Sign in

You're signed outSign in or to get full access.

CI

CareDx, Inc. (CDNA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 adjusted revenue grew 14% year-over-year to $90.5M, but GAAP revenue of $86.7M missed S&P Global consensus of $90.6M due to a $3.8M write-off of aged receivables from prior periods; non-GAAP diluted EPS of $0.10 missed consensus $0.12* .
  • Testing services volumes rose 13% to ~49,500, marking an eighth straight quarter of sequential volume growth; AlloSure Kidney volumes grew nearly 20% year-over-year, driving mix and margin gains .
  • Guidance narrowed: FY25 revenue range tightened to $367M–$373M (midpoint unchanged) and adjusted EBITDA maintained at $29M–$33M; management reiterated volume growth mid-teens, ASP ~$1,360/test, and ~70% non-GAAP gross margin .
  • Key narrative catalysts: draft LCD affirms surveillance coverage but introduces scenarios with potential $15M–$30M full-year headwinds; Epic integration and AI-driven AlloSure Plus rollout expected to reduce ordering friction and support adoption .

What Went Well and What Went Wrong

  • What Went Well

    • Volume and kidney strength: “Volume growth accelerated, led by AlloSure kidney testing which was up nearly 20% year-over-year” .
    • Margin efficiency: Non-GAAP gross margin ~69%; testing services non-GAAP gross margin improved to ~77.6% on scale and lab efficiencies .
    • Evidence and products: Launch of AlloSure Plus (AI diagnostic), KOAR manuscript published, strong WTC presence with >40 abstracts and 12 oral presentations .

  • What Went Wrong

    • GAAP revenue/EPS vs estimates: GAAP revenue $86.7M missed consensus $90.6M*; non-GAAP diluted EPS $0.10 missed $0.12*, driven by $3.8M prior-period receivable write-off .
    • Non-GAAP net income down YoY: $5.6M vs $13.6M in Q2 2024, despite adjusted EBITDA improvement, reflecting higher OpEx investments and the write-off impact .
    • LCD uncertainty: Company modeled two draft LCD scenarios with approximate $15M headwind if frequency-limited bundled surveillance is adopted, or ~$30M if bundled is not adopted and only one molecular test per date of service is paid (potentially disfavoring HeartCare multimodal reimbursement) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue (GAAP, $USD Millions)$86.579 $84.685 $86.679
Primary EPS (Non-GAAP diluted, $USD)$0.18 $0.09 $0.10
Non-GAAP Gross Margin %69% 68.5% 69%
Adjusted Testing Services Revenue (Non-GAAP, $USD Millions)n/a$62.997 $65.860
Adjusted EBITDA ($USD Millions)$9.834 $4.563 $9.137

Segment Revenue Breakdown ($USD Millions):

SegmentQ4 2024Q1 2025Q2 2025
Testing Services$63.819 $61.921 $62.033
Product$11.367 $10.810 $11.833
Patient & Digital Solutions$11.393 $11.954 $12.813
Total Revenue$86.579 $84.685 $86.679

KPIs and Balance Sheet:

KPIQ4 2024Q1 2025Q2 2025
Testing Services Volume (tests)~45,500 ~47,100 ~49,500
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$261 $231 $186
Cash from Operations ($USD Millions)$21.9 ($26.6) use $10
DebtNone None None

Estimates vs Actuals:

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Revenue ($USD Millions)84.558*86.579 84.535*84.685 90.562*86.679
Primary EPS (Non-GAAP diluted, $USD)0.1475*0.18 0.0683*0.09 0.122*0.10

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$365M–$375M $367M–$373M Narrowed (midpoint maintained)
Adjusted EBITDAFY 2025$29M–$33M $29M–$33M Maintained
ASP (blended per test)FY 2025~$1,360 ~$1,360 Maintained
Testing Volume GrowthFY 2025Mid-teens YoY Mid-teens YoY; Seq: +2%–3% Q3, +5%–6% Q4 Maintained granularity updated
Non-GAAP Gross Margin %FY 2025~70% ~70% Maintained
Operating ExpensesFY 2025~$235M ~$235M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/Technology InitiativesPipeline incl. HistoMap; digital tools; AlloSeq cfDNA study Epic Aura integration initiative started Launch of AlloSure Plus (AI risk score); Epic pilots Q3, broader rollout Q4 Acceleration
Supply Chain/COGSLab products margin initiatives underway Tariffs minimal impact (<$1M) Lab products margin +17 pts YoY; supplier negotiations; mix shift Improving
Regulatory/LegalPatent verdict reversal; share buyback authorization Securities class action settlement in principle; new AlloSure CPT code Draft LCD affirms surveillance; modeled $15M–$30M headwind scenarios Mixed (coverage affirmed; payment risk)
RCM/ASPRebuilt RCM team; ASP growth expected RCM workflows rebuilt; ASP drivers detailed 100% workflows implemented; strong cash collections (105% of adjusted testing services revenue) Improving
Product PerformanceTesting services growth across organs Pediatric heart and SPK kidney indications launched AlloSure Kidney volumes +~20% YoY; eighth sequential volume growth quarter Strengthening
CMS/IOTA ProgramAnticipated July 1, 2025; software support XynQAPI tool prepared; educational outreach IOTA composite score tool released; >70 programs engaged Execution underway

Management Commentary

  • “CareDx had a strong second quarter. Volume growth accelerated, led by AlloSure kidney testing which was up nearly 20% year-over-year… contributed to a substantial adjusted EBITDA improvement” — John W. Hanna, CEO .
  • “We surpassed 60 surveillance protocols nationally and kidney testing volume grew nearly 20% year over year. Our growth strategy is working.” — John W. Hanna .
  • “We estimate the impact… bundled surveillance frequency limits… ~$15M headwind… if no bundling and only one molecular test per DOS is paid… ~$30M headwind.” — John W. Hanna .
  • CFO transition: Abhishek Jain retiring; Nathan Smith appointed CFO effective Aug 7, 2025 .

Q&A Highlights

  • LCD scenarios: Management outlined two reimbursement scenarios with ~$15M vs ~$30M headwinds depending on bundling and frequency limits; will publish comment letter post-Aug 31 .
  • Epic rollout: Company operating “two months ahead of anybody” on Epic; four pilot centers to go live in Q3, broader rollout in Q4; annual investment ~$5M plus per-click fees .
  • Volume drivers: Heart and lung grew; kidney surveillance protocols reinitiated, driving ~20% YoY kidney growth; eighth consecutive sequential volume quarter .
  • RCM and cash: 100% eligibility verifications; 60% reduction in claim submission time; collections accelerated to 105% of adjusted testing services revenue .
  • Guidance detail: FY25 ASP ~$1,360/test; volumes mid-teens; sequential growth +2%–3% Q3 and +5%–6% Q4; adjusted EBITDA $29M–$33M .

Estimates Context

  • Q2 2025: Revenue $86.7M vs $90.6M consensus* — bold miss; non-GAAP diluted EPS $0.10 vs $0.12 consensus* — bold miss; driver was $3.8M write-off of aged receivables from prior periods .
  • Trailing quarters: Q1 2025 revenue/eps beat consensus*; Q4 2024 revenue/eps beat consensus* .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Volume momentum intact: eighth consecutive sequential growth quarter; kidney surveillance protocols and AlloSure Kidney strength underpin mid-teens test volume outlook .
  • Reimbursement risk contained but material: draft LCD affirms surveillance coverage; monitor final policy for bundling/frequency limits—modeled headwinds ~$15M–$30M full-year; narrative around multimodal HeartCare reimbursement is pivotal .
  • Execution catalysts: Epic integration (Q3 pilots, Q4 rollout) and AlloSure Plus AI risk scores should reduce ordering friction and deepen clinical utility, potentially supporting ASP and adherence .
  • Cash deployment: $186M cash with no debt post $50M buyback; Board authorized new $50M program, providing flexibility for opportunistic repurchases alongside growth investments .
  • Margin trajectory: Non-GAAP gross margin ~69% with testing services ~77.6%; continued RCM and lab efficiencies and mix shift (NGS kits, patient/digital solutions) support margin resilience .
  • Near-term trading setup: Q2 headline misses (rev/EPS vs consensus) were largely accounting-related (prior-period receivable write-off); watch sequential volume growth and LCD developments into Q3/Q4 as stock-moving catalysts .
  • Medium-term thesis: Evidence generation (KOAR/SHORE manuscripts), payer coverage expansion, and operational excellence (RCM, Epic) aim to sustain profitable growth and support FY25 guidance maintenance .