CareDx, Inc.

Good day, everyone, and welcome to today's Karatex Inc. First Quarter 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 the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call is being recorded, and I will be standing by if you need any assistance. It is now my pleasure to turn today's conference over to Greg Chodachik Please go ahead, sir.

Thanks, Travis, and good afternoon, and thank you for joining us today. Earlier today, CareDX released financial results for the quarter ending March 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, are 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, May 9, 2024. 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 what generally accepted accounting principles. Reconciliation 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, Greg, and to everyone for joining today's call. I want to start by thanking our CareDx employees and the transplant community for their warm welcome. It is an honor to be a part of this organization and its mission to improve transplant patient outcomes by providing innovative testing, digital, and product solutions globally. Before I begin with my prepared remarks on our first quarter 2024 performance, I want to acknowledge an exciting new development that emerged yesterday. The Centers for Medicare and Medicaid Services, announced a new initiative called the Increasing Organ Transplant Access Model. The proposed initiative aims to increase access to kidney transplants for all people living with end-stage renal disease. In the program, participating transplant hospitals would be measured by increases in the number of kidney transplants, increased organ acceptance rates, and post-transplant outcomes. We are pleased to hear about this latest development and the potential it holds for the approximately 90,000 patients on the organ transplant list awaiting a new kidney. The CMS initiative is a proposed six-year mandatory program for approximately 50% of all kidney transplant hospitals in the US, scheduled to begin on January 1st, 2025. For CareDx, we anticipate this initiative to be a tailwind for the adoption of our solutions that improve patient transplant outcomes, a critical component to the program's evaluation. Turning to our results, our first quarter results are better than anticipated, stemming from growth across all businesses and our operational discipline. I will start today's call by sharing highlights from the quarter, including examples of the significant value our solutions create for patients and transplant centers that is driving our growth. Then I will turn the call over to Abishak for a detailed look at our financials and outlook for 2024. CaretX posted strong growth in the first quarter that builds upon the momentum created in the second half of 2023. For the first quarter, we reported revenue of $72 million, up 10% from the prior quarter. In the testing services business, we delivered approximately 42,000 tests, up 6% from the fourth quarter. and representing the third consecutive quarter of growth in testing services volumes. Revenue was 53.8 million, up 8% quarter over quarter, primarily excluding one-time collections from tests performed in prior quarters. Our testing services business is propelled by continued innovation that is highlighted in a growing body of clinical evidence supporting the clinical utility of our solutions, HeartCare, AlloSure Kidney, and AlloSure Lung. At the International Society of Heart and Lung Transplantation Annual Meeting in Prague, our products were featured in over 30 oral presentations, posters, and two symposia. In an oral presentation of late-breaking clinical study data, the first peer-reviewed findings from our Large Multi-Center Surveillance of Heart Care Outcomes Registry, or SURE, were presented during an ISHLT scientific session. The SURE study is the largest prospective observational study of its kind in heart transplantation, with 67 participating centers, over 2,700 patients enrolled, encompassing over 11,000 patient encounters. Independent researchers presented results that demonstrated that surveillance testing with heart care, the combined use of both AlloSURE Heart and AlloMAP Heart outperformed testing with donor-derived cell-free DNA alone in characterizing patients' risk for acute rejection. Notably, dual positive results from heart care in the first six months also predicted poor outcomes at two years compared to patients with donor-derived cell-free DNA positive results alone or dual negative results in the first six months. These findings support the prognostic value of heart care. These data are highlighted in our earnings presentation. We believe the SHORE study findings are significant and have the potential to transform the way providers care for heart transplant patients because of the clinical importance of having both AlloMAP gene expression profiling and AlloSHORE donor-derived cell-free DNA to assess allograft health. We believe that heart care has the potential to become the new standard of care and surveillance biopsies will be performed more sparingly. We anticipate the first of several publications generated from the rich data set created by the SHORE study to be in print this year. Many in the transplant clinical community have already taken note of heart care's impact on outcomes. Stanford University has led the way as one of the earliest adopters of heart care in their journey to discover cases of subclinical rejection noninvasively. Stanford implemented a heart care protocol which allowed the center to shift further away from using surveillance biopsies to routinely incorporating non-invasive heart care testing. They have eliminated greater than 90% of biopsies in patients with dual positive results, and importantly, outcomes have remained excellent. Improving the outcomes of transplant patients at centers like Stanford is driving the adoption of our testing solutions. Building upon the clinical evidence emerging for HeartCare, Alloshore Kidney, and Alloshore Lung, we successfully expanded medical policy coverage with Blue Cross Blue Shield plans and other private commercial payers for 14 million lives in the quarter. Payers are acknowledging the utility of our testing solutions and improving patient outcomes. We anticipate that coverage, coupled with our focused efforts in revenue cycle management, should continue to contribute to margin growth in future quarters. Lastly, on our Medicare coverage efforts, there continues to be significant pressure from transplant patient advocacy groups, clinicians, and CareDx to restore the longstanding coverage which has primarily affected kidney transplant patients. We will be unwavering in our efforts to address this policy issue. Moving on to our patient and digital solutions business, where we had a good quarter with $9.6 million in revenue, a year-over-year growth of 12%. Currently, over 70% of transplant centers in the U.S. use at least one of our patient and digital solutions. After acquiring one of our solutions, such as our quality reporting software, and experiencing positive outcomes, we frequently see an uptake of additional value-added solutions, such as administrative staff augmentation or patient medication adherence services. For example, Tampa General has become a significant user of our patient and digital health solutions. They have adopted four products over the last 18 months, addressing their needs, including patient care coordination, quality improvement, HLA lab operations management, and logistics support. We are integrated with their EMR system, enabling them to provide digitally enhanced patient care. As a result, they have improved their quality measurement scores, operational efficiencies, and resource utilization across all stages of their transplant patient workflow. They recently sought our assistance in refining their wait-listing process to increase the throughput of transplantation at their center. Our work with Tampa General demonstrates how CareDX's patient and digital solutions establish us as a trusted and essential partner to the success of their transplant program. Finally, in our products business, we achieved $8.6 million in revenue in the quarter, a 25% year-over-year growth. primarily driven by the continued adoption of our industry-leading Alloseek TX NGS-based HLA typing kits. Alloseek TX delivers comprehensive results to HLA laboratories to help identify the best genetic match for organ transplant recipients. LifeLink Foundation's HLA laboratory recently converted from legacy HLA typing solutions using real-time PCR methods to NGS-based Alloseek TX, because it eliminates the need for reflex testing to resolve ambiguous results and increases operational efficiencies. In summary, we had a strong first quarter. We have reset the business and returned to growth. Testing services is gaining momentum as our ever-growing data set of evidence continues to demonstrate the clinical utility and need for our novel non-invasive testing. Traction in our patient and digital solutions is growing. and our products business continues to gain market share. We are effectively managing our bottom line and driving profitable growth by improving efficiencies throughout the organization, enabling us to sustain a healthy cash balance. Given our performance in the first quarter, CareDX is raising its revenue guidance for 2024 to $274 to $282 million, as noted in our press release. Abhishek will provide more detail in his remarks. In conclusion, I want to thank the entire CARE-DX team for their focus and execution. We have an incredibly talented and inspired organization, and we look forward to a strong 2024. With that, I will ask Abhishek to share more details on our first quarter results. Abhishek.