CareDx, Inc (CDNA) Earnings

Management highlights

### Strategic Transformation Update - Two-year transformation to a leading precision medicine diagnostics company is largely complete, with exit from non-core businesses to focus on high-value opportunities across solid organ transplantation, specialty oncology, and cell therapy. - The CARDI-X model (longitudinal molecular testing, robust clinical evidence, integrated workflows, patient engagement) is a repeatable, differentiated framework across all business segments. ### Pipeline and Clinical Milestones - **ALAHEME (cell therapy AML/MDS recurrence monitoring):** ACROBAT trial clinical validation manuscript submitted to a peer-reviewed journal; results showed ALAHEME predicts relapse a median of 41 days ahead of standard of care, enabling earlier intervention. CLIA readiness on track for completion by end-2026, with a 2027 commercial launch planned, positioning the company for first-mover advantage in this market. - **Histomap Kidney (molecular biopsy assessment):** New clinical data published in *Transplantation* demonstrated Histomap Kidney identifies high-risk DSA/CD4-negative microvascular inflammation patients with 3x higher 6-year graft loss rates compared to low-risk groups, providing clinically meaningful data beyond conventional biopsy. A clinical study launch is planned for 2026, with broad commercial launch in 2027. - **AlloSure (solid organ transplant monitoring):** Multiple new studies published/presented confirmed clinical value: persistently elevated AlloSure levels correlate with 9x higher graft loss risk vs consistently low levels, and AlloSure detects ongoing injury missed by conventional markers, supporting its use as a potential clinical trial surrogate endpoint. AlloSure use is expanding beyond routine surveillance into new for-cause, risk assessment, and treatment response monitoring contexts. ### NavDx Acquisition Integration (Specialty Oncology) - Acquisition closed July 1, 2026; integration focused on three priorities: leveraging CareDx commercial/evidence generation infrastructure to expand NavDx adoption, applying workflow and EMR integration expertise to simplify clinical use, and integrating in-house revenue cycle/reimbursement capabilities to scale operations. - New data from a 40,000-patient cohort presented at the 2026 American Head and Neck Society meeting confirmed NavDx test kinetics predict salvage therapy response; 33 leading clinicians published consensus recommendations supporting serial circulating tumor HPV DNA testing (the core use case for NavDx) as standard of care for post-treatment surveillance, marking a key adoption milestone. ### Reimbursement Milestone - Final Medicare Local Coverage Determination (LCD) affirmed coverage for AlloSure and Allomap surveillance testing across kidney, heart, and lung transplants. The policy also establishes a coverage pathway for Histomap for indeterminate biopsy cases and a framework for future coverage of additional organs like liver transplant, supporting long-term innovation in transplant diagnostics.

Guidance

Management raised full-year 2026 guidance compared to prior estimates: - Total revenue guidance raised to $490 million to $500 million, representing 30% YoY growth at the $495 million midpoint. At the midpoint, guidance breaks down to $400 million in testing services revenue (including $24 million in specialty oncology revenue), $72 million in patient and digital solutions revenue, and $23 million in product revenue. - Adjusted EBITDA guidance set to $66 million to $78 million, with a 15% margin at the $72 million midpoint. - Total testing volume guidance of 258,000 to 266,000 tests, representing 31% YoY growth at the 262,000 midpoint. Midpoint assumptions are 72,600 total tests (58,000 transplant, 14,600 specialty oncology) in Q3 2026, and 76,300 total tests (60,000 transplant, 16,300 specialty oncology) in Q4 2026, with 30% YoY specialty oncology volume growth in H2 2026. - Non-GAAP gross margin guidance set to 71% to 73%, with 63% gross margin assumed for specialty oncology, ~79% for transplant testing, and 26% for patient and digital solutions. - Non-GAAP operating expenses guidance set to $293 million to $297 million, approximately 60% of total revenue. - The prior 7.5 million projected headwind from the new LCD policy was removed from guidance.

Segment performance

For Q2 2026 ending June 30, 2026, total company revenue increased 52% year-over-year to $132 million. 1. Testing Services: Revenue increased 61% YoY to $100 million (75.8% of total revenue), with 58,000 total tests (17% YoY volume growth) and an average of $1,720 per test. This includes $15.6 million in out-of-period revenue. 2. Patient and Digital Solutions: Revenue increased 50% YoY to $19 million (14.4% of total revenue), with growth driven primarily by the company's pharmacy segment. 3. Lab Products: Revenue increased 8% YoY to $13 million (9.8% of total revenue). The divestiture of the lab products business was completed on June 30, 2026.

Risks & headwinds

• NavDx transition to CareDx's in-house billing system (from third-party outsourcing) is a large operational undertaking that introduces near-term uncertainty around revenue and margin realization, leading management to take a prudent approach to near-term guidance. • Forward-looking statements, including all launch and growth projections, are based on current estimates and assumptions that face material risks and uncertainties which could cause actual results to differ materially from expectations, including regulatory, reimbursement, and clinical adoption risks. • Increased investment in new growth areas (cell therapy, specialty oncology) could temporarily pressure EBITDA margins in 2027 even as the company targets 20% long-term EBITDA margins.

Analyst Q&A

• Q: What is the early impact of the finalized Medicare LCD policy, and could it create tailwinds for volume or future Histomap coverage? /

  A: Management notes the LCD is a payment policy that does not directly change clinical ordering behavior, so no immediate volume impact is expected. The policy affirmatively endorses coverage for existing AlloSure/Allomap testing, and importantly establishes a clear pathway for future Histomap coverage as the company completes clinical development and collects additional evidence. This outcome is viewed as positive for long-term product expansion. /

• Q: Why is 30% YoY H2 2026 specialty oncology growth guidance set below NavDx's prior 40% Q1 growth rate, and what is the outlook for ASP increases in 2027? /

  A: Guidance is intentionally prudent because CareDx only just closed the acquisition, and plans to migrate NavDx from its current third-party billing system to CareDx's in-house system in Q4, a large operational transition. Management still believes 30-40% annual long-term growth is achievable, and expects ASPs to rise from the current ~$780 guided for H2 2026 to $1,000-$1,100 as billing is stabilized and additional clinical evidence supports higher reimbursement. /

• Q: What drivers are behind accelerating transplant testing volume growth, and what is the long-term EBITDA margin outlook? /

  A: Volume growth is driven by two core factors: improved clinical and patient workflows that have increased the average number of surveillance tests per patient, and expanding use of AlloSure in new for-cuse and treatment monitoring contexts beyond routine surveillance. Management confirmed a 20% long-term target EBITDA margin, with profitability prioritized alongside revenue growth, but noted that $5-$10 million in targeted investments for new programs could temporarily pressure margins in 2027. /

• Q: Will NavDx have a dedicated sales force after integration is complete? /

  A: NavDx already has a dedicated specialty oncology sales team today, and CareDx plans to expand this team to reach more potential ordering providers and drive higher utilization, as originally planned when the acquisition was announced.