Please ensure Javascript is enabled for purposes of website accessibility

Here's Why CareDx Jumped 13.5% Today

By Brian Orelli, PhD - Aug 10, 2018 at 8:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A beat and a raise, what's not to like?

What happened

Shares of transplant specialist CareDx (CDNA 8.72%) jumped 13.5% on Friday after the company reported solid second-quarter earnings after the bell on Thursday, leading management to raise guidance for the year.

So what

Revenue increased 48% year over year on the back of the company's AlloSure test, which launched late last year. AlloSure has been used by 76 U.S. transplant centers so far, and CareDx estimates that 1% of U.S. kidney cancer patients are using a test that measures cell-free DNA, which is a sign of kidney injury.

CareDx's GAAP loss was larger than the year-ago quarter, but that was mostly due to changes in the value of common stock warrants and derivatives and an increase in stock-based compensation. Looking at adjusted earnings that backs out those and other items, CareDx's loss was $1.3 million, less than the $3.6 million it recorded in the year-ago quarter.

Doctors performing surgery with equipment in the background

Image source: Getty Images.

Now what

With a solid growth in the first half of the year, management felt comfortable increasing its revenue guidance to a range of $68 million to $70 million from previous guidance of $64 million to $66 million.

CareDx thinks it'll be profitable on an adjusted EBITDA basis during the second half of the year. Eventually, the company will need to start showing a profit the way everyone else calculates earnings, but adjusted EBITDA profitability is a good first start.

To help drive revenue further, CareDx signed a deal with Illumina (ILMN 5.95%) in May to sell Illumina's TruSight HLA Sequencing Panels that are used in transplantation diagnostic testing. As part of the deal, CareDx got the rights to develop its own products using Illumina's next-generation sequencing technology.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CareDx, Inc Stock Quote
CareDx, Inc
CDNA
$26.17 (8.72%) $2.10
Illumina, Inc. Stock Quote
Illumina, Inc.
ILMN
$258.06 (5.95%) $14.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.