CareDx Q2 2026 Earnings Report

CareDx EPS Results

• Actual EPS: $0.37
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: -$0.16

CareDx Revenue Results

• Actual Revenue: $131.95 million
• Expected Revenue: $114.05 million
• Beat/Miss: Beat by +$17.90 million
• YoY Revenue Growth: +52.20%

CareDx Announcement Details

• Quarter: Q2 2026
• Date: 7/30/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 4:30PM ET

CareDx (NASDAQ:CDNA) (NASDAQ: CDNA) is a precision diagnostics company focused on the care of transplant patients. The firm develops and commercializes non‐invasive tests designed to detect organ transplant rejection and infection risk, helping physicians make informed management decisions throughout the post‐transplant journey.

The company’s core product portfolio includes AlloMap®, a gene expression profiling test for heart transplant recipients, and AlloSure®, a donor‐derived cell‐free DNA assay used primarily in kidney transplant monitoring. CareDx also offers a range of clinical laboratory services and companion diagnostic solutions that support patient management in lung and liver transplantation.

Headquartered in Brisbane, California, CareDx serves transplant centers across the United States, Europe and select international markets. The company operates a network of CLIA‐certified laboratories and collaborates with academic institutions and transplant centers to advance research in immunological monitoring and personalized patient care.

CareDx was established through the integration of Viracor-IBT and Transplant Genomics in 2018, building on more than a decade of molecular diagnostic expertise. The company’s leadership team comprises seasoned professionals with backgrounds in biotechnology, laboratory operations and clinical research, all dedicated to improving outcomes for transplant recipients worldwide.

CareDx Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 revenue rose 52% to $132 million, while testing services revenue increased 61% to $100 million and adjusted EBITDA reached $25 million, or 19% of revenue. The company also ended the quarter with $374 million in cash and no debt.
• Positive Sentiment: CareDx raised its 2026 guidance to $490 million–$500 million in revenue and $66 million–$78 million in adjusted EBITDA, including $24 million of second-half specialty oncology revenue and 258,000–266,000 tests for the year.
• Positive Sentiment: Transplant testing growth remains strong, with Q2 volume up 17% to 58,000 tests as both surveillance and for-cause use expanded. Management cited broader clinical adoption, improved workflows, and evidence supporting AlloSure’s use in risk assessment and treatment monitoring.
• Positive Sentiment: The company reported progress across its growth pipeline and NavDx acquisition, including a planned 2027 AlloHeme commercial launch, a 2026 clinical-study launch for HistoMap Kidney, and integration initiatives intended to expand NavDx adoption and improve reimbursement and workflow efficiency.
• Neutral Sentiment: Management characterized its outlook as prudent while it integrates NavDx billing and operating systems; specialty oncology is currently modeled at roughly 63% gross margin and may require additional investment, although CareDx continues to target approximately 20% long-term adjusted EBITDA margins.

Presentation

[Operator]

Hello, everyone. Thank you for joining us, and welcome to the CareDx Q2 2026 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 one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Nina Deka, CareDx Head of Investor Relations. Nina, please go ahead.

[Nina Deka, Head of Investor Relations at CareDx]

Thank you, operator. Good afternoon. Thank you for joining us today. Earlier today, CareDx released financial results for the second quarter 2026, ending June 30th, 2026. The results and our earnings presentation are available on the company's website at caredx.com. Joining me on today's call are John Hanna, President and Chief Executive Officer, and Keith Kennedy, Chief Operating Officer and Chief Financial 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 facts 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.

[Nina Deka, Head of Investor Relations at CareDx]

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 filing with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, July 30th, 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 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 compatible GAAP financial measures may be found in today's earnings release, which is posted on our website.

[Nina Deka, Head of Investor Relations at CareDx]

With that, I will now turn the call over to John.

[John Hanna, President and CEO at CareDx]

Thank you, Nina. Good afternoon, thank you for joining us today. Two years ago, we set out to transform CareDx into a leading precision medicine diagnostics company. Today, that transformation is largely complete. We deepened our leadership in transplantation. We sharpened the portfolio, exiting non-core businesses to focus on our highest value opportunities. We extended that same solutions approach into specialty oncology and cell therapy, new markets with the same proven model. The CareDx model is built on longitudinal molecular testing that informs clinical decision-making, supported by robust clinical evidence, integrated workflows, and patient engagement. It's repeatable and differentiated, and it connects everything we do across transplant, specialty oncology, and cell therapy. Our growth strategy is working.

[John Hanna, President and CEO at CareDx]

We are pursuing markets where our core competencies give us the right to win, where we can hold a clear number one position, and where patients face a high cost and burden of disease warranting repeat molecular testing to inform clinical decision-making. In these markets, our solution-selling model creates value and stickiness with clinicians and patients. Today in my prepared remarks, I'm going to share an update on progress with our pipeline, the integration of our strategic acquisition of NavDx, and our execution on the quarter in solid organ transplantation. Innovation remains central to how we plan to maintain our leadership position, extend our model into new markets, and grow our TAM. We continue to advance AlloHeme, our recurrence monitoring test for patients undergoing cell therapy to treat AML and MDS hematologic malignancies.

[John Hanna, President and CEO at CareDx]

During the second quarter, investigators from the ACROBAT trial submitted the AlloHeme clinical validation manuscript to a peer-reviewed journal. One of the most compelling findings from the ACROBAT study was AlloHeme's ability to predict relapse ahead of standard of care. AlloHeme predicted relapse a median of 41 days before clinical relapse was diagnosed. This lead time may provide an opportunity for earlier clinical intervention, potentially enabling clinicians to take action before overt relapse occurs. These data support the potential role of AlloHeme as a blood-based surveillance tool for risk stratification and earlier detection. Publication of these results is an important milestone in our evidence generation strategy, helping to build clinical confidence in AlloHeme and support future adoption. We believe the publication represents a key step toward our reimbursement objectives, including future coverage submissions to both private and Medicare payers.

[John Hanna, President and CEO at CareDx]

We remain on track to complete CLIA readiness activities before year-end, positioning AlloHeme for a planned 2027 commercial launch. AlloHeme represents the organic expansion of the CareDx model into cell therapy, a market where we believe we have a first-mover advantage and are positioned to win by creating meaningful value for patients and providers. HistoMap Kidney also continues to advance toward launch. HistoMap adds a molecular layer to tissue biopsy assessment to complement AlloSure Kidney blood-based monitoring. Last week, investigators from the University of Wisconsin published new data in the journal Transplantation evaluating HistoMap Kidney in 138 kidney transplant biopsy specimens, including 42 patients with microvascular inflammation that is donor-specific antibody negative and C4d negative. DSA negative and C4d negative MVI was recognized in the 2022 Banff classification as a distinct rejection phenotype that can appear low risk by conventional biopsy assessment, yet may progress to rejection and graft loss.

[John Hanna, President and CEO at CareDx]

In the study, HistoMap Kidney distinguished patients with MVI pathology with markedly different outcomes, with more than three times the rate of graft loss at six years in the HistoMap high-risk group compared with the low-risk group, supporting the potential of HistoMap Kidney to provide clinically meaningful information beyond conventional biopsy assessment. HistoMap is an example of how we are establishing clinical differentiation and providing molecular solutions to our customers from non-invasive blood-based monitoring to prognostic tissue analysis of high-risk patients undergoing biopsy. We intend to launch HistoMap Kidney in a clinical study this year and make it available more broadly commercially in 2027. In addition to our pipeline programs, we have significantly expanded our TAM with the recent NavDx acquisition in specialty oncology. NavDx adds a clinically differentiated solid tumor MRD platform to the CareDx portfolio. We are already seeing encouraging momentum as we integrate the business.

[John Hanna, President and CEO at CareDx]

Since closing the acquisition on July 1st, we've made meaningful progress executing the integration priorities that support the strategic rationale for the transaction. Our focus has been on three areas where we believe CareDx's core competencies can drive growth and create value. First, leveraging our commercial capabilities in evidence generation, building belief in molecular testing as a standard of care, and patient support infrastructure to expand adoption of NavDx. Second, applying our workflow expertise, including Epic integration and connectivity capabilities, to simplify the customer experience and support incorporation into routine clinical practice. Third, integrating revenue cycle management and reimbursement capabilities to create a scalable operational foundation and support broader market access. Together, these initiatives reflect the core value creation opportunity behind the acquisition, combining NavDx's differentiated technology with CareDx's commercial reach, workflow expertise, and operational scale.

[John Hanna, President and CEO at CareDx]

In July, I had the fortune to attend the 2026 American Head and Neck Society Annual Meeting in Boston and meet with head and neck surgeons, radiation oncologists, and medical oncologists from over 60 institutions across the U.S. Their conviction for using NavDx in their practice is strong, and they were enthusiastic about how our solutions address their key challenges with broader adoption. At the event, over 30 presentations and sessions focused on circulating tumor HPV DNA or other biomarker-related topics. New data were presented from a nationwide cohort of approximately 40,000 patients with HPV-driven cancers. The study focused on patients whose NavDx tests became positive during surveillance monitoring, indicating molecular recurrence of disease. The authors evaluated the clinical significance of the NavDx quantitative score, a differentiating feature of the test, in predicting response to treatment, otherwise known as salvage therapy.

[John Hanna, President and CEO at CareDx]

The data demonstrated that lower NavDx scores at the time of molecular recurrence were associated with higher rates of ctDNA clearance and faster clearance to undetectable levels, supporting the role of NavDx in predicting response to salvage therapy. These findings suggest the test kinetics may provide prognostic information, helping clinicians better understand how patients respond to treatment in the recurrent setting. Also at AHNS, we hosted a symposia featuring leading clinicians of the California Head and Neck Cancer Consortium, who recently published consensus recommendations on the use of circulating tumor HPV DNA in head and neck cancer. The session drew strong engagement from the head and neck oncology community. 33 experts across 15 institutions reached a strong consensus that circulating tumor HPV DNA is a valuable tool for diagnosis and surveillance and that serial testing should be performed throughout the years following definitive treatment.

[John Hanna, President and CEO at CareDx]

This is an important milestone when leading clinicians converge on consensus recommendations for how a technology should be used, it signals that molecular testing is becoming an established part of how these patients are managed in clinical practice. Moving on to solid organ transplant, we continue to see molecular testing increasingly integrated into clinical decision-making across transplant care. As the evidence base grows, clinicians are using molecular insights not only to detect rejection, but also to assess rejection risk, evaluate treatment response, and support longitudinal patient management. At the American Transplant Congress, the largest transplant meeting of the year, we continued to build belief in molecular testing as a standard of care by advancing our evidence generation strategy with new data that support both adoption of AlloSure surveillance testing and the expansion of its use into new for-cause contexts of use.

[John Hanna, President and CEO at CareDx]

At ATC, CareDx data were featured in more than 30 abstracts and nine oral presentations spanning kidney, heart, lung, and multi-organ transplantation with findings generated from studies conducted across more than 110 transplant centers in the U.S. One of the clearest themes at ATC was the continued evolution of AlloSure Kidney beyond surveillance, increasingly being evaluated for risk assessment, treatment response, and long-term graft outcomes, not just to identify injury. One of the most notable studies presented at ATC evaluated more than 1,100 kidney transplant recipients from the KOAR registry and examined how AlloSure trajectories during the first four months of surveillance testing following transplant related to long-term outcomes. The findings were striking. Approximately 35% of patients with persistently elevated AlloSure levels experienced rejection and had a nine-fold higher risk of graft loss compared to patients with consistently low AlloSure levels.

[John Hanna, President and CEO at CareDx]

Patients whose elevations resolved over time had outcomes similar to those who were never elevated at all. In other words, it's not a single result that matters, but the trajectory over time, which is exactly the insight that longitudinal molecular monitoring with AlloSure is designed to provide. In the for-cause setting, we saw AlloSure used as the endpoint to judge whether a therapy is working. In a single-center prospective study, patients with persistent chronic antibody-mediated rejection were followed with serial AlloSure testing through monthly tocilizumab infusions. Donor-specific antibodies declined and kidney function stabilized, yet AlloSure did not change over 12 months, and follow-up biopsies confirmed that antibody-mediated rejection was still present. The conventional markers suggested that patients were improving. AlloSure, confirmed by biopsy, showed the injury was ongoing.

[John Hanna, President and CEO at CareDx]

That raises real questions about how sensitive conventional markers are for monitoring treatment response, and it supports AlloSure as a potential surrogate endpoint in clinical trials of transplant therapies. Taken together, these data speak to our growth model. More patients monitored over time, more clinical contexts of use where a treating physician needs an objective molecular answer, and a growing role for AlloSure in how new transplant therapies are evaluated. The data presented at ATC reinforce both the strength of our evidence generation engine and the leadership position we have built in transplant diagnostics. Separately, this quarter marked another milestone with the publication of our second KOAR analysis in the esteemed Journal of the American Society of Nephrology. In more than 1,250 kidney transplant recipients across 56 U.S. centers, roughly a third of patients saw their AlloSure levels rise over time, and those elevations mattered.

[John Hanna, President and CEO at CareDx]

Patients with elevated AlloSure levels faced a nearly four to six times higher risk of losing their transplant. Most of these elevations appeared subclinically before any measurable decline in kidney function, meaning AlloSure identified patients at risk well before other measures. On the other end, patients who stayed consistently low represented a clearly low-risk group with low rates of rejection, graft dysfunction, or graft loss. This is what AlloSure makes possible: identifying risk earlier and supporting more informed clinical decision-making. Together with the ATC data, these AlloSure Kidney findings continue to differentiate our platform, reinforce our leadership in transplant, and demonstrate why monitoring with AlloSure is becoming a routine part of how transplant patients are managed. Another development announced on July 16th was the finalization of the Medicare Local Coverage Determination for solid organ transplant molecular testing.

[John Hanna, President and CEO at CareDx]

The policy affirms coverage for surveillance testing across kidney, heart, and lung transplant and reinforces the role of AlloSure and AlloMap in post-transplant patient management. In addition, what we find encouraging is that the foundational policy extends beyond existing coverage. It establishes a pathway for HistoMap coverage for molecular assessment in situations where conventional biopsy findings may be indeterminate or discrepant with clinical presentation, which is supported by the HistoMap data published this quarter. The policy also establishes a framework that can support future innovation in additional organs such as liver transplant. As a reminder, today, nearly 500,000 Americans are on kidney dialysis, and approximately 100,000 Americans are on a transplant wait list. Improving access to transplantation will require the field to make greater use of available donor organs, manage increasingly high-risk recipients, and ultimately support emerging transplant solutions such as gene-edited organs and xenotransplantation.

[John Hanna, President and CEO at CareDx]

As transplant medicine evolves, tools that can assess immunological activity, detect injury earlier, and support clinical decision-making become increasingly important. We believe the final policy acknowledges that molecular diagnostics are an integral part of transplant management, not only for today's standard of care surveillance with AlloSure and AlloMap, but also for the next generation of transplant innovation. With that, I'd like to turn the call over to Keith to review our financial results and outlook for the remainder of the year. Keith?

[Keith Kennedy, COO and CFO at CareDx]

Thank you, John. I plan to cover our second quarter 2026 financial results and our updated 2026 guidance. Turning to the financial highlights section of our earnings presentation for the second quarter of 2026 and our year-over-year results. Total revenue increased 52% to $132 million. Testing services revenue increased 61% to $100 million or $1,720 per test. Testing volume increased 17% to 58,000 tests. Non-GAAP gross margins increased to 74%. Adjusted EBITDA increased $19 million to $25 million or 19% of revenue. We repurchased 570,000 shares for $12.2 million or $21.50 per share. We ended the quarter with $374 million in cash and cash equivalents and no debt. We closed the sale of the lab products business on June 30th, recognizing a gain on the sale of $113 million, which is included in GAAP operating income, but excluded from operating income for non-GAAP reporting.

[Keith Kennedy, COO and CFO at CareDx]

Turning to slide 13 and our Q2 revenue performance. Total revenue increased 52% to $132 million. Testing services revenue increased 61% to $100 million, including $15.6 million in out-of-period revenue. Patient and digital solutions revenue increased 50% to $19 million, driven principally by our pharmacy. Lab products revenue increased 8% to $13 million. Turning to the next slide, non-GAAP gross margins increased to 74%. Non-GAAP gross profit of $98 million increased 63%. Non-GAAP operating expenses of $75 million or 57% of revenue, including approximately $7 million of incremental transaction-related payments and bonus accrual for performance above plan. Adjusted EBITDA increased to $25 million or 19% of revenue. Our GAAP operating income includes $113 million gain from the sale of our lab products business, GAAP net income of $111 million or $2.15 per basic share, or $2.07 per diluted share.

[Keith Kennedy, COO and CFO at CareDx]

We are now connected electronically with approximately 90% of our transplant customers by test volume, with 50% of test volume from integrated EMRs and 40% through our care portal. We are live today with 17 transplant centers using Epic Aura, and we expect to be live with 30 to 40 centers by the end of the year. Turning to the next slide, cash collections increased 49% to $136 million. We generated cash flow from operations of $31 million this quarter and $94 million over the last four quarters. We ended the quarter with $374 million in cash and cash equivalents and no debt.

[Keith Kennedy, COO and CFO at CareDx]

Turning to guidance, starting on slide 16, we are raising 2026 revenue guidance to $490 million-$500 million, representing a 30% increase year-over-year at the $495 million midpoint of the range, and adjusted EBITDA from $66 million-$78 million or 15% of revenue at the $72 million midpoint of the range. Our guidance includes the addition of specialty oncology in the second half of 2026 and testing services. We applied the following assumptions or estimates in modeling our full year guidance consistent with non-GAAP measures. Testing volume between 258,000 and 266,000, representing a 31% increase year-over-year at the 262,000 midpoint of the range. The midpoint of our guidance assumes Q3 testing volume of 72,600 tests with transplant volumes of 58,000 and specialty oncology volume of 14,600.

[Keith Kennedy, COO and CFO at CareDx]

For Q4, the midpoint of our guidance assumes testing volume increase sequentially 5% to 76,300 tests, with transplant volumes of 60,000 and specialty oncology volumes of 16,300 tests. Our Q3 and Q4 specialty oncology volumes reflect a 30% increase over the prior year. We removed the $7.5 million LCD impact embedded in our prior guidance. Our non-GAAP gross margin range in the guidance is 71%-73%. The non-GAAP operating expenses of $293 million-$297 million are approximately 60% of revenue. In our 2026 depreciation expense of approximately $10 million, ±$1 million. Our full year guidance assumes revenue for each service calculated at the midpoint of the range, includes testing services revenue of $400 million, inclusive of $24 million in specialty oncology revenue, patient and digital revenue of $72 million, and product revenue of $23 million.

[Keith Kennedy, COO and CFO at CareDx]

Our guidance excludes the cost or expense to complete the sale of our products business and the acquisition of Naveris. Turning to slide 17, our guidance includes $23 million of lab products revenue in the first half of 2026, and specialty oncology revenue of $24 million in the second half of 2026. As I stated earlier, we completed the divestiture of our lab products business, generating $172 million in consideration and $113 million gain on the sale. The gain is included in GAAP results and excluded from non-GAAP results. Turning to slide 18, this slide illustrates the blended ASP and revenue per test for testing services, including trans specialty oncology. In modeling to the midpoint of our guide range, the chart on the left shows the blended ASP and revenue per test for transplant only, and shows that we are on or ahead of plan in transplant.

[Keith Kennedy, COO and CFO at CareDx]

The chart on the right shows the blended ASP and revenue per test for testing services. We expect revenue per test of $1,527, including $1,367 for ASP and $160 for out-of-period revenue. In modeling to the midpoint of our guide, we assume transplant average ASP per test of $1,455 in Q3 and $1,465 in Q4 at the midpoint of our guidance, and specialty oncology average ASP per test of $770 in Q3 and $795 in Q4, also at the midpoint of our guidance, and out-of-period revenue of $8 million in Q3 and $4 million in Q4. Hopefully, this is helpful detail. I'll now turn the call back over to John. Thank you, Keith. We have transformed CareDx into a differentiated precision molecular diagnostics company with a unique set of core competencies that position us for continued profitable growth.

[John Hanna, President and CEO at CareDx]

Our performance reflects that our strategy is working, and we look forward to building on our momentum as we integrate NavDx and launch into cell therapy. Before closing, I'd like to briefly again welcome the entire NavDx team to CareDx. The work they do is incredibly meaningful for patients all across the country. I'd now like to ask the operator to open the queue for Q&A. Operator?

[Operator]

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 one to raise your hand. To withdraw your question, press star one 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. Your line is open. Please go ahead.

[Analyst at Jefferies]

Thanks. This is Matt on for Tycho. Maybe just to start, given the updated CMS policy was finalized a couple of weeks ago for AlloSure and AlloMap, John, would love to just get any updated color. I know it's only been a short period of time here, but feedback from the field, either docs or the commercial team, any kind of early trends post the finalization of that update where it's calling out and then good to see the removal of the headwind in the back half of the year. How do we think about this going forward? Could there potentially actually be some tailwinds now that this is finalized? I think you talked about a pathway for HistoMap coverage over time, but would love just your updated thoughts post finalization here. Thanks.

[John Hanna, President and CEO at CareDx]

Hey, Matt. Thanks so much for joining the call. Yeah, we believe that the policy ultimately reflects the reality of the evidence supporting these products and the evidence supporting surveillance testing in kidney. We were pleased that the agency affirmed coverage for surveillance testing. We don't have any kind of feedback from the field. As I've shared before, this is really a payment policy. It's not anything that we talk with clinicians about in the field other than instructions on how to order and how to submit their requisition forms. We didn't anticipate that it would have an impact on volume. Certainly, the positive outcome here, both for the existing products, but also for the future, right? As we mature our HistoMap program, we publish additional evidence and prepare for CLIA launch, we'll be in position to submit that dossier for coverage of the product.

[Analyst at Jefferies]

All right, great. Appreciate all the color on the moving pieces related to the guide. Maybe just on the specialty oncology piece, I think the back half guide assumes volumes are up kind of that 30% year-over-year. I think 1Q was up low 40s for them. Any color on what volumes did there in 2Q? Just on ASPs, I think the back half blended ASP is $780 for specialty oncology. How do we think about scope to drive that higher here into 2027? Maybe just refresh us in on some of the levers you have at your disposal to move ASPs up higher into next year as well. Thank you.

[Keith Kennedy, COO and CFO at CareDx]

Matt, great question. The guide is, as Carolyn likes to tell me, prudent. We do still believe this is a 30%-40% growth. We'd like to, obviously, by the end of the year, show that we're doing better than where I am in the guide right here. We are just taking over the business at this point, and we are intending and in a process right now to move them to our billing system. We are trying to do that in the fourth quarter. That is a big undertaking to do that. We think we have a lot of workflows that we spent a lot of time on that are working very well. We think moving them to our claims processing, they outsource their claims processing.

[Keith Kennedy, COO and CFO at CareDx]

They have people internally, but they mostly rely on an external firm to do that. I need to get some time, some reps with doing the billing before I feel confident in moving that number up. I am trying to be prudent. I do believe that number should move up to $1,000-$1,100. They get $1,800 from Medicare, and I think as we publish more and more evidence and we continue to bill and collect under our system, I do think that will move up, and I'll have more to talk about when we do the Q4 guide as well and in the October call, hopefully. Is that helpful?

[Operator]

Your next question comes from the line of Mason Carrico with Stephens Inc. Your line is open. You may now go ahead.

[John Hanna, President and CEO at CareDx]

Hey.

[Mason Carrico, Managing Director at Stephens Inc]

Hey, guys. Thank you for taking the questions. First, looks like another solid quarter for the transplant business. Could you just talk about some of the factors that have driven and, I guess, continue to drive the acceleration in volume growth there? How's surveillance testing trending? Have for-cause volumes continued to ramp? Any additional insight into those drivers would be great.

[John Hanna, President and CEO at CareDx]

Hey, thanks so much for joining, Mason. Yes, surveillance testing continues to gain ground, as does for-cause. We have done a really nice job helping with improved workflow in the practices, which is growing the average number of surveillance tests per patient in the first year and first three years post-transplantation.

[John Hanna, President and CEO at CareDx]

Our clinical liaison team, our patient liaison team that are out there supporting the blood draw process and ensuring that the orders are submitted and the results are reviewed in the practices, have really done a remarkable job at that. We're seeing that factor into the growth. As I described

[John Hanna, President and CEO at CareDx]

In the prepared remarks, using the testing in new contexts of use in the for-cause setting continues to expand such that we're seeing both for-cause and surveillance testing grow year-over-year and sequentially.

[John Hanna, President and CEO at CareDx]

we remain-

[Mason Carrico, Managing Director at Stephens Inc]

Got it. Thank you

[John Hanna, President and CEO at CareDx]

a little over 50%, Mason, on for-cause on kidney.

[Mason Carrico, Managing Director at Stephens Inc]

Perfect. Okay. Thank you. Then a higher level question. As we think about the new go-forward business, the growth outlook there obviously looks positive. You've raised your adjusted EBITDA margin guidance for the year, but I'm just curious how you're thinking about the ability to continue expanding EBITDA margin in 2027, or maybe how you're prioritizing continuing to ramp profitability from 2026 levels and balancing that against any required investments in Naveris.

[Keith Kennedy, COO and CFO at CareDx]

Yeah. They currently represent around 10% of our revenue, we do envision investing behind the company and continuing to scale. We have a project ongoing to integrate them into Epic is going really well for us. We do think that that long term will have further support for them. We will evaluate it, but we do believe we should be running at 20% EBITDA margins long term. We do believe that. There isn't a discussion we have in the business where we don't talk about profitability as well as revenue and how to balance that. Could there be a need to put $5 million to $10 million into something, and that would potentially impact our margins for a year or something like that as we were ramping ASP?

[Keith Kennedy, COO and CFO at CareDx]

That could happen, we're going to evaluate that in our annual operating planning, which we've already started, we'll have more to talk about, if not on the Q3 call, on the Q4 call.

[Operator]

Your next question comes from the line of Bill Bonello with Craig-Hallum. Your line is open.

[Bill Bonello, Analyst at Craig-Hallum]

Hey, guys.

[Operator]

You may go ahead.

[Bill Bonello, Analyst at Craig-Hallum]

Hey, guys.

[Keith Kennedy, COO and CFO at CareDx]

Hey, Bill.

[Bill Bonello, Analyst at Craig-Hallum]

Thank you for providing the color, particularly the bridge with all the moving parts. I just want to see if I have my math right here, and I hope you can follow me. If I add and subtract all the moving parts, it looks to me like the non-acquisition raise for the second half of the year is about $17 million-$18 million. If we take out the LCD impact, it's maybe about $10 million. If we take out the raise in patient and digital, it looks like you're keeping the guidance for transplant testing roughly flat in the back half of the year. Do I have my math about right there?

[Keith Kennedy, COO and CFO at CareDx]

I don't think so. Let me walk through some numbers and see if you have those right. We had $23 million in product, and we had $24 million in specialty oncology. That should have been right in line with where we talked on the last quarter. We said $45 million-$50 million. That should add up to $47 million. Right. The out-of-period number is all on our testing services. Our guide last quarter on out-of-period in Q2 was $7.5 million, and we had $15.5 million. We had an $8 million beat in this quarter. I increased, I think our cash collections versus our AR. I think we're going to have $8 million in Q3 and $4 million in Q4. Our testing number for our transplant business at the midpoint of the guide is $376 million.

[Keith Kennedy, COO and CFO at CareDx]

The $376 plus the $24 in specialty oncology is what gets you to $400 on testing services. We'll have $72 million on patient and digital and $23 million on products, and that gets you to $495.

[Bill Bonello, Analyst at Craig-Hallum]

Yep. Okay.

[Keith Kennedy, COO and CFO at CareDx]

Okay.

[Bill Bonello, Analyst at Craig-Hallum]

That's helpful. I think the difference might be I was backing out the beat from this quarter, but anyway, we can follow up. I guess more importantly, can you give us any similar color as you did on sort of the moving parts that impacted your adjusted EBITDA guide and maybe how we should be thinking about gross margin?

[Keith Kennedy, COO and CFO at CareDx]

Our gross margin without out-of-period is around 70%, 71%. The difference between that and 74%, what we reported, is due to the out-of-period. We continue to do very well on the margin, so I think we're pretty comfortable in that, I would say 69%-71% range, excluding out-of-period. Our margins on our testing business alone is in the high, almost 80%. We're at 79% margins, and that's what I have in the guide. The margins on specialty oncology, I'm guiding at 63%. We're in the middle of putting them on our system. They generally can get to 65% margin right now. I have a little bit of prudency as the keyword is on the margins there. Is that helpful? The margins on patient digital, I have it 26% at the midpoint.

[Bill Bonello, Analyst at Craig-Hallum]

Yep. It seems like from an EBITDA standpoint, based on the guide, you probably have been effectively able to get rid of. You're not stuck with a bunch of overhead that was being covered by the products business.

[Keith Kennedy, COO and CFO at CareDx]

Yeah. The sale of the products business, we have someone on our board who loves this stuff, but we talk about the cash cycle. We had a 70-day improvement in our cash cycle moving to just CLIA-only, because that business had high inventory and things like that you would have in a kit business.

[Bill Bonello, Analyst at Craig-Hallum]

Yep.

[Keith Kennedy, COO and CFO at CareDx]

There's just a lot of overhead. My regulatory team, it took 3X the number of people to do the same amount of work on the kit business that we do on the CLIA business due to the high regulatory burden on an IVD kit business. Almost no matter what you do, you need 15 to 20 people in a kit business just on the regulatory and quality side.

[Bill Bonello, Analyst at Craig-Hallum]

Perfect. All right. Thank you. That was really helpful.

[Keith Kennedy, COO and CFO at CareDx]

Thank you, Bill.

[Operator]

Just a reminder, if you would like to ask a question, please press star one to raise your hand. Your next question comes from the line of Yi Chen with H.C. Wainwright & Co. Your line is open. Please go ahead.

[Yi Chen, Analyst at H.C. Wainwright & Co]

Thank you for taking my questions. For the second quarter, you reported $16 million in prior period revenue. Can you talk about what are your expectation regarding prior period recognized revenue in the second half, particularly considering the final LCD will be effective August 30th. Also, the 58,000 volume of tests in the second quarter, are they generally all covered under the new final LCD? Thank you.

[Keith Kennedy, COO and CFO at CareDx]

The LCD goes into effect at the end of August. I think our tests are covered for five years, and any impact the LCD, we feel we have covered in our guide. I'm not worried there. On the out-of-period, the Q3 and Q4, which I stated in my prepared remarks, I have out-of-period revenue in Q3 I'm guiding to $8 million. In Q4, $4 million. Does that answer your question, Yi?

[Yi Chen, Analyst at H.C. Wainwright & Co]

Yes. Thank you.

[Keith Kennedy, COO and CFO at CareDx]

We did in terms of the 58,000. I think the more important question there is when we raised the 58, the guide does have 58 in Q3. We lifted the guide from the prior quarter of 56.6 in Q3. We lifted that from 56.6 to 58 on the testing side on transplant.

[Yi Chen, Analyst at H.C. Wainwright & Co]

Got it. Just a follow-up on Naveris. Once you've fully incorporated the operations of Naveris, would you have a dedicated sales team just focused on NavDx products?

[John Hanna, President and CEO at CareDx]

Thanks, Yi Chen. There is a dedicated sales team focused just on the NavDx products today.

[Yi Chen, Analyst at H.C. Wainwright & Co]

Okay

[John Hanna, President and CEO at CareDx]

as a part of the acquisition announcement, that we would be expanding that team to really ensure that we were reaching all of the providers that could potentially order the test and driving up the utilization of the product on a per-patient basis.

[Yi Chen, Analyst at H.C. Wainwright & Co]

Okay. Thank you.

[John Hanna, President and CEO at CareDx]

Great. Thank you.

[Operator]

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Nina Deka, Head of Investor Relations
• John Hanna, President and CEO
• Keith Kennedy, COO and CFO

Analysts

• Analyst at Jefferies
• Mason Carrico, Managing Director at Stephens Inc
• Bill Bonello, Analyst at Craig-Hallum
• Yi Chen, Analyst at H.C. Wainwright & Co