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CareDx, Inc. (CDNA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $86.6M, up 32% year-over-year; non-GAAP diluted EPS was $0.18 and adjusted EBITDA was $9.8M. Cash from operations was $21.9M and testing services volume reached ~45,500 (+14% YoY) .
  • GAAP diluted EPS of $1.51 benefited from a $96.3M litigation accrual reversal; management emphasized continued operating discipline and reiterated long-term targets (exit 2027: $500M revenue, 20% adjusted EBITDA) .
  • 2025 guidance: revenue $365–$375M and adjusted EBITDA $29–$33M; non-GAAP gross margin ~70%, OpEx ~$235M, mid-teens test volume growth, and blended ASP ~$1,360 (Q1 ~$1,335). Board authorized a $50M share repurchase over 24 months .
  • Catalysts: payer coverage expansion (e.g., AlloMap Heart coverage expanded to month 2, +21M lives; +12.2M AlloSure lives in Q4; FY adds: +28M AlloMap Heart, +36M AlloSure), operational upgrades to revenue cycle/billing, and evidence-generation (KOAR, SHORE) supporting surveillance testing adoption .

What Went Well and What Went Wrong

What Went Well

  • Six consecutive quarters of sequential testing services growth; Q4 testing services revenue rose 37% YoY to $63.8M with volumes ~45,500 (+14% YoY) .
  • Coverage gains: “We expanded AlloMap Heart coverage from beginning at month 6 post-transplant to month 2 post-transplant by 21 million commercial lives and added 12.2 million new commercial covered lives for AlloSure,” plus FY adds of +28M AlloMap Heart and +36M AlloSure .
  • Strong cash generation and balance sheet: “We generated $22 million in cash from operations in the fourth quarter and ended the year with a cash balance of $261 million and no debt” .
  • Pipeline and product momentum: publication validating AlloSeq cfDNA accuracy (Transplant International), planned expansions (AlloSure Heart Pediatrics, SPK Kidney, HistoMap, AlloView AI expansion), and lab products/software roadmap (Assign 2.0, Score 7) .

What Went Wrong

  • Revenue quality: Q4 included ~$2.2M from tests outside Q4; FY 2024 included ~$17M revenue from prior periods—management not baking one-timers into 2025 guidance, implying less tailwind ahead .
  • Near-term headwinds: Q1 seasonality, fires/snow storms, and midweek New Year holiday contributed to softer Q1 outlook; ASP improvements remain difficult to forecast despite billing enhancements .
  • Product gross margin pressure (context from prior quarter): product GM was lower in Q3 vs prior year due to production schedule variability; management is working supply chain changes to improve lab products margins by end of 2025 .

Financial Results

Key Financials (GAAP and non-GAAP)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$92.274 $82.883 $86.579
GAAP Diluted EPS ($)$(0.03) $(0.14) $1.51
Non-GAAP Diluted EPS ($)$0.25 $0.14 $0.18
Non-GAAP Gross Margin %72% 69% 69%

Segment Revenue Trend

Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Testing Services$70.918 $60.807 $63.819
Patient & Digital Solutions$10.746 $11.864 $11.393
Product$10.610 $10.212 $11.367

Q4 YoY Segment Growth (as disclosed)

SegmentYoY GrowthSource
Testing Services+37%
Patient & Digital Solutions+18%
Product+23%

KPIs and Operating Metrics

KPIQ2 2024Q3 2024Q4 2024
Testing Services Volume (tests)~43,700 ~44,600 ~45,500
Adjusted EBITDA ($USD Millions)$12.943 $6.905 $9.834
Cash from Operations ($USD Millions)$18.9 $12.5 $21.9
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$228.9 $241.0 $261.0

Estimates vs Actuals (Q4 2024)

MetricConsensus (S&P Global)Actual
Revenue ($USD Millions)Unavailable (access limit)$86.579
Primary EPS ($)Unavailable (access limit)$1.51 (GAAP diluted); $0.18 (non-GAAP diluted)

Note: S&P Global consensus values were unavailable due to data access limits. We attempted retrieval; access exceeded daily limit [GetEstimates error].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$370M single-point (reiterated) $365M–$375M Formalized range
Adjusted EBITDAFY 2025N/A$29M–$33M Initiated
Non-GAAP Gross MarginFY 2025N/A~70% Initiated
Operating ExpensesFY 2025N/A~$235M Initiated
Testing Services VolumesFY 2025N/AMid-teens YoY growth Initiated
Testing Services ASPFY 2025N/A~$1,360 blended; Q1 ~$1,335 Initiated
Non-testing Rev (Patient & Digital + Products)FY 2025N/AMid-teens growth, approaching ~$100M total Initiated
Quarterly Growth Pacing (Testing Services)2025N/AQ1: 2–3%; Q2: 5–6%; Q3: 2–3%; Q4: 5–6% Initiated
Capital Allocation2025–2026Prior buybacks ~$29M (program expired Dec’24) New $50M repurchase over up to 24 months Authorized

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4 2024)Trend
AI/Technology initiativesNature Medicine validated AlloView AI; digital SaaS growth Expand AlloView AI risk prediction; XynQAPI real-time IOTA quality reporting prior to July’25 Increasing deployment of AI/software
Payer Coverage & ASP+27M lives H1’24; mid-teens ASP expansion expectation +21M AlloMap Heart coverage expansion; +12.2M AlloSure lives in Q4; ASP guidance detail for 2025 Coverage broadening; ASP tailwinds targeted
Surveillance TestingReacceleration observed late Q3; protocols take 2–3 quarters Kidney surveillance continued to increase; centers ramp protocols; clinicians using dd-cfDNA without formal protocols Recovery progressing
Regulatory/LegalDOJ closed probe (Oct’24); CMS reaffirmed coverage; competitor dropped pursuit of injunction vs current method District Court reversed $96M verdict; accrual reversed; potential appeal expected Legal overhang reduced; watch appeals
Supply Chain/ProductsNotable product GM variability (Q3); end-of-life builds Manufacturing shifts to improve lab products GM by end of 2025 Margin optimization ongoing
InternationalGrowing adoption of AlloSeq Tx; Italy labs transitioned ~5% of revenue ex-U.S.; EU study validated AlloSeq cfDNA accuracy Gradual global expansion

Management Commentary

  • Strategy and long-term targets: “We reiterate our 2025 guidance of $370 million in revenue and our target to exit 2027 with $500 million in revenue and 20% adjusted EBITDA” .
  • Operational discipline: “We generated $22 million in cash from operations in the fourth quarter and ended the year with a cash balance of $261 million and no debt” .
  • Commercial and billing investments: “We completed our plan to add 30 sales and marketing team members… [and] 20 team members to our billing organization to drive greater collections and expand our ASP” .
  • Evidence generation: “Study investigators submitted the first… manuscripts from the KOAR registry… we anticipate those data will be published in the second half of 2025” .
  • Capital allocation: “Our Board authorized another share buyback program in February 2025 of up to $50 million over 2 years” .

Q&A Highlights

  • ASP and billing execution: Management is upgrading systems/modules and workflows; return on billing team investments expected but ASP appreciation is hard to forecast. Q4 ASP (implied ex one-timers) ~“$1,350-ish,” 2025 blended ASP ~$1,360; upside depends on billing effectiveness and coverage .
  • Guidance framework: $5M buffer reflects volume ±1%, ASP ±0.5ppt, and small non-testing variability; upper-end levered to speed of surveillance ramp and billing/collections .
  • Surveillance protocols vs clinician behavior: Protocols ramp on new patients over 2–3 quarters, but clinicians use dd-cfDNA for surveillance even without formal protocols, supporting ongoing volume recovery .
  • Litigation & capital allocation: Verdict reversed; potential appeal anticipated. Capital priorities remain reinvestment, strategic opportunities, then buybacks .
  • New hires ramp: ~6 months to full productivity; training emphasized amid Q1 disruptions; stronger Q2 expected .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for Q4 2024; access was unavailable due to daily limit constraints. As a result, comparisons to consensus are not provided [GetEstimates error].
  • Implication: Sell-side models may need to reflect Q4’s strong YoY growth, one-time revenue recognition dynamics, and updated 2025 guidance ranges, particularly on ASP, volume seasonality, and OpEx .

Key Takeaways for Investors

  • Revenue quality is improving, but one-time prior-period revenue contributions (~$17M FY, $2.2M in Q4) are not embedded in 2025, sharpening focus on organic volume/ASP drivers and billing execution .
  • Surveillance testing recovery in kidney is underway and should build through 2025 as protocols restart and clinicians continue dd-cfDNA usage; evidence pipeline (KOAR/SHORE) is a multi-quarter catalyst for coverage and adoption .
  • Coverage expansion and revenue cycle management are central to ASP tailwinds; the expanded billing organization and system upgrades are key to upside vs guidance .
  • Lab products margin improvements via supply chain/manufacturing actions are targeted by end-2025; watch for GM updates and product roadmap execution (Assign 2.0, Score 7) .
  • Capital structure and liquidity are strong (year-end $261M cash, no debt), enabling $50M buyback and reinvestment in growth while managing legal appeals risk .
  • Near-term trading: Q1 seasonality and early-year disruptions imply lighter growth; watch Q2 as new hires ramp and surveillance protocols accumulate .
  • Medium-term thesis: Multi-modal testing leadership, expanding payer coverage, AI-enabled digital solutions, and international HLA adoption support multi-year profitable growth toward 2027 targets .