CareDx, Inc.

Please stand by. Your program is about to begin. If you need assistance on today's conference, please press star zero. Good day, everyone, and welcome to today's CARE DX Incorporated second 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 by pressing star one on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note, this call may be recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the call over to Mr. Greg Hadacek, Managing Director.

Thanks, Leo. Good afternoon, and thank you for joining us today. Earlier today, CareDX released financial results for the quarter ending June 30, 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 description 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, July 31, 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 generally accepted accounting principles. Reconciliations of 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 thank you to everyone who has joined today's call. After a good start to the year, we had another strong quarter marked by growth across all of our businesses and disciplined operational execution. CareDX's commitment to patience, innovation, and providing robust solutions that address transplant centers' needs are driving our growth. We continue to publish compelling evidence supporting the role of our testing services in extending Allograft's survival. Our digital solutions are vital to helping our customers navigate complex workflows and achieve high-quality outcomes. And our NGS-based laboratory products are gaining wider adoption, supplanting legacy technologies. In my prepared remarks, I will share examples of how our solutions benefit patients, transplant centers, and labs, underpinning the drivers of increased utilization and top-line growth. We've reached an inflection point in our business. Our revenue growth coupled with our disciplined approach to expense management has translated into sizable improvements in our adjusted EBITDA, resulting in both top-line and bottom-line growth. We became adjusted EBITDA positive this quarter and expect to be adjusted EBITDA neutral for the remaining two quarters of the year, resulting in positive adjusted EBITDA for the full year as reflected in our updated guidance. Given our strong year-to-date results and expected growth for the remainder of the year, we are raising our revenue guidance for fiscal year 2024 to $320 million to $328 million, a growth rate of 15% year-over-year at the midpoint of our guidance. Turning to our financial results for the second quarter, we reported revenue of $92.3 million, up 31% from the prior year. In our testing services business, we delivered approximately 43,700 tests, up 17% from the prior year and up 4% from the previous quarter. This represents the fourth consecutive quarter of sequential growth in testing services volumes. Testing services revenue was $70.9 million, up 33% year-over-year. We accrued $13.2 million in revenue from tests performed in prior quarters, making our adjusted testing services revenue in the quarter $57.7 million, up 21% year-over-year. In the second quarter, we achieved a significant milestone, the first peer-reviewed publication of our SURE study in the Journal of Heart and Lung Transplantation. As shown on slide six of our earnings presentation, this prospective observational study demonstrates that heart care, which combines AlloSure Heart and Allomap Heart, identifies acute cellular rejection in heart transplant patients better than donor-derived cell-free DNA alone. The findings also demonstrate on slide seven that using heart care is associated with lower biopsy rates and excellent clinical outcomes two years post-transplant. We believe that heart care could potentially guide clinicians to perform surveillance biopsies more sparingly. The SURE study is the most extensive prospective study of its kind in heart transplantation, with 67 participating centers and over 2,700 patients enrolled. SURE is designed to follow patients for five years, so we expect SURE will continue to generate meaningful publications for the foreseeable future. Moving to our kidney business, A landmark study was published last month in Nature Medicine, validating our AlloView AI-enabled risk prediction model and demonstrating that AlloShore kidney detects subclinical rejection in stable patients. The international multicenter study of 2,882 patients that underwent donor-derived cell-free DNA testing was conducted by the Paris Institute for Transplantation and Organ Regeneration, along with researchers in the U.S. and Belgium. Several key findings from the study shown in slide nine of our investor presentation are Allishore kidney donor-derived cell-free DNA levels were elevated before biopsy-proven rejection in an analysis of patients receiving consecutive biopsies. Allishore kidney donor-derived cell-free DNA levels decreased for patients with successfully treated rejection. suggesting AlloShore kidney may be used to assess treatment response. AlloShore kidney surveillance testing detected subclinical rejection in clinically stable patients, and surveillance monitoring with AlloShore kidney and AlloView improves the detection of antibody-mediated rejection and T-cell-mediated rejection compared to standard of care measures such as serum creatinine, donor-specific antibodies, and biopsy. This study underscores Allishore's role as a leading indicator of kidney transplant rejection. It enables clinicians to intervene before clinical symptoms of rejection occur and monitor post-treatment progress while avoiding invasive biopsy procedures. These findings contribute to a growing body of evidence that may establish new standards globally in routine monitoring of rejection and treatment response in kidney transplant patients. Turning to coverage, we look forward to the finalization of the draft Medicare local coverage determination likely in the third quarter. CareDx, transplant clinicians, and their specialty societies and transplant patients continue to advocate to permanently restore longstanding coverage language. Recall, in February of this year, CMS issued a statement affirming their commitment to ensuring that patients with transplanted hearts, lungs, and kidneys who meet Medicare's local coverage criteria can continue to access molecular blood tests and that these tests remain available to patients when medically necessary and ordered by a physician. We have had significant success in increasing commercial payer coverage for our kidney and heart testing services. In the first half of 2024, we gained additional coverage from Blue Cross Blue Shield plans and other commercial plans totaling approximately 27 million lives nationwide. This includes new policies for Alimap Heart, Alishore Heart, Alishore Kidney. The coverage coupled with improvements in revenue cycle management have contributed to ASP growth that we will continue to benefit from in future quarters. Moving to our patient and digital solutions business, we achieved our first quarter of over 10 million in revenue. representing 19% year-over-year growth. This growth can be attributed to SAS conversions and an uptake of our lab information management system software solution for HLA laboratories. Our digital offerings continue to gain traction in US-based transplant centers, with over 70% having at least one of our patient and digital solutions. Because our value-added solutions complement each other and deliver positive outcomes, transplant centers are acquiring additional products from us. Florida Memorial Hospital and Joe DiMaggio's Children's Hospital, renowned for their adult and pediatric transplant program, have implemented CareDx's quality reporting software to facilitate their engagement with regulatory, accreditation, and payer organizations. CareDX's software solutions are cloud-based tools that, in this case, transform raw utilization data into insights, aiding centers in achieving high-quality outcomes. In our lab products business, we reported another first, achieving over $10 million in revenue, representing 35% year-over-year growth. This strong growth was primarily driven by continued global adoption of our industry-leading Alloseq TX NGS-based HLA typing kits for use in bone marrow transplantation and solid organ transplantation. Centers are discovering that our Alloseq TX has many benefits over legacy typing technologies. We expect this migration toward our best-in-class NGS HLA typing will continue. For example, Two top HLA labs in Rome, Italy, Cagliara, and San Camillo transitioned from legacy HLA typing solutions using real-time PCR methods to NGS-based ALICEQ-TX. They recognized the value it provides in eliminating the need for reflex testing to resolve ambiguous results, thereby increasing operational efficiencies. This growth in a price-sensitive market like Italy, which is one of the top five markets in Europe, reflects the value ALICEQ-TX innovation brings to the region. In summary, we had a strong quarter across all three businesses, testing services, digital solutions, and lab products, and demonstrated solid year-over-year growth, and we will believe this will continue. I want to thank the entire CARE-DX team globally for their commitment to transplant patients and for their disciplined execution in delivering against our plan to return to growth. With that, I will ask Abhishek to share more details on our second quarter results. Abhishek?