for 2027. / A: CEO John Hanna stated that the LCD removal eliminated an overhang, allowing the company to refocus on clinical differentiation and workflow optimization rather than policy concerns. He confirmed that utilization has continued to grow quarter-over-quarter without disruption, validating their view that the policy did not fundamentally alter field dynamics.

Q: Analyst Mark Massaro inquired why lung transplantation is performing exceptionally well compared to kidney and heart segments, and asked about penetration rates. / A: John Hanna explained that lung transplants are less efficacious with a 5-year average survival, leading to intense surveillance for both rejection and environmental allergens. This results in higher test-per-patient ratios in year one. Combined with digital solutions like remote spirometry, lung testing has a low base and significant runway, leading to faster growth than other organs.

Q: Analyst Tycho Peterson’s representative asked about the drivers behind the step-up in EBITDA margins and operating expense leverage. / A: CFO Keith Kennedy attributed margin improvement to disciplined expense control, the completion of transaction-related costs which are declining rapidly, and strong revenue cycle management performance. He noted that the company achieved positive net income in recent quarters and generates significant cash flow, reflecting stewardship of capital.

Q: Analyst Bill Bonello asked if the focus is shifting from target protocol adherence to expanding for-cause use cases across the care continuum. / A: John Hanna confirmed that while surveillance grows, there is a large opportunity in for-cause settings, such as assessing therapeutic efficacy, transitioning immunosuppression, and managing delayed graft function. He emphasized that not all patients require surveillance, but expanding these additional contexts of use provides substantial growth potential beyond standard protocols.

Q: Analyst Mason Carrico asked if CareDx would gate Alloheme volumes ahead of Medicare coverage and whether it would be orderable via Epic Aura at launch. / A: John Hanna stated they do not plan to gate volume, aiming instead for rapid adoption among top-tier KOL centers. He highlighted that Alloheme will launch native on Epic Aura, meaning 100% of ordering will occur through EMR integration on day one, facilitating immediate workflow adoption without manual ordering barriers.