CareDx (CDNA) EPS Beats Sales Gain 14%

CareDx (CDNA -11.37%), a molecular diagnostics company specializing in transplant care solutions, released its results for the second quarter of fiscal 2025 on August 6, 2025. The big news from the release was a solid beat on non-GAAP earnings per share, reporting $0.10 against an expected loss, despite a very slight non-GAAP revenue shortfall versus expectations. Non-GAAP adjusted revenue was $90.5 million, up 14% from the prior year but just short of the $90.6 million non-GAAP consensus. Testing service volumes continued their streak of growth, reaching 49,500, and the company’s adjusted EBITDA swung positive year over year. Management narrowed its full-year 2025 revenue guidance to $367 million to $373 million but reaffirmed its adjusted EBITDA target of $29 million to $33 million for FY2025, underscoring progress in driving operational discipline even as margins faced pressure in the period.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About CareDx and Its Business Model

CareDx develops diagnostic tests, digital solutions, and associated products focused on improving outcomes for organ transplant patients. Its flagship offerings include AlloSure kidney, heart, and lung surveillance tests, which use molecular techniques to monitor for signs of organ rejection more effectively than conventional approaches.

The company pursues a strategy of working closely with transplant centers, offering both laboratory testing and digital patient solutions. By tying together services like testing, patient engagement software, and transplant pharmacy, CareDx aims to deepen relationships with clients and boost cross-selling opportunities. This model seeks to keep customer acquisition costs in check while building predictable growth.

Quarterly Performance and Key Initiatives

For the quarter, CareDx’s adjusted revenue rose 14% year-over-year, primarily driven by robust growth in test volumes. The company delivered approximately 49,500 testing services, up 13% year-over-year, with AlloSure kidney surveillance testing volume grew nearly 20% year-over-year. The patient and digital solutions segment, which includes tools for patient engagement and a specialized pharmacy, posted a 19% increase to $12.8 million in GAAP revenue. Product revenue from transplant-related kits climbed 12% to $11.8 million.

CareDx also saw its adjusted EBITDA improve to $9.1 million, swinging from a loss in the prior year quarter. This improvement was supported by increasing test volumes and collection efficiency. However, margins did come under pressure: the company’s non-GAAP gross margin dipped to 69%, down from 72% in Q2 2024. GAAP gross margin mirrored this decline, coming in at 67%.

Operationally, CareDx advanced several notable initiatives. It began customer pilots of its EPIC electronic health record integration, aiming to make test ordering and billing more seamless for client centers. The launch of AlloSure Plus, an artificial intelligence-powered diagnostic platform for organ rejection prediction, marked a significant nod to the growing role of AI in healthcare diagnostics. The company also generated new clinical evidence, including a large peer-reviewed publication from its Kidney Allograft Outcomes AlloSure Registry, which could support improved reimbursement in the future. At the 2025 World Transplant Congress, CareDx products were featured in 40 abstracts and 12 oral presentations, reinforcing its presence among leading transplant centers.

A one-time negative revenue adjustment ($3.8 million) for aged receivables weighed on GAAP reported figures. This adjustment follows a $13.2 million positive prior period adjustment in Q2 2024, making the year-over-year decline in reported GAAP revenue and testing services revenue appear larger than it is on a normalized basis. Legal costs also affected the first quarter, with over $5 million in out-of-pocket settlement expense related to the resolution of a securities class action lawsuit.

CareDx made visible investments in its commercial teams, especially in sales and marketing. Non-GAAP operating expenses edged higher in the first quarter, in line with a strategy to drive future growth, while research and development spending (non-GAAP) held roughly steady year over year in the first quarter. The company ended the quarter with $186 million in cash and marketable securities after completing a $50 million share repurchase. It continues to carry no debt, supporting ongoing investments and offering financial resilience.

Looking Forward: Management Guidance and Industry Watchpoints

Management narrowed CareDx’s FY2025 revenue guidance range to $367 million to $373 million (from $365 million to $375 million). Adjusted EBITDA guidance was maintained at $29 million to $33 million for the full year. The forecast assumes continued sequential test volume growth, mid-teens percentage increases in test counts, and a stable average selling price of about $1,360 per test for the full year. No material impact from recent tariff policy changes is expected.

Despite strong core operating results, investors should watch several areas in the coming quarters: potential for further margin compression, regulatory and reimbursement changes affecting Medicare and private payer policies, and the effects of ongoing investments in infrastructure and process improvement, such as the EPIC integration initiative. The transition toward more payer contracts using AlloSure’s dedicated billing code could help future revenue and pricing, but benefits will manifest across several quarters. Management did not make any mention of a quarterly dividend. CDNA does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.