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CareDx Q1 Revenues Drop 7 Percent but Beat Estimates as Firm Raises Full-Year Guidance

NEW YORK – CareDx reported after market close on Thursday that its first quarter revenues declined 7 percent year over year. Despite the drop, the company also raised its 2024 full-year revenue guidance to reflect "strong financial and operational performance" during the first quarter.

"Our first quarter results are better than anticipated stemming from growth across all businesses and our operational discipline," CareDx President and CEO John Hanna told investors in a call recapping the company’s Q1 financial results.

For the three months ending March 31, the Brisbane, California-based transplant diagnostic firm booked $72.0 million in total revenues, compared to $77.3 million for the same quarter a year ago and beating analysts' average estimate of $63.1 million. The company noted that Q1 revenues grew 10 percent sequentially from $65.6 million in Q4 2023.

Revenues from testing services were $53.8 million, a 13 percent decline from $61.8 million in Q1 2023 but a 15 percent increase sequentially. The year-over-year decrease was primarily driven by a reduction in the volume of AlloMap and AlloSure testing services due to a Medicare billing article change regarding these services, the company noted in its quarterly filing with the US Securities and Exchange Commission.

AlloMap and AlloSure testing volumes dropped 16 percent year over year during the quarter, from 50,000 tests delivered in Q1 2023 to approximately 42,000.

Product revenues were $8.6 million, up 25 percent from $6.9 million in the prior-year period. The growth was primarily due to the continued adoption of the company's Tx next-generation sequencing-based Human Leukocyte Antigen (HLA) typing kit, CFO Abhishek Jain told investors during the call.

Patient and digital solutions revenues were $9.6 million, a 12 percent increase from $8.6 million in Q1 last year, mainly benefiting from the company's core digital offerings, Jain noted.

CareDx's Q1 net loss was $16.7 million, or $.32 per share, compared to $23.7 million, or $.44 per share, in the same quarter last year. Adjusted loss per share was $.03, beating the consensus Wall Street expectation of a $.21 loss per share.

The company's Q1 R&D spending decreased 23 percent year over year to $18.7 million from $24.4 million in Q1 2023. Its SG&A expenses shrunk 10 percent to $46.7 million from $52.0 million a year ago. 

CareDx ended the quarter with $93.3 million in cash and cash equivalents and $122.6 million in marketable securities.

"We maintain a strong balance sheet," Jain said. "Based on our current cash position and anticipated cash and usage in operations, we currently believe that we do not need to raise cash in the foreseeable future."

Encouraged by its Q1 performance, CareDx raised its guidance for full-year 2024 to a range of $274.0 million to $282.0 million from a previous range of $260.0 million to $274.0 million.

At the midpoint of the guidance, the company is assuming low double-digit testing services revenue growth, high-single-digit growth for product revenues, as well as mid-single-digit growth for its patient and digital solutions revenues.

During the call, Hanna also highlighted the newly proposed Increasing Organ Transplant Access (IOTA) model by the Centers for Medicare & Medicaid Services (CMS). Announced on Thursday, the proposed six-year, mandatory model would begin on Jan. 1, 2025, and aims to "increase access to life-saving transplants for patients living with kidney disease and reduce Medicare expenditures," according to the CMS.

"For CareDx, we anticipate this initiative to be a tailwind for the adoption of our solutions that improve patient transplant outcomes, a critical component to the program's evaluation," Hanna said.