Name: CareDx, Inc. Q3 2025 Earnings Call
Start: 2025-11-04T21:30:00.000Z

Executive Summary

Strong quarter with total revenue of $100.1M (+21% YoY) and non-GAAP diluted EPS of $0.28; delivered record revenue across Testing Services, Patient & Digital Solutions, and Products, while turning GAAP net income positive to $1.7M .
Results exceeded S&P Global consensus: revenue beat by ~5% ($100.1M vs. $95.3M*) and EPS beat by ~14c ($0.28 vs. $0.14*); CareDx raised FY25 revenue guidance to $372–$376M (from $367–$373M) and Adjusted EBITDA to $35–$39M (from $29–$33M) .
Margin and cash execution inflected: non-GAAP gross margin ~71% (up 190 bps YoY); cash collections for Testing Services reached 124% of revenue with DSOs improving to 44 days from 71, driven by RCM automation and process wins .
4Q25 outlook embeds continued pricing/collections tailwinds (revenue per test $1,400–$1,420, including $4–$6M prior-period collections) and further sequential growth (implied Q4 revenue $101–$105M) .
Key swing factors: (1) Epic Aura integrations scaling (target ~10% of volume by YE25, ~50% by YE26) , and (2) LCD finalization in early 2026—management reiterates modeled headwind scenarios ($15M or $30M annualized) first laid out in Q2 and unchanged near term .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth: Total revenue +21% YoY to $100.1M, with Testing Services +19% YoY to $72.2M and volumes up 13% to ~50,300; Patient & Digital +30% YoY to $15.4M; Product +22% YoY to $12.5M .
- Cash and collections execution: Cash collections hit 124% of Testing Services revenue; DSOs improved to 44 days from 71; $19M sequential AR reduction; record October collections .
- Strategic pipeline and evidence: Launched HistoMap Kidney (tissue-based gene expression) with early-2026 availability; new SHORE Heart study validated AMR detection; AlloSeq Tx11 and IVDR certifications reinforce global product strength .
What Went Wrong
- Macro volumes: Overall transplant volumes were relatively flat YoY across organs; anticipated late-2025 acceleration, especially in kidney, did not materialize in Q3 amid media scrutiny around allocation practices .
- Q2 headwinds and noise: Prior quarter’s GAAP results reflected a $3.8M write-off of aged receivables on prior-period tests; management emphasized focus on “revenue per test” to minimize variability from out-of-period adjustments .
- LCD uncertainty: Draft LCD scenarios imply potential $15M or $30M annual headwinds depending on final design (frequency limits vs. single-test DOS policy), with timing and final provisions still pending into early 2026 .

Financial Results

Summary financials (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenue ($M)	$84.7	$86.7	$100.1
GAAP Diluted EPS ($)	(0.19)	(0.16)	0.03
Non-GAAP Diluted EPS ($)	0.09	0.10	0.28
Non-GAAP Gross Margin (%)	68.5%	69%	71%
Adjusted EBITDA ($M)	$4.56	$9.14 (after prior-period adj.)	$15.30

Actuals vs S&P Global consensus (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue – Estimate ($M)	84.54*	90.56*	95.25*
Revenue – Actual ($M)	84.69	86.68	100.06
Primary EPS – Estimate ($)	0.068*	0.122*	0.142*
Primary EPS – Actual ($)	0.10	0.10	0.28

Values with asterisks (*) retrieved from S&P Global.

Segment revenue ($M) (oldest → newest)

Segment	Q1 2025	Q2 2025	Q3 2025
Testing Services	61.9	62.0	72.2
Patient & Digital Solutions	12.0	12.8	15.4
Product	10.8	11.8	12.5
Total	84.7	86.7	100.1

KPIs (oldest → newest)

KPI	Q1 2025	Q2 2025	Q3 2025
Testing Services Volume (tests)	~47,100	~49,500	~50,300
Revenue per Test ($)	n/a	n/a	1,436 (includes ~$5.9M excess cash collections)
Cash Collections / Testing Services Revenue (%)	n/a	105% (adjusted base context)	124%
DSOs (days)	n/a	71 (prior benchmark)	44
Cash, Cash Equivalents & Marketable Securities ($M)	231	186	194.2
Debt Outstanding	None	None	None
Share Repurchase (Period)	—	$50M (~5% shares)	$25.6M (~2M shares)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$367–$373M	$372–$376M	Raised
Adjusted EBITDA	FY 2025	$29–$33M	$35–$39M	Raised
Non-GAAP Gross Margin	FY 2025	~70%	~70%	Maintained
Revenue	Q4 2025	n/a	$101–$105M (implied)	New
Revenue per Test	Q4 2025	n/a	$1,400–$1,420 incl. $4–$6M excess collections	New
Patient & Digital Solutions Rev.	Q4 2025	n/a	$15–$16M	New
Lab Products Rev.	Q4 2025	n/a	$12–$12.5M	New
Non-GAAP Gross Margin	Q4 2025	n/a	~70%	New
Adjusted EBITDA	Q4 2025	n/a	$10–$14M	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Revenue Cycle Mgmt (RCM) & ASP	RCM rebuild completed; KPIs improved: claim submission time (-60%), prior auth success (+45%), rejection rate (-800 bps); cash collections = 105% of adjusted Testing Services revenue . Q1: RCM restructure completed to drive ASP growth .	Cash collections 124% of Testing Services revenue; DSOs improved to 44 from 71; RCM AI automation; revenue per test metric at $1,436 with $5.9M prior-period benefit; Q4 rev/test guided to $1,400–$1,420 .	Improving execution; durable ASP uplift signals.
Epic Aura Integrations	Epic instance launched, pilots scheduled; aim to roll out broader in 2H25 . Q1 initiated EMR integration initiative .	Live at Boston Children’s with 20% faster TAT and 60% fewer specimen holds; ~10% volume via Epic by YE25, ~50% by YE26 .	Scaling deployments; operational efficiency gains.
IOTA transplant model & volumes	Tool launched in XynQAPI; expectation for transplant growth; monitoring policy and performance .	Market volume flat; kidney acceleration delayed amid media scrutiny; management expects pickup in Q4 and into 2026 as policies clarified .	Near-term headwind; medium-term tailwind expected.
LCD policy (draft)	Two scenarios: $15M headwind with frequency limits/bundling; $30M if single-test DOS removes AlloMap Heart; finalization early 2026 .	View unchanged; continued advocacy; no behavior change assumed; no observed utilization impact yet .	Unchanged risk; timing early 2026.
Product innovation & evidence	AlloSure Plus launched; KOAR manuscript published; strong WTC presence . Q1: AlloSure Heart peds and AlloSure Kidney SPK indications expanded .	HistoMap Kidney announced (early 2026 study availability); IVDR certifications; AlloSeq Tx11 launched; SHORE AMR publication validates HeartCare utility .	Strengthening pipeline and data moat.

Management Commentary

“We achieved record-setting third quarter 2025 financial results... guided by putting our customers at the center of everything we do.” — John W. Hanna, CEO .
“Cash collections... accelerated to 124% of testing services revenue... DSOs improved from 71 to 44 days.” — Nathan Smith, CFO .
“We expect to recognize revenue per test of $1,400–$1,420 in Q4, inclusive of $4–$6M of collections in excess of receivables.” — CFO .
“We continue to anticipate the draft LCD policy will be finalized in early 2026... expectations are unchanged today.” — CEO .
“We are officially live at Boston Children’s... 20% reduction in order turnaround time and 60% reduction in specimen holds.” — CEO .

Q&A Highlights

ASP durability: Management sees durable uplift from strong cash collections on historical claims, increasing predictability of future ASP; Q4 revenue per test guided to $1,400–$1,420 as modeling baseline .
Epic rollout: ~150 active discussions; ~40 centers expected to go live in 2026; typical 10% uplift post-go-live (too early to quantify); meaningful reductions in TAT and specimen holds observed .
IOTA dynamics: Kidney volume acceleration delayed by media scrutiny; government clarifications expected to restore center confidence; modest pickup expected into Q4 and materially in 2026 .
LCD financial sensitivity: If finalized as drafted with frequency limits/bundling → ~$15M headwind; if single-test DOS eliminates AlloMap Heart in HeartCare → ~$30M headwind; no current utilization impact observed .
Competitive landscape: Management attributes softer August/September more to seasonality and macro, not competition; kidney business up ~20% YoY driven by surveillance protocol re-adoption .

Estimates Context

Q3 2025: Revenue beat by ~$4.8M (Actual $100.06M vs. $95.25M*); EPS beat by ~14c ($0.28 vs. $0.142*). Drivers: RCM collections above accruals ($5.9M benefit), volume growth across organs, and margin discipline .
Q2 2025: Revenue miss vs. consensus (Actual $86.68M vs. $90.56M*), EPS roughly in line/slight miss ($0.10 vs. $0.122*), complicated by a $3.8M write-off of aged receivables tied to prior periods .
Q1 2025: Revenue in line (Actual $84.69M vs. $84.54M*), EPS beat ($0.10 vs. $0.068*), with early RCM initiatives and protocol adoption momentum .
Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

Momentum re-accelerated in Q3 with broad-based growth, a clean beat, and raised FY25 guidance; sustained RCM wins (124% collections/DSO 44 days) are improving quality of revenue and margin visibility .
Near-term catalysts: Q4 revenue per test uplift, continued Epic Aura integrations (10% of volume by YE25; 50% by YE26), and ongoing center protocol re-adoptions supporting kidney growth .
Watch LCD finalization in early 2026; baseline scenario assumes ~~$15M annual headwind with frequency limits, with larger risk if single-test DOS removes AlloMap Heart from HeartCare reimbursements (~~$30M) .
Product and data moat expanding (HistoMap Kidney launch, SHORE Heart AMR validation, IVDR certifications), enhancing long-term differentiation and international opportunities .
Q2 noise from prior-period adjustments contrasts with Q3’s clean execution; management’s shift to “revenue per test” metric should reduce confusion and better align with forward fundamentals .
Medium-term thesis: penetration gains (surveillance protocols), operational efficiency (RCM + Epic), and portfolio breadth (tests, digital, pharmacy, products) can sustain double-digit growth and EBITDA scaling, pending LCD outcomes .

CareDx, Inc. (CDNA)·Q3 2025 Earnings Summary