The number of organ transplants has continued to grow over the years. Unfortunately, it seems as though supply is not going to catch up to demand any time soon.

With such a backlog of transplants, patients and clinicians alike want to ensure the safety of their new transplanted organ. Thankfully, medical diagnostic company CareDx (CDNA 8.40%) is working to address this issue. Let's take a look at what trends have me convinced to hold this healthcare company, despite the fact that its stock price is down more than 30% year-to-date.

Organ transplant waiting list in the U.S.

As reflected in the chart above, there is massive demand for transplants of all kinds, but especially for kidneys. As of September 2021, there were nearly 100,000 patients in the U.S. alone were awaiting a new kidney.

CareDx helps patients find their match and monitors the health of a transplanted organ as well. This leading niche diagnostics company has a battery of testing services for transplanted kidneys, hearts, and lungs, and is set to add liver transplants to the mix in the coming years. It also offers blood testing that matches donors to recipients.

While CareDx got its start in testing for matching donors and monitoring the health of transplanted organs, it is now expanding beyond diagnostics. The company's tools help manage several aspects of transplant care. It has a team dedicated to connecting community nephrologists with transplant centers and monitor transplant waiting list for patients and clinicians.

Post-transplant, CareDx's mobile phlebotomy team can meet the patient where they are most comfortable -- at home or elsewhere -- for post-transplant surveillance blood testing. It even offers a free app where patients can manage medications, track vital signs and fluid intake, and interact with their transplant care management team to schedule testing. In the process, CareDx is trying to become stickier by embedding itself across the spectrum of transplant care.

A chart depicting the number of organ transplants in the U.S. Kidney transplants are on the rise.

As evidenced in the above chart, the number of transplanted kidneys, lungs, liver, and hearts transplanted per year has steadily risen since the late 1980s. More transplants mean more organs that will have to be monitored for rejection.

AlloMap, a CareDx test that monitors for rejection of a transplanted heart, is utilized at over 90% of hospitals that perform cardiac transplantation. Its AlloSure blood test, which monitors the health of kidney transplants, is used at over 70% of hospitals that do kidney transplants, with one in three of these newly transplanted organs monitored with AlloSure. Despite having just launched in the fourth quarter of 2021, CareDx's Allosure lung test is already utilized by 40% of centers performing lung transplants.

Plus, this niche healthcare company is growing within its market, as testing volume has grown from just 16,000 tests processed in 2017 to 153,000 in 2021. In the meantime, its revenue has increased from $77 million in 2018 to $296 million in 2021, with management forecasting $330 to 350 million in 2022. The company believes there is plenty of room for growth, reporting that its transplant-matching and organ surveillance testing services constitute $6 billion addressable market.

As the number of patients in need of transplants and the number of transplants performed continue to rise, CareDx is primed to flourish for years to come. This diagnostics company already has a foot in the door at major healthcare institutions; with a market cap of just $1.76 billion and a price-to-sales ratio under 6, CareDx looks like a bargain for a savvy long-term investor.