CareDx, Inc. 2026 Q3 Earnings Call

Good afternoon. Thank you for joining us today. Earlier, CareDx released financial results for the third quarter of 2026, ending September 30, 2026. The results and our earnings presentation are available on the company's website at caredx.com. Joining me on today's call are John Hanna, President and Chief Executive Officer, and Keith Kennedy, Chief Operating Officer and Chief Financial Officer. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that can cause actual results to differ materially from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements. Information concerning the risks, uncertainties and other factors that could cause results to differ from these forward-looking statements is included in our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, October 29, 2026. We disclaim any intention or obligation, except as required by law, to update or revise any information, financial projections or other forward-looking statements, whether because of new information, future events, or otherwise. This call will also include a discussion of certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute or in isolation from, GAAP measures. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures may be found in today's earnings release or investor presentation, which are posted on our website.

With that, I will now turn the call over to John.

Thank you, Nina. Good afternoon, everyone, and thank you all for joining us today. We had another strong quarter of solid execution, extending our leadership in transplantation, expanding into specialty oncology, and preparing for our entrance into cell therapy. As a reminder, our strategy is to focus on markets where we believe our core competencies give us the right to win. Markets where patients face a high burden of disease and are managed by a concentrated group of subspecialty providers, where the high cost of treatment and disease management warrants repeat molecular testing, and where our solution selling approach, including integrated testing, digital solutions, and pharmacy, can create a competitive advantage. In my conversations with clinicians across transplantation, oncology, and cell therapy over the past quarter, the feedback is consistent.

Clinicians want actionable precision molecular information about their patient's disease status and how it is changing over time to inform treatment decisions. Across these markets, our approach to driving growth is consistent. Generate the evidence that builds clinical belief and make testing easier to integrate into practice workflows. Today, I will cover our progress across the growth drivers we use to execute this strategy, our pipeline, the evidence we are generating, and how we are executing in the market, including specialty oncology. I am also excited to share later in my prepared remarks a new facet to our strategy in how we build meaningful connections with patients throughout their care journey. But first, let us talk about our pipeline. Innovation remains central to maintaining our leadership position, applying CareDx strengths in new markets and expanding our addressable market. Both of our organic pipeline programs are on track.

For each pipeline program, we begin by generating evidence well before launch, so clinicians have the data they need to evaluate the test and understand how it can inform patient care. Let me start with AlloHeme. We continue to advance AlloHeme, our recurrence monitoring test for patients undergoing cell therapy to treat AML and MDS hematologic malignancies. Designed as a universal assay for cell therapy patients without reliance on a specific disease mutation, AlloHeme represents an organic expansion of our capabilities into a market where we believe we have the potential to establish a differentiated leadership position. The ACROBAT Clinical Validation Steering Committee has submitted the initial trial manuscript for peer review. Recall at Tandem earlier this year, the authors demonstrated that AlloHeme identified molecular relapse a median of 41 days before clinical diagnosis.

We remain on track to complete CLIA readiness activities before year-end, supporting a planned commercial launch in the first quarter of 2027. HistoMap Kidney, which adds a layer of molecular insights to tissue biopsy assessment, complementing AlloSure Kidney blood-based monitoring, is also on track This quarter, a second independent validation study performed in conjunction with investigators at the University of Wisconsin was published in the peer-reviewed journal, Transplantation.

HistoMap's molecular classification exhibited robust concordance across established rejection categories. Importantly, the authors evaluated a subgroup of patients diagnosed with microvascular inflammation, or MVI. Previously, this pathology was often interpreted as no rejection. The clinical significance of this phenotype was elevated by a recent study published in the New England Journal of Medicine, which found that these patients had a significantly greater risk of graft loss than previously believed. In the Transplantation article, HistoMap was able to identify two subgroups of patients with MVI that had meaningfully different long-term graft outcomes.

Over follow-up of up to six years, 50% of patients molecularly classified by HistoMap as having a high risk of rejection experienced graft loss, compared with 15% of those classified by HistoMap as having a low risk of rejection. This more than threefold difference demonstrates HistoMap's potential to identify clinically meaningful risk in the setting of MVI beyond conventional pathology. We remain focused on completing HistoMap CLIA readiness activities before year-end in support of a broader commercial availability in 2027. As a reminder, in liver transplantation, we continue to collect and analyze follow-up data from patients enrolled in MAPLE, our multi-center prospective clinical validation study. Evidence generation is central to how we advance our pipeline. We are building the evidence needed to demonstrate clinical value and support future adoption and coverage. Turning now to evidence generation for our on-market products.

Evidence is how we build belief in molecular testing as standard of care. Our medical affairs team continues to strengthen the foundation for long-term growth by advancing clinical confidence in our testing portfolio and supporting the translation of evidence into clinical practice. I'll start with specialty oncology and then turn to transplant. In specialty oncology, NavDx is used for molecular residual disease, or MRD, testing in HPV-driven cancers, with surveillance as its first established context of use. Investigators are now exploring additional contexts of use, including radiation de-escalation in HPV-driven head and neck cancer. This is an important clinical question because the burden of radiation for head and neck cancer can be profound. Treatment typically lasts for six to seven weeks, and the cumulative effects can make it difficult for patients to swallow, maintain nutrition, and manage everyday life, with some effects persisting long after treatment ends.

If clinicians could safely reduce that burden for selected patients while maintaining disease control, even a shorter course or lower dose, that de-escalation could be meaningful. At the American Society for Radiation Oncology conference, or ASTRO, two independent phase II studies utilizing NavDx in distinct radiation de-escalation settings were presented. The first evaluated radiation after surgery. In an independent prospective multi-center study, investigators at Emory and Vanderbilt used post-operative NavDx results to guide the subsequent radiation dose and treatment area. Among 35 patients, the study reported 97% control of the cancer in the treated region at 12 and 24 months, along with favorable patient-reported swallowing function at one year. These findings are early, but they illustrate one potential context of use for precision molecular information following surgery. The second study from Ohio State evaluated patients receiving radiation as their primary treatment.

Investigators measured NavDx kinetics during treatment to determine which patients would receive a reduced radiation dose. In the first 15 patients, 12 had a greater than 95% decline in their NavDx score by week 4 and received a lower radiation dose than the current standard. All 12 achieved a complete response at 3 months, with no cancer returning in the treated region at the interim analysis. Longer follow-up will be important, but the study demonstrates how NavDx is being evaluated to tailor radiation based on an individual patient's response. Together, these two phase II trials evaluated two distinct contexts of use: guiding radiation after surgery and adapting definitive radiation during treatment to safely reduce the burden of radiation for selected patients while maintaining disease control.

At ASTRO, more than 20 trials were highlighted exploring radiation de-escalation in this setting, underscoring the level of clinical interest in determining which patients may safely receive a lower dosage. A new study is also evaluating NavDx during the initial period after definitive radiation treatment and before the standard of care imaging assessment at month 3. A newly published 8-center study in "Clinical Cancer Research," led by investigators at Mount Sinai and Dana-Farber Cancer Institute, evaluated 332 patients during this early post-treatment period. Patients whose results remained positive faced a much greater risk of recurrence, while no recurrences were observed among those whose results later became negative. The findings highlight the potential prognostic value of molecular results before the standard 3-month imaging assessment. This illustrates how the evidence could expand NavDx beyond established surveillance and into additional treatment decisions across the patient journey.