CareDx, Inc.

Hello, everyone. Thank you for joining us and welcome to CareDX Q1 2026 Financial Results Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your keypad to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Caroline Corner, Investor Relations. Caroline, please go ahead.

Thank you, Operator. Good afternoon. Thank you for joining us today. Earlier today, CareDX released financial results for the first quarter of 2026, ending March 31, 2026. The results are currently available on the company's website at www.CareDX.com. Joining me on today's call are John Hanna, President and Chief Executive Officer, Keith Kennedy, Chief Operating Officer and Chief Financial Officer, and Dr. Jeffrey Teutoburg, Chief Medical Officer. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements 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. Information concerning the risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements is included in our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, April 28, 2026. We disclaim 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 non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute or in isolation from, GAAP measures. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures may be found in today's earnings release. which is posted on our website. With that, I will now turn the call over to John.

Thank you, Caroline. Good afternoon, and thank you all for joining today's call. Since I joined CareDX in 2024, I have been singularly focused on transforming this company into a precision diagnostics market leader. Today, I'm going to highlight two portfolio actions we have taken to accelerate our growth strategy and including the divestiture of our lab products business, which we announced on April 15th, and the acquisition of Nevaris, announced today. In my prepared remarks, I'm going to briefly review our strategy in solid organ transplant that is propelling the growth in our core business. I'll then cover the two portfolio actions in more detail. After that, Keith will walk through the financials and our updated outlook for 2026. At CareDx, our growth strategy is focused on extending our leadership in precision medicine testing services and patient and digital solutions by addressing markets where our core competencies give us the right to win. We are addressing clinical markets where we hold a clear number one position. These markets are characterized by patients with a high cost and burden of disease that warrants repeat molecular testing to inform clinical management. These patients are managed by a concentrated group of subspecialty providers and that we service through our solution selling approach that integrates digital solutions and pharmacy to support clinical workflows and patient engagement and adherence to our testing services. Our organic growth strategy is anchored on three connected drivers. First is our pipeline programs. Innovation is central to how we maintain leadership and extend our model into new markets and grow our TAM. Q1 marked continued progress across our pipeline, with advancement in both new clinical programs and platform capabilities that extend our core monitoring model over time. In 2026, we are advancing three key pipeline initiatives. First, during the quarter, we advanced our lead cell therapy program, Alaheem. with clinical data from the Acrobat study. The Acrobat data have now been presented at both Tandem and EBMT, and we anticipate publication submission in the second quarter. In solid organ transplant, we are progressing our program to expand AlloSure into liver transplantation. Liver transplantation is unique in its biology and clinical management. And in our MAPLE trial, we are gathering follow-up data for patients enrolled in the study to validate our solution for this important indication. Strategically, Allishore Liver would extend our core monitoring model into a new organ system, enabling total addressable market while remaining tightly aligned with the same workflow-driven, repeat testing solutions-based approach that underpins our core business. Additionally, Late last year, we announced the launch of Histomap Kidney, which extends molecular insights to the moment of biopsy and complements our existing blood-based kidney monitoring. For example, when a kidney transplant patient undergoes a biopsy, clinicians typically rely only on histology, looking at tissue under a microscope, to assess what may be happening in the graft. Histomap kidney adds a molecular layer, providing additional biological context that can be evaluated alongside traditional pathology. During the quarter, we continue to make progress toward the planned histomap kidney launch, including submission of our second clinical validation manuscript and advancing our CLIA readiness. Together, Alaheem, Alisher Liver, and HistoMath demonstrate how we are innovating on our core platform to extend our leadership into new clinical markets. Second, our go-to-market strategy is focused on building belief in molecular testing as the standard of care in solid organ transplant and simplifying the workflow for health systems to drive operational efficiencies in their practice and adherence to testing protocols, while improving the quality and consistency of how customers experience working with CareDx. We are executing this through two primary go-to-market initiatives. First is emphasizing the clinical differentiation of our solutions, where we lead with indication-specific strategies tailored to how transplant clinicians make decisions. With heart care, our focus is on informing prognosis and treatment decisions, leveraging our sure data. In kidney, we are expanding the context of use for Alisher beyond surveillance with a focus on four cause testing indications, which currently account for 50% of our kidney testing volume. In lung, we continue to build adoption by promoting early findings from our Alamo registry. This approach allows us to drive relevance within each indication rather than relying on a single commercial message across markets. The second initiative is driving workflow improvements and ease of use, which is increasingly critical to scale. We are embedding our solutions more deeply into clinical workflows through a combination of center-based software, Epic Aura integrations, and Epic Enterprise LIMS infrastructure. Together, these capabilities are designed to support more consistent ordering, reporting, and cash collection by reducing friction within transplant center workflows. As we look ahead, we are targeting approximately 50% of testing volume through Epic integrated sites by year end, reflecting our belief that workflow integration is central to sustained adoption. We made continued progress on this strategy during the quarter with nine centers live and 16 additional integrations underway. While still early, these integrations are showing early signs that they reduce friction for care teams and enable increased adherence to center-specific testing protocols. These initiatives are supported by continued investment in sales, medical education, and patient engagement through our CareDX CARES team, with a clear emphasis on improving the customer experience. We are deploying resources to accelerate growth, And today, we have over 120 field support team members that assist transplant centers with their workflow and assist patients with blood collection. Overall, our go-to-market approach reflects a clear strategic intent to establish molecular testing as the standard of care by combining clinical differentiation, workflow simplicity, and scalable execution. Our evidence generation strategy is intentionally designed to support how we scale the business and extend our leadership position. The objective is to advance the clinical utility of our on-market products, inform how clinicians use molecular testing over time, and support expansion into new indications in a disciplined way. In solid organ transplant, studies such as Alamo and Harbor focus on demonstrating longitudinal utility and monitoring relevance. MERIT is a meaningful step beyond that. MERIT is an interventional study which evaluates how molecular insights can actively inform therapeutic decision-making. Strategically, this is important because it makes molecular testing integral to clinical action, reinforcing its role within routine care pathways. In cell therapy and heme oncology, we are advancing our Transplant Plus strategy starting with Acrobat, which serves as the foundation for the clinical validation of alloheem and our entrance into AML and MDS markets. We are also extending that same molecular monitoring model into DLBCL and multiple myeloma in our ACROSS study, evaluating CAR-T persistence, This work focuses on understanding expansion and persistence kinetics in real-world CAR-T care. Strategically, this study helps define where molecular monitoring can add value in a rapidly evolving market, which may become an important part of our future pipeline. We announced in March the launch of VANTIX, our AI-enabled clinical insights platform, which adds an intelligence layer to clinical decision-making. In practical terms, consider a kidney transplant patient who is undergoing routine molecular testing as a part of follow-up care. Over time, those results, such as serial Allisher measurements, are generated alongside clinical data already captured in the care workflow. With VANTIX, centers can securely aggregate and analyze center-specific molecular and clinical data across cohorts, enabling more consistent interpretation of trends over time. The supporting algorithms are informed by CARE-DX's large clinical study databases, including SHORE and KOR, helping translate real-world longitudinal data into scalable program-level insights. Together, these efforts reflect a consistent strategy, extend molecular monitoring in adjacent clinical settings in a disciplined way, prioritizing evidence, clinical relevance, and timing. Last week, CARE-DX's precision medicine testing services were featured in more than 50 abstracts, including 16 oral presentations at the International Society for Heart and Lung Transplantations annual meeting, drawing on data generated from across approximately 95 transplant centers. This breadth reflects one of the largest coordinated bodies of real-world longitudinal molecular monitoring data presented at a national transplant meeting. The data spanned both heart and lung transplantation and included findings from large prospective registries such as SURE and Alamo, as well as early interventional work supporting MERIT. Across these studies and key features of the highlighted abstracts on this slide, the consistent theme was the clinical relevance of longitudinal molecular signals over time, supporting risk stratification, earlier signal detection, and more informed post-transplant management. The scientific momentum we highlighted at ISHLT reinforces our broader strategy and the growth drivers we've discussed. demonstrating how molecular monitoring is becoming increasingly embedded in clinical practice. Next, I'd like to briefly turn to the divestiture of our lab products business, an important step in our recent portfolio actions. This transaction simplifies the company to what we do best, precision medicine testing services and digital and patient solutions. The lab products business includes manufacturing, regulatory, and commercial operations that are distinct from our U.S.-based testing services platform. By separating these activities, we are streamlining our operating model and allowing each business to move forward with greater focus and alignment. Strategically, this reinforces our testing services and patient and digital solutions core business, which are driving growth. In the first quarter, they delivered 48% and 33% revenue growth, respectively. Financially, the transaction provides upfront cash consideration of $170 million at closing, improving our financial flexibility and supporting our capital allocation strategy. At the same time, the transaction positions the lab products business for continued success under Eurobio Scientific. a longstanding partner and global IVD manufacturer with scale and distribution capabilities. Keith will walk through the pro forma financial impacts of the transaction in more detail in his remarks. Now onto the big news. We announced today an agreement to acquire Nevaris. This is a thoughtful and deliberate step in our growth strategy. Along with our Alehyme and CAR-T organic pipeline in oncology, we are taking a very selective and differentiated approach to solid tumor MRD with a category-defining and indication-leading platform with Naveris. Importantly, this is not a move to broadly pursue MRD as a category. Rather, is it a targeted addition in a specific viral-mediated cancer space where longitudinal molecular monitoring is already reimbursed, embedded in specialty workflows, and aligned with how we operate our core business today? Novaris' platform is built around a tumor-naive blood test used across the care continuum from diagnosis through MRD surveillance. First, I'd like to share a little bit about the business at a high level. To date, the company has performed more than 130,000 commercial tests, has approximately 2,000 active ordering physicians, and is operated by a strong U.S.-based team of approximately 100 employees. The testing is currently covered for approximately 100 million lives, including Medicare. and has advanced diagnostic laboratory test or ADLT designation with an $1,800 Medicare reimbursement per test. For 2025, the estimated unaudited revenue is $34 million, and we expect it will grow by 30% to 40% or greater over the next three years. The Naveris testing platform uses a proprietary and differentiated tumor tissue modified viral DNA, or TTMV, approach to detecting tumor-derived viral DNA in a blood sample. The liquid biopsy platform is tumor-naive by design, meaning it does not require access to tumor tissue. As a result, testing can be performed through a simple blood drawl. while also differentiating malignant signal from transient or benign HPV infection without reliance on having a tissue sample. The platform is built on an ultra-sensitive digital PCR technology combined with proprietary analytical methods supporting both strong clinical performance and scalable operations. Multiple indications for nevaris testing are supported by a large and growing body of evidence that now totals 56 peer-reviewed publications. In a large multi-center real-world observational study of 543 cancer patients reflecting use in routine clinical practice, The Nevaris test demonstrated strong performance with a negative predictive value of 98% and a positive predictive value of 95% during post-treatment MRD surveillance. As shown in the Kaplan-Meier curve on the right, patients with persistent negative TTMV DNA results during surveillance experienced improved recurrence-free and overall survival compared with those with one or more positive tests. and the median lead time to identify recurrence was four months ahead of standard of care methods. Based on these findings, the study authors recommended post-treatment monitoring and guideline-specified routine surveillance intervals. Viral-driven cancers represent a growing specialty oncology market, with HPV playing a central role across multiple solid tumors. According to U.S. population-level data from the CDC, HPV is associated with the majority of cases of several of these tumor types, reaching approximately 80% of head and neck cancers and close to 90% of anal cancers, Nevaris' two lead indications. Importantly, the incidence of HPV-associated cancers continues to increase, demonstrated here by the growth in head and neck cancer on the right. The Naveris platform is validated across multiple viral-mediated cancer indications. In aid to diagnosis, Naveris is validated in head and neck and planned validation in anal cancers. In MRD surveillance, Naveris is clinically validated and Medicare covered in head and neck and anal cancers and has planned validation in gynecological cancers. And now, I would like to ask our Chief Medical Officer, Dr. Jeff Tutteberg, to walk us through the patient journey for head and neck cancer diagnosis and molecular MRD monitoring. Jeff?

Thank you, John. I'm excited to join the call and share what we see to be a significant opportunity for a differentiated solution to address an unmet medical need in viral-mediated cancers. Today, I'm going to focus my comments on head and neck cancer, where the Navaris adoption is the greatest. and illustrate how Nevaris fits into the workflow and management of these patients. Patients with head and neck cancer typically start their journey after being referred to an ENT surgeon, with symptoms that may include chronic sore throat, pain or difficulty swallowing, or a neck mass. The ENT surgeon will first examine the patient, perform laryngoscopy and imaging, and then obtain tissue via biopsy or fine needle aspiration. Importantly, these methods can be inconclusive, and an HPV diagnosis can be missed if tissue samples are inadequate or non-diagnostic. Peer-reviewed evidence has shown that Nevaris is highly accurate, aiding in the diagnosis of HPV-positive head and neck cancer. When utilized in conjunction with traditional approaches, more patients are correctly classified as HPV-positive, which is important because making an accurate diagnosis of HPV positivity is critical to downstream therapeutic decision-making. HPV-positive patients almost always undergo surgical resection, followed by chemotherapy, radiation, or both, under the care of a multidisciplinary team. Navaris testing may be utilized to inform treatment response through its unique quantitative tumor tissue modified viral DNA score, which correlates with tumor burden. The TT-MV DNA score has the potential to inform both the duration and intensity of therapy for which studies are ongoing. Following definitive treatment, Navaris molecular testing is positioned as a longitudinal monitoring tool. In this context, serial blood-based monitoring is used to complement routine follow-up enabling a repeat assessment of the molecular signal over time as part of standard surveillance workflows. The MRD surveillance protocol for nevarious testing aligns with guideline recommended physician follow-up time points, including quarterly for years one and two and semi-annually for years three, four, and five, for a total of 14 tests per patient over the first five years post-treatment, followed by annual testing thereafter. Currently, Nevaris is the only Medicare-covered assay for HPV-positive head and neck and anal cancer MRD. Care is delivered by specialists at accredited centers consistent with NCCN and CAP-aligned practices, where patients are followed closely for multiple years due to risk of recurrence. And now I'll hand it back to John.

Thank you, Jeff. With that context on the technology, patient journey, and the reimbursement framework already in place, I want to step back and talk about the size and quality of the opportunity in front of us with Nevaris. HPV-driven solid tumors are a large and growing portion of the overall specialty oncology testing market. Today, we estimate the U.S. total addressable market to be approximately 4.5 billion, split across two distinct clinical applications. The first is molecular residual disease surveillance, which represents roughly 1.5 billion of TAMP, This is where Naveris is focused today, with clinical validation and Medicare coverage and in the early stages of clinical adoption. The second is aid to diagnosis, representing an additional $3 billion opportunity that has yet to be tapped. In totality, at CareDx, we are building a differentiated, multi-indication, precision medicine portfolio to drive growth. In solid organ transplant, we've established leadership across heart, kidney, and lung, with liver progressing from development into validation. In specialty oncology, we're applying our core competencies in high-value indications. That includes viral-mediated cancers and hematologic malignancies like AML and MDS. Importantly, this diversified portfolio approach allows us to continue on our strong growth trajectory by extending our precision medicine testing services and patient and digital solutions into new indications. When taken together, we estimate the total addressable market for solid organ transplant and specialty oncology now exceeds $12 billion. The result is a diversified growth profile across specialty markets. Naveris extends our platform into a large specialty oncology market where our model already applies and where we can lead. It allows us to stay disciplined about where we compete, focusing on indications where molecular monitoring is differentiated and scalable. As we evaluated this opportunity, we were particularly focused on the long-term impact of our growth and returns to shareholders, and we have strong conviction that this investment can deliver both within the framework of our existing operating model. This brings us to the core takeaway. CareDX is the right company to scale Naveris. We have the proven platform, the operational discipline, and the specialty focus that can turn this expanded portfolio opportunity into durable growth and profitability. And now I'd like to turn the call over to Keith to review our Q1 financials and 2026 guidance. Keith?

Thank you, John. I plan to cover our first quarter 2026 financial results and our updated 2026 guidance. You may access our earnings presentation at CAREDX.com by clicking through to our investor page. Turning to the financial highlights section of our earnings presentation for the first quarter 2026 and our year-over-year results, Total revenue increased 39% to 118 million. Testing volume increased 17% to 54,900 tests. Testing services revenue increased 48% to 91 million or 1,660 per test. Patient digital solutions revenue increased 33% to 16 million. Lab products revenue declined 4% to 10 million. Our non-GAAP gross margins increased to 73%. Non-GAAP operating expenses of 69 million, or 59% of revenue, including approximately 2 million incremental bonus accrual for performance above plan. Our GAAP net income of $3 million. GAAP net income for basic and diluted share of 5 cents. An adjusted EBITDA of $19 million increased 300% plus. Cash collections increased 52% to $121 million. Cash flow from operations were $4 million this quarter and $72 million over the last four quarters. And we ended the quarter with $198 million in cash and cash equivalents and no debt. In the first quarter, we collected 14 million in excess of December 31st receivables. This out of period revenue contributed $260 per reported test. Excluding this revenue, our revenue per test was $1,405. Turning to guidance, we are raising 2026 revenue guidance to 447 to 465 million. representing a 20% increase year over year at the 456 million midpoint of the range and adjusted EBITDA of 43 to 57 million, a 58% increase year over year at the 50 million midpoint of the range. Our full year guidance covers the business in our hands today, including our products business. After I cover our annual guidance, I'll provide details for our products business embedded in our annual guidance, which hopefully will provide a preliminary insights into the financial carve out. We applied the following assumptions and modeling our full year guidance consistent with non-GAAP measures. We believe testing volume will range between 224,000 and 229,000 tests for the year, representing a 13% increase year over year at the 226,500 midpoint of the range. Based on our experience and seasonality in our business, we expect to see a step up in volume of approximately 1,700 tests from Q1 to Q2, flat from Q2 to Q3, and another step up in volume of 1,800 tests from Q3 to Q4. Our guidance assumes revenue for each line of business calculated on a year-over-year basis at the midpoint of the following ranges. Testing services revenue of 337 to 351 million, a 25% increase at the 344 million midpoint. Patient digital revenue of 63 to 66 million, a 13% increase at the 65 million midpoint, and product revenue of 45 to 50 million flat at the 48 million midpoint. For testing services, we included a slide on revenue per test in our earnings presentation. We expect our revenue per test to increase 10% year over year to the midpoint of our guide, 7% due to an increase in our average accrual rate and 3% due to the combination of cash collections and excessive receivables offset by our estimate of the LCD price impact. In modeling to the midpoint of our guide, we assume average accrual rate per test to increase from $1,405 per test in Q1 to $1,460 by year end. Out of period revenue of $7.5 million in Q2, $5 million in Q3, and none in Q4. And the LCD to negatively impact revenue, not volume, by $7.5 million in the second half of 2026. Per quarter, we model gross margins in the range of 68 to 71% and operating expenses of 68 to 70 million, including higher bonus accrual of approximately 2 million per quarter. And we anticipate depreciation recorded in operating expenses to be approximately 9 million for the full year. As mentioned in our press release in April, the board of directors authorized common stock repurchase program of up to $100 million of shares over a period of up to 24 months. Turning to our lab products divestiture, as John mentioned, we signed a definitive agreement to divest this business, which we expect to close by the end of the third quarter and net approximately 160 million in cash equal to the 170 million sales price net of $10 million in estimated transaction expenses. As I said earlier, our full year guidance covers the business in our hands today, including our products business. In the first quarter of 2026, our products business generated approximately $10 million in revenue and less than $1 million in adjusted EBITDA. To provide context on the carve out of our products business, The following slide in our earnings presentation illustrates the following. On the left, we prepared a chart showing our revenue mix by service line for 2025 and the full year guidance at the midpoint of the range. Our 2026 guidance includes 48 million in lab products revenue, or flat year over year, and $409 million in core business revenue, including testing, patient, and digital services, or 23% growth year over year. The table to the right of this slide provides assumptions built into our 2026 guide for our products business, which is our best estimate at this time, but we expect to vary depending on when the transaction closes transition services we provide to the buyer, et cetera. In a perfect world, both parties would like to achieve a clean close at quarter end or June 30th, but we are allowing for slippage into Q3. Our 2026 guidance assumes lab products generates 45 to 50 million in annual revenue, 26 to 30 million in gross profit, 21 to 24 million in operating expenses, approximately half a million dollars in depreciation, and contributes three to nine million in EBITDA. We are reviewing our post-close expense structure, and we'll have more to say on the carve-out after we close. For modeling purposes, we provided the quarterly ranges underlying our 2026 guide, which we will update post-close. For example, we modeled five to six million in quarterly operating expenses for the lab products business. Hopefully this is helpful detail. I'll now turn the call back over to John.

Thank you, Keith. In summary, I want to thank all the team here at CareDx and Nevaris and look forward to the path forward. We think these actions taken together are advancing our growth strategy as a company. optimizing our portfolio, and extending our leadership in precision medicine diagnostics. Thank you, and I will now turn the call back over to the operator. Operator?

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your keypad to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tycho Peterson with Jefferies. Tycho, your line is open. Please go ahead.

Hey, team. This is Lauren on for Tycho. Two quick ones for me. First, on the $4.5 billion TAM for MRD, how much of this market right now is immediately accessible to you guys through your existing infrastructure? And what new clinical channels must be established for the 30% to 40% projected annual growth? And then second, on the digital solutions business, As you guys are growing this out in the solution selling strategy, what's the attach rate for digital solutions among your high-volume transplant center customers? Thanks.

Yeah, thanks so much for the question, Lauren. As we outlined in the prepared remarks, $1.5 billion of the TAM is currently in the MRD space and covered in head and neck and anal cancers. And from a channel access perspective, the Nevaris team has done a great job building a channel into the specialty providers that diagnose and monitor those patients, including ENTs predominantly in head and neck, and then medical oncologists that they work with. And so we don't anticipate having to build a net new channel. Nevaris has already built that channel. And with CareDx capabilities, in driving repeat testing, building workflow optimization, epic integration, we think we can accelerate that revenue and volume growth rate. Your second question on the attachment rate of digital solutions, we said previously that 70% of transplant centers across the U.S. use at least one of the CARE-DX patient or digital solutions, and that continues to be true today. And as we've shared previously, the more solutions a transplant center has, the more embedded we become into their workflow. And therefore, the more testing we see and revenue generated from those centers.

Perfect. Thanks so much.

Thank you.

Our next question comes from the line of Brandon Couillard from Wells Fargo. Brandon, your line is open. Please go ahead.

Hey, good afternoon. Thanks for the time. John, I'm Navaris. Just curious how long this asset's been on your radar screen. Looks like they also operate two labs, one in Massachusetts, one in North Carolina. Would it be your expectation to keep both? And R&D spend must be pretty lean here. Would this be a type of situation where, hey, you know, maybe we could spend an extra $10 or $20 million and get a lot of, you know, juice out of that, be it commercially or with the R&D pipeline? Or would you expect to keep operating this business, you know, near break even to slightly profitable things?

Yeah, on the labs, we will, you know, they operate and have, you know, CLIA licenses in both their labs. You know, it's not really that material at this point, and they're in the middle of automating some of their workflows. So we will be spending a lot of time really helping them on their cost per test and continuing to drive that as well as the revenue cycle management. Over time, we'll evaluate the lab strategy.

Yeah, and I think, Brandon, on the R&D spend, the company operates incredibly efficiently. There's a high number of active clinical trials in addition to the 56 publications that have already been published on the study or on the products. Right now, you know, there's a focus on the aid to diagnosis indication, both in head and neck and anal cancer, to unlock that larger portion of the TAM. and then development work really around the gynecologic indication and MRD. But by and large, I think, you know, the vast majority of the spend and investment here is really around workflow, commercial infrastructure, and pulling through those 14 time points of testing over the first five years post-definitive treatment for those patients. And that's what we're going to be focused on. And that's really the core competencies that make this deal work. and why Nevera selected, quite frankly, CarityX as their partner going forward.

Super. And then, John, it'd be great to get your kind of macro view on the transplant procedure environment right now. I mean, volume growth is still pretty sluggish here. You know, curious how much longer you can keep growing your own testing volumes at double digits, and if this type of environment persists. And to what degree at all does your guidance assume that, you know, procedure volumes pick up as we move through the year? Thanks.

Yeah, it's hard to predict. As you know, Brandon, it seems like in the transplant market, the procedure volumes accelerate and then fall back and accelerate and fall back. And we saw some acceleration at the end of the first quarter, particularly in kidney. But we're monitoring that closely. And as you're aware, we're coming toward the end of the first reporting period in the IOTA program. And we keep hearing, you know, chatter in the market about a focus on increasing transplant volumes as a result of that program, but we're not seeing it nationwide in terms of total volume growth. It's in select centers. So we're very focused on supporting those centers that are in the IOTA program around hitting their goals as they move into this first reporting cycle.

As we... test patients, our patient population of unique patients we're testing is growing as a result of year over year. Once you get a transplant, you're followed for years in getting testing. So even if the underlying transplant volume is flat, the growth rate's going to be significantly higher in surveillance testing.

Thank you. Our next question comes from Mark Massaro at BTIG. Mark, your line is open. Please go ahead.

Hey, guys. Congrats on the acquisition of Nevaris. I wanted to ask a couple on that deal. The first one is, where is the GYN cancer indication in terms of development? How quickly do you think that could launch? The second one is, I understand there's 100 employees at the company. How many are in commercial? And did I hear you right that you don't expect to expand their commercial? And then the third one is on the reimbursement. I think the reimbursement rate is $1,800 per test under an ADLP. When do you think that might reset, if ever? And is that lost for the end of this year? And how are you thinking about that going forward?

Hey, Mark. Thanks for the questions. The GYN indication is still in development. There's a greater heterogeneity of HPV-driven proteins in GYN than in the other indications, and so that's a development program within the company that will continue. We don't have a specific timeline around today. From a commercial channel perspective, what I was saying in the response to Brandon's question is that the channel exists today. Or I'm sorry, Lauren's question. There is a channel today. We certainly anticipate supporting expanding that channel, right? Driving growth requires more reach and frequency with providers and building belief. And so we will do that. But that's part of our model here. And we think it's very doable to maintain the profile, the financial profile that we anticipate with the asset. The 1800 ADLT, as you know, ADLT status, you report data every year. And that reimbursement rate has been consistent for the company. So we're not expecting any change in that rate.

Yep, understood. And then I figured I'd ask an unrelated question to the Navaris acquisition question. What is your latest thinking around the timing of the LCD for transplant from the Moldex group? Is that perhaps mid-26th? I know we're approaching mid-26th, so how are you thinking about that?

Yeah, it still continues to be mid-26th, given that the draft issuance date was July 15th, and CMS generally holds themselves to... publishing a final or retiring the draft within one year of the draft issuance. So we still anticipate we could see the LCD here sometime at the end of the second quarter or early third quarter.

Sounds good. I will keep the questions there. Thanks, guys. Cool.

Thanks, Mark.

Our next question comes from the line of Andrew Brackman from William Blair. Andrew, your line is open. Please go ahead.

Hey, guys. Good afternoon. Thanks for taking the question. I also wanted to ask on the virus. So certainly, you know, it checks a lot of the boxes that you outlined with respect to the specialty markets that you're concentrating on, both organically and with potential M&A. But can you maybe just sort of unpack the operational learnings from the transplant business that you can apply here? You know, you talk about driving the repeat ordering, driving the epic integration, but I guess what specifically are the operational learnings that you've sort of found over the last few years here that you can apply to this business?

Thanks. Yeah, thanks for the question, Andrew. And, you know, and I'll ask Jeff to jump in here as well, I think, because it's not just It's not just operational. It's also around provider education, right, and awareness of the data, the use of the products. Do you want to share a little bit?

Yeah, I mean, I think as people get more familiar and more comfortable with using these non-invasive tests rather than their typical invasive tests or even radiographic tests, you'll see the utility of this because a lot of times patients go to physicians and it's hard to diagnose these recurrences by physical exam and the radiology can be equivocal, particularly right after treatment. when you have things like PET CT scans lighting up because there's so much metabolic activity from a recent surgery. So there's lots of really good uses for this test. I think people, as they start to use it, will start to see more and more utility.

And operationally? Operationally, I think, you know, just they're not of scale. So their ability to, you know, buy things at scale the way we're able to do that, deploy automation, have engineers and things like that. So You know, we do believe there's potentially up to a third of the cost per test you can do by automation and just price negotiations and things like that. We have line aside that we looked at during the diligence and things like that. And then on Epic, you know, obviously it's too small of a company on their own to invest in something like that. But adding that to our Epic incense and turbocharger is something that we can do quite easily without incremental cost. So, you know, we're excited about that opportunity supported by the commercial initiatives and the go-to-market strategy.

Yeah, and I talked a little bit about our customer service team and the CareDx Cares team and really supporting workflow within a specialty practice or subspecialty practice because oftentimes, you know, these practices are just rate limited by the amount of labor that they have, the amount of support staff, and it becomes overwhelming sometimes. And so ordering a diagnostic test is not top of mind because they've got, you know, a slew of patients waiting in the waiting room to get in and see the clinician. And so, you know, ensuring that there is very streamlined workflow and we're supporting them and we're engaging patients after the order has been set and pulling through access to the blood is really critical. And these are things that we have built expertise on at CareDx, and we think we can port over to the Nevaris business.

Perfect. Appreciate all that, Keller. And then if I could just follow up, obviously, I'm sure you did a lot of diligence around the competitive environment for this asset. Can you maybe just sort of talk about how you guys are viewing sort of the specific indications that they're in right now? any potential emergence that you have on your radar? And I guess, bigger picture, how do you sort of maintain a niche that they would establish?

Thanks. Yeah, thanks, Andrew. Certainly, we did diligence on the competitive environment. And, you know, we operate in competitive markets today. But Naveris has a differentiated technology. And that technology makes it a preferential tool in the monitoring and diagnosis of these patients with HPV-driven cancers. And so that made us very comfortable with the transaction, and we think we can sustain that competitive advantage and market-leading position that the company has today.

Great. Thanks, guys.

Our next question comes from the line of Mason Carrico from Stevens Incorporated. Mason, your line is open. Please go ahead.

Hey guys, thanks for taking the questions here. Could you provide a bit more detail on the financials of Navaris? What was the 2025 growth rate off of 2024? Maybe how it ramped throughout the year. And then on that 30 to 40% growth rate going forward, how much of that is volume driven versus ASP?

I'm going back to 24. At 25 in front of me, of course, she has me at 24. Sorry about that, Mason. Go ahead to John, and I'll come back to you on that one.

All right. Yeah, I think Mason, obviously, there's a mix of ASP and volume growth, but volume has been the key driver here for the company, given that it's relatively early in the adoption cycle in the market. I would say that We feel very comfortable with the 30% to 40% growth rate going forward, and that's why we provided commentary that we anticipate that to persist over the next three years.

Mason, the growth from 24% to 25% was 75% top-line growth. Got it. Okay.

Yeah, thanks, Keith. And, John, could you just update us on – maybe where you think market penetration stands today for cell DNA testing and transplant. Maybe your estimate across organ types and I guess how much growth runway remains ahead of you here.

Yeah, I think that the growth runway remains significant, right? There are still, as with many of these markets, you know, factions that don't use molecular testing at all. And as an organization, you know, dating back to mid-24, we started to focus on reinstituting surveillance testing in kidney. Over the past several quarters, we've also been focused on for-cause indications in kidney because there are many. And as I shared in my prepared remarks, we're now seeing roughly 50% of that volume before cause today. And so we still think there's substantial runway in kidney. We continue to see growth in heart care, and in particular, Alimap as a product growing sequentially quarter over quarter, even after being on the market for over 20 years now, which is incredibly impressive. And I think indicative of the strength of the evidence and data and utility of the product. And then in lung, we feel like we're still early days in adoption. And so we are eager to see data from Alamo published such that we can continue to drive adoption even in its limited levels that we see in lung transplant centers today and have that grow into sustained utilization. So we've got a lot of work still to do in this space, and we think there's a lot of runway still to go in solid organ transplant.

Got it. Thanks, guys.

Thanks, Mason.

Your next question comes from the line of John Wilkin with Craig Hallam. John, your line is open. Please go ahead.

Hi, guys. Thanks for taking the questions. Just one bigger picture, one on Navaris. As you think about any potential needs of a broader portfolio as you go into that channel, I guess, one, do you believe that you need to have that? And two, if so, how do you get there?

Thanks, John. That's a great question. I think, you know, today we feel really confident in the portfolio that the company has, and it is the market leader in both head and neck and anal cancers. And certainly you could foresee having a service that augmented for non-HPV driven cancers, but that's not our focus today. And so I think as we go through the close process, we integrate the business, we continue to execute on the large opportunity ahead of the company, We'll come back and update you if we have different thinking around broadening the portfolio.

Great. And then, am I correct in assuming that there's no contribution from the VAERS currently included in revenue guidance for the year? That's correct. Okay. Great. Thank you, guys. Thank you. Thanks.

Our next question comes from the line of Tom DeBorsy with Nefron Research. Tom, your line is open. Please go ahead.

Thanks for taking the question. Just I wanted to focus on transplant, specifically the ASP improvements that you're clearly seeing. And so I think, Keith, you mentioned, I guess, ASP is moving towards 1450, 1460 by the end of this year. And just wanted to understand how much of that is driven by, I guess, better claims submissions or less rejections versus, I guess, you know, the push towards getting 50% of volume through Epic Aura?

Yeah, so we don't have any Epic Aura submissions. uplift built into our guide and our cash collections per test are exceeding our revenue per test and as we laid out in july of last year we started transitioning to you know shrinking the look back period in our rev rec policies and what you know as our as we were you know improving you know automation and workflows and revenue cycle management and obviously that's driving you know, significant cash, which quarterly is exceeding our expectations. So we're really excited about that. But you're going to see that flow into revenue per test as the year goes on. So you'll see out of period revenue, revenue that comes in reflected of exceeding our AR at the beginning of that quarter. And you'll see that start to flow into AR or into REBREC and AR so that that levels out. And that's why I'm giving you out-of-period revenue sort of forward-looking views so that you know how I'm transitioning that. And obviously, that's up higher than it was last quarter because our out-of-period revenue was so high this quarter. And it continues in April.

Understood. And just as a follow-up question, in hematological malignancies or blood cancer MRDs, with alloheem and potentially allocell. I think the existing plan had been to leverage existing transplant center relationships given stem cell transplants and other. Is that still the current plan or does the addition of the varus change that, I guess, sales rep strategy?

Yeah, thanks for the question, Tom. The acquisition of Navaris doesn't change that strategy. I think that we have a very focused strategy around Elohim, given that it's not yet Medicare covered. And so 2027 is going to be very focused on clinical education around the product and early adoption and building toward Medicare coverage for the product. And then we'll think longer term around what the channel looks like.

Thank you. Our next question comes from the line of Yi Chen from HC Wainwright. Yi, your line is open. Please go ahead. A reminder to unmute on your device locally.

You take a break.

We have reached the end of our Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.