CareDx Earnings Call: Growth Accelerates Amid Bold Pivot

CareDx Inc ((CDNA)) has held its Q1 earnings call. Read on for the main highlights of the call.

CareDx’s latest earnings call struck a notably upbeat tone, blending rapid top-line growth with clear margin progress and aggressive portfolio reshaping. Management acknowledged reimbursement and execution risks, yet emphasized a stronger cash position, a cleaner business mix and a bolder growth runway following the Lab Products sale and the Navaris acquisition.

Robust Q1 Revenue and Volume Momentum

Total revenue jumped 39% year over year to $118 million in the first quarter of 2026, signaling strong demand across CareDx’s core offerings. Testing volume climbed 17% to 54,900 tests, underscoring deeper penetration in transplant surveillance despite uneven procedure volumes.

Testing and Digital Businesses Drive Core Growth

Testing services remained the main engine, with revenue up 48% to $91 million and an average reported $16.60 per test. Patient and digital solutions complemented that trajectory, rising 33% to $16 million as CareDx deepened its ecosystem around transplant centers and recipients.

Profitability Metrics Show Significant Improvement

Non-GAAP gross margin expanded to 73%, reflecting stronger mix and better efficiency in the testing business. Adjusted EBITDA surged to $19 million, more than quadrupling year over year, while GAAP net income reached $3 million, or $0.05 per share.

Cash Collections and Balance Sheet Strengthen

Cash collections increased 52% to $121 million, highlighting improved billing and reimbursement execution. CareDx finished the quarter with $198 million in cash and cash equivalents, no debt, and generated $4 million of operating cash flow in the quarter and $72 million over the past year.

Guidance Lift Highlights Confidence in 2026 Outlook

Management raised full-year 2026 revenue guidance to a range of $447 million to $465 million, implying about 20% growth at the midpoint. Adjusted EBITDA is now projected at $43 million to $57 million, with testing volumes forecast between 224,000 and 229,000 tests for the year.

Portfolio Streamlining via Lab Products Divestiture

CareDx announced a definitive deal to sell its Lab Products business for $170 million upfront, expecting roughly $160 million in net proceeds. The divestiture sharpens focus on higher-growth testing and digital segments, which already delivered 48% and 33% revenue growth respectively in the quarter.

Navaris Acquisition Extends Reach into Oncology MRD

The company moved to acquire Navaris and its tumor-naive MRD platform, adding a sizable oncology testing beachhead. Navaris has processed over 130,000 tests, serves roughly 2,000 ordering physicians and is projected to deliver about $34 million in 2025 revenue with 30% to 40% annual growth potential.

Clinical Evidence and Scientific Profile Deepen

Navaris comes with 56 peer-reviewed publications, including data showing a 98% negative predictive value and 95% positive predictive value in a 543-patient MRD surveillance study. Separately, CareDx’s transplant portfolio was highlighted in more than 50 abstracts at a leading transplant conference, including 16 oral presentations.

Pipeline and Product Advancements Continue

CareDx reported progress across key programs, including clinical data from its Alaheme cell therapy initiative. AlloSure Liver advanced in the MAPLE trial with ongoing follow-up, while HistoMap Kidney is moving toward launch as clinical validation and laboratory readiness milestones are completed.

Workflow Integration and Commercial Execution Build

The company is pushing deeper integration with Epic, targeting about half of testing volume through Epic-connected sites by year-end, with nine centers live and 16 more in progress. A field support team of more than 120 professionals is working to streamline workflows and blood collection at transplant centers.

Lab Products Exposed Weak Margins Pre-Sale

The Lab Products segment posted a 4% revenue decline to $10 million in the quarter and generated less than $1 million in adjusted EBITDA. Management expects only $3 million to $9 million of full-year EBITDA from this segment, underscoring why the lower-margin business is being carved out.

Revenue Timing Noise from Out-of-Period Collections

Quarterly revenue was boosted by $14 million of cash collected beyond year-end receivables, adding roughly $260 per reported test. Management also flagged additional out-of-period revenue expected in the next two quarters, which may temporarily distort per-test economics for investors modeling near-term trends.

Reimbursement and Policy Risk on the Horizon

CareDx is preparing for potential changes to payer coverage policies that could trim testing revenue next year. Management is modeling about a $7.5 million negative revenue impact from expected reimbursement shifts in 2026, even as broader growth is poised to offset this headwind.

High Operating Cost Base Pressures Margins

Non-GAAP operating expenses reached $69 million, or 59% of revenue, and are guided at $68 million to $70 million per quarter. Elevated bonus accruals and around $9 million of annual depreciation weigh on margins, limiting the pace of bottom-line expansion despite rapid top-line growth.

Transplant Volume Softness Adds Growth Sensitivity

Management described transplant procedure volumes as sluggish and uneven across centers, reducing a natural tailwind for demand. Revenue growth is therefore leaning more on increased surveillance testing per patient, leaving results sensitive to any slowdown in adoption or adherence.

Navaris Scaling and Indication Expansion Risks

The Navaris acquisition brings attractive growth but also operational and clinical execution challenges, including the need to automate to lower cost per test. Some cancer indications remain under development, and the business will be exposed to future reimbursement dynamics as it scales.

Timing Uncertainty Around Lab Products Close

The Lab Products divestiture is expected to close by the end of the third quarter, but any delay could shift modeled revenue and earnings contributions. Transition services and carve-out costs may also introduce short-term noise, complicating near-term forecasts for the legacy products line.

Upgraded Guidance Signals Strong Growth Trajectory

For 2026, CareDx now expects revenue of $447 million to $465 million, with the midpoint implying 20% growth and about 10% revenue-per-test expansion. Adjusted EBITDA is projected to rise roughly 58% at the midpoint, supported by higher testing and digital revenues, modest gross margin gains and benefits from portfolio reshaping.

CareDx’s earnings call painted a picture of a company leaning into its strengths in testing and digital services while offloading lower-margin assets and adding a promising oncology platform. Investors will need to watch reimbursement trends and execution on integration, yet the combination of faster growth, better margins and a fortified balance sheet sets an encouraging tone for the coming year.