CareDx 2026 Q2 Earnings Call

Good afternoon. Thank you for joining us today. Earlier today, CareDx released financial results for the second quarter 2026, ending June 30th, 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 facts 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 could 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 filing with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, July 30th, 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 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 compatible GAAP financial measures may be found in today's earnings release, which is posted on our website.

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

Thank you, Nina. Good afternoon, thank you for joining us today. Two years ago, we set out to transform CareDx into a leading precision medicine diagnostics company. Today, that transformation is largely complete. We deepened our leadership in transplantation. We sharpened the portfolio, exiting non-core businesses to focus on our highest value opportunities. We extended that same solutions approach into specialty oncology and cell therapy, new markets with the same proven model. The CareDx model is built on longitudinal molecular testing that informs clinical decision-making, supported by robust clinical evidence, integrated workflows, and patient engagement. It's repeatable and differentiated, and it connects everything we do across transplant, specialty oncology, and cell therapy. Our growth strategy is working.

We are pursuing markets where our core competencies give us the right to win, where we can hold a clear number one position, and where patients face a high cost and burden of disease warranting repeat molecular testing to inform clinical decision-making. In these markets, our solution-selling model creates value and stickiness with clinicians and patients. Today in my prepared remarks, I'm going to share an update on progress with our pipeline, the integration of our strategic acquisition of NavDx, and our execution on the quarter in solid organ transplantation. Innovation remains central to how we plan to maintain our leadership position, extend our model into new markets, and grow our TAM. We continue to advance AlloHeme, our recurrence monitoring test for patients undergoing cell therapy to treat AML and MDS hematologic malignancies.

During the second quarter, investigators from the ACROBAT trial submitted the AlloHeme clinical validation manuscript to a peer-reviewed journal. One of the most compelling findings from the ACROBAT study was AlloHeme's ability to predict relapse ahead of standard of care. AlloHeme predicted relapse a median of 41 days before clinical relapse was diagnosed. This lead time may provide an opportunity for earlier clinical intervention, potentially enabling clinicians to take action before overt relapse occurs. These data support the potential role of AlloHeme as a blood-based surveillance tool for risk stratification and earlier detection. Publication of these results is an important milestone in our evidence generation strategy, helping to build clinical confidence in AlloHeme and support future adoption. We believe the publication represents a key step toward our reimbursement objectives, including future coverage submissions to both private and Medicare payers.

We remain on track to complete CLIA readiness activities before year-end, positioning AlloHeme for a planned 2027 commercial launch. AlloHeme represents the organic expansion of the CareDx model into cell therapy, a market where we believe we have a first-mover advantage and are positioned to win by creating meaningful value for patients and providers. HistoMap Kidney also continues to advance toward launch. HistoMap adds a molecular layer to tissue biopsy assessment to complement AlloSure Kidney blood-based monitoring. Last week, investigators from the University of Wisconsin published new data in the journal Transplantation evaluating HistoMap Kidney in 138 kidney transplant biopsy specimens, including 42 patients with microvascular inflammation that is donor-specific antibody negative and C4d negative. DSA negative and C4d negative MVI was recognized in the 2022 Banff classification as a distinct rejection phenotype that can appear low risk by conventional biopsy assessment, yet may progress to rejection and graft loss.

In the study, HistoMap Kidney distinguished patients with MVI pathology with markedly different outcomes, with more than three times the rate of graft loss at six years in the HistoMap high-risk group compared with the low-risk group, supporting the potential of HistoMap Kidney to provide clinically meaningful information beyond conventional biopsy assessment. HistoMap is an example of how we are establishing clinical differentiation and providing molecular solutions to our customers from non-invasive blood-based monitoring to prognostic tissue analysis of high-risk patients undergoing biopsy. We intend to launch HistoMap Kidney in a clinical study this year and make it available more broadly commercially in 2027. In addition to our pipeline programs, we have significantly expanded our TAM with the recent NavDx acquisition in specialty oncology. NavDx adds a clinically differentiated solid tumor MRD platform to the CareDx portfolio. We are already seeing encouraging momentum as we integrate the business.

Since closing the acquisition on July 1st, we've made meaningful progress executing the integration priorities that support the strategic rationale for the transaction. Our focus has been on three areas where we believe CareDx's core competencies can drive growth and create value. First, leveraging our commercial capabilities in evidence generation, building belief in molecular testing as a standard of care, and patient support infrastructure to expand adoption of NavDx. Second, applying our workflow expertise, including Epic integration and connectivity capabilities, to simplify the customer experience and support incorporation into routine clinical practice. Third, integrating revenue cycle management and reimbursement capabilities to create a scalable operational foundation and support broader market access. Together, these initiatives reflect the core value creation opportunity behind the acquisition, combining NavDx's differentiated technology with CareDx's commercial reach, workflow expertise, and operational scale.

In July, I had the fortune to attend the 2026 American Head and Neck Society Annual Meeting in Boston and meet with head and neck surgeons, radiation oncologists, and medical oncologists from over 60 institutions across the U.S. Their conviction for using NavDx in their practice is strong, and they were enthusiastic about how our solutions address their key challenges with broader adoption. At the event, over 30 presentations and sessions focused on circulating tumor HPV DNA or other biomarker-related topics. New data were presented from a nationwide cohort of approximately 40,000 patients with HPV-driven cancers. The study focused on patients whose NavDx tests became positive during surveillance monitoring, indicating molecular recurrence of disease. The authors evaluated the clinical significance of the NavDx quantitative score, a differentiating feature of the test, in predicting response to treatment, otherwise known as salvage therapy.

The data demonstrated that lower NavDx scores at the time of molecular recurrence were associated with higher rates of ctDNA clearance and faster clearance to undetectable levels, supporting the role of NavDx in predicting response to salvage therapy. These findings suggest the test kinetics may provide prognostic information, helping clinicians better understand how patients respond to treatment in the recurrent setting. Also at AHNS, we hosted a symposia featuring leading clinicians of the California Head and Neck Cancer Consortium, who recently published consensus recommendations on the use of circulating tumor HPV DNA in head and neck cancer. The session drew strong engagement from the head and neck oncology community. 33 experts across 15 institutions reached a strong consensus that circulating tumor HPV DNA is a valuable tool for diagnosis and surveillance and that serial testing should be performed throughout the years following definitive treatment.

This is an important milestone when leading clinicians converge on consensus recommendations for how a technology should be used, it signals that molecular testing is becoming an established part of how these patients are managed in clinical practice. Moving on to solid organ transplant, we continue to see molecular testing increasingly integrated into clinical decision-making across transplant care. As the evidence base grows, clinicians are using molecular insights not only to detect rejection, but also to assess rejection risk, evaluate treatment response, and support longitudinal patient management. At the American Transplant Congress, the largest transplant meeting of the year, we continued to build belief in molecular testing as a standard of care by advancing our evidence generation strategy with new data that support both adoption of AlloSure surveillance testing and the expansion of its use into new for-cause contexts of use.

At ATC, CareDx data were featured in more than 30 abstracts and nine oral presentations spanning kidney, heart, lung, and multi-organ transplantation with findings generated from studies conducted across more than 110 transplant centers in the U.S. One of the clearest themes at ATC was the continued evolution of AlloSure Kidney beyond surveillance, increasingly being evaluated for risk assessment, treatment response, and long-term graft outcomes, not just to identify injury. One of the most notable studies presented at ATC evaluated more than 1,100 kidney transplant recipients from the KOAR registry and examined how AlloSure trajectories during the first four months of surveillance testing following transplant related to long-term outcomes. The findings were striking. Approximately 35% of patients with persistently elevated AlloSure levels experienced rejection and had a nine-fold higher risk of graft loss compared to patients with consistently low AlloSure levels.