What happened
Shares of transplant diagnostics company CareDx (CDNA) were up more than 20% as of 12:20 p.m. ET on Friday after a decision by the Centers for Medicare & Medicaid Services (CMS) that could favor more diagnostic tests. The healthcare stock is still down by about 12% year to date.
So what
CareDx specializes in testing services and products to help transplant patients, and is a leading provider of genomics-based information for transplant patients. Sales of its tests are keenly affected by the CMS's decisions in terms of approvals and pricing for diagnostic tests. For example, CareDx management withheld its annual guidance because it said it was waiting for updated pricing from the agency.
A key trend that could help all diagnostic companies came on Thursday when CMS contractor Novitas Solutions, in response to pressure from the federal agency, changed its mind and decided it would continue to cover a host of non-invasive genetic cancer tests. That could signal an opening for all diagnostic testing companies.
Also on Thursday, Biodesix, another data-driven diagnostics company, announced that the CMS had approved its Nodify CDT test as an Advanced Diagnostic Laboratory Test (ADLT), possibly signaling the CMS will cover other such tests, including those marketed by CareDx. There had been concerns that the Medicare Billing Article revisions would curtail coverage of non-invasive post-transplant tests.
Now what
CareDx is coming off a difficult first quarter. Its revenue fell 3% year over year to $77.3 million, and it booked a net loss of $23.7 million, compared to a loss of $19.6 million in the same period a year ago. The lone bright spot in the report was that the company saw record testing volume for its AlloMap and AlloSure tests for heart transplants, with roughly 49,000 tests, up 17%, year over year.
