Good day, and welcome to the CareDx Incorporated First Quarter Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Greg Hodulcek.
Please go ahead.
Thank you.
Good afternoon and thank you for joining us today. Earlier today CareDx released financial results for the quarter ending March 31, 2020. The release is currently available on the company's website at www.caredx.com. Peter Maag, Chief Executive Officer and Michael Bell, Chief Financial Officer will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination of historical operating trends, expectations regarding coverage decisions, pricing and enrollment matters, and our future financial expectation and results are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission.
The information provided in this conference call speaks only to the live broadcast today, April 30, 2020. CareDx disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections or other forward looking statements whether because of new information, future events or otherwise. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to Peter.
Peter?
Thanks, Greg, and good afternoon, everyone. I am pleased to welcome you to the CareDx call to review our results for the Q1 of 2020. Before we discuss our results, I wanted to take a moment to thank all of the healthcare workers across the globe. CareDx is part of a community of essential healthcare businesses. We have the utmost respect for those working on the frontline and do the best ourselves to support them wherever possible.
Back in January, we chose transplant proud as our theme for 2020, and it could not be more and I could not be more proud of how our team has come together in response to the COVID crisis. Now turning to the results, in the Q1 of 2020, we reported revenue of 38 $4,000,000 an increase of 48% compared with the Q1 of 2019. Growth primarily came from our testing services where we provided just over 15,000 patient results, an increase of 50% year over year. Product revenue for the quarter was $4,700,000 and digital revenue added $2,200,000 to the top line. For the 7th straight quarter, we posted a positive adjusted EBITDA.
We have always focused on building a profitable, sustainable precision medicine business and believe that our robust platform has enabled us to quickly pivot and adjust in response of this unprecedented crisis. The arrival of COVID-nineteen in the U. S. Has affected everyone and everything. The healthcare sector is no exception as hospitals have become the frontline of this battle.
With hospitals increasingly caring for COVID-nineteen patients, hospital administrators have chosen to limit or even defer non emergency visits and procedures. Immunosuppressed transplant patients either decided on their own or were asked to avoid transplant centers and caregiver visits. With transplant surveillance visits down, we did experience a slowdown in testing services volume in the final week of the quarter. Considering this backdrop, our results this quarter were particularly strong. Up until the impact of COVID-nineteen, we were well on track to exceed $40,000,000 in total revenue for the Q1.
Our pledge to support our patients remains our focus and as part of our efforts on March 17, we announced the launch of RemoTrak, our solution for enabling home based monitoring for transplant patients. Importantly, we created RemoTrak in response to hearing that patients were missing their check-in appointment and blood draws as a result of COVID crisis. This home based blood draw solution using mobile phlebotomy reduces the necessary visit to labs and hospitals for immunosuppressed transplant patients. Notably to date, more than 150 transplant centers are leaning in and offering RemoTrak to their patients. Approximately 2,000 kidney, heart and lung transplant patients have already enrolled.
Based on existing and new relationships with partners, we have expanded our nationwide network from 1,000 to more than 10,000 mobile phlebotomists. This has been an enormous undertaking as the need is greatest in areas where there are the most infections. As always, with complex workflows, the devil is in the detail and we are learning every day. Mobile phlebotomy has increased from 10% of our daily volume 8 weeks ago to now comprising over 50%. Under the tremendous leadership of Reg Sito, our President and Chief Business Officer, CareDx has pivoted extremely quickly, transplant proud.
As Remotrax starts to take effect and as some transplant centers begin to return to normal operating capacity, I'm very pleased to share that in the last week we have almost returned to pre COVID volume of AlloSure and AlloMap. It remains to be seen if this will continue and whether we can return to linear growth at any time soon, but for the moment we are pleased with the progress over the last week. Another COVID-nineteen related initiative that we are very proud of is our partnership with an international consortium, including the National Institute of Health to create and manage a global COVID-nineteen transplant registry. Initial mortality rates of transplant patients with COVID-nineteen infections are alarming. With this non competitive registry, we are supporting the need for better data on the impact COVID-nineteen is having on immunosuppressed transplant patients.
C19txr.org was built in record time and is powered by OtterCare, our transplant specific electronic medical record software. The site is free to use, is open access and is web based with a real time analytics dashboard. Already 400 COVID infections are captured in the registry, so this might be the largest COVID-nineteen transplant registry in the world. The OtterCare team in Omaha has done an incredible trial. Now turning to our operations, in response to the COVID crisis, we have established internal operating plans based on 3 Cs, compassion, common sense and confidence.
We have implemented multiple solutions to protect our employees and their families while continuing our commitment to supporting patients. Besides the talented Marissa Dixon, our Head of HR, we have an experienced and skilled management team in place supported by a seasoned and resourceful Board. I'm glad to report that our operations continue without interruption. As well as Remodrexc19txr.org and our operational update, I would like to comment on our very successful pivot to virtual meetings. We are now engaging with the transplant community more than ever.
We have virtual advisory boards bringing together transplant nephrologists and cardiologists, community nephrologists, transplant coordinators and administrators, transplant patients, PharmDs and HLA lab directors. We are deeply indebted to the incredible feedback, advice and insights that we have received from leaders in the transplant community. Lastly, some might have scratched their head last year when we acquired AutoCare and Clin Management to form a digital backbone for CareDx. While we could not have foreseen a crisis like COVID-nineteen, the trend towards precision medicine and the adoption of new interactive platforms based on clinical data was always there. Now, telehealth has become a reality overnight.
With these digital capabilities, CareDx is well positioned to lead this new era in patient engagement, clinical decision making and transplant care. As we announced a few weeks ago, we have withdrawn our 2020 revenue guidance. While volumes have almost come back to normal, we will undoubtedly see an adverse revenue impact in Q2. As I'm thinking about year end, I'm asking 3 questions. First, at the macro level, will COVID-nineteen and shelter in place orders have a lasting impact?
For example, will there be another way? 2nd, how successful will we be continuing to roll out RemotRack mitigating or potentially overcompensating the COVID impact? And third, when will transplant centers reopen to surveillance visits and when will their transplant volumes get back to pre COVID levels? We are applying our 3 Cs. We have tremendous compassion, especially for patients and frontline caregivers.
We lean in and apply common sense as we respond to the crisis and the path to recovery. And we are confident as we have built a great platform in transplant care. So I feel optimistic about the remainder of 2020 and look forward to providing updates on the progress in future communication. Now I hand over to Mike to discuss our financials. CareDx could not have a better suited CFO than Mike Bell in this time of crisis.
He's doing a phenomenal job. Mike?
Thank you, Peter. Turning first to the income statement. Total revenue for the Q1 was $38,400,000 a year over year growth of 48%. The growth in revenue was primarily driven by AlloSure Kidney and AlloSure AlloMap Heart as well as continued adoption and center penetration of AlloSure Kidney. AlloMap has also experienced accelerated growth over the past few quarters due to increased interest in heart care by transplant centers.
As a result of the strong performance of both AlloSure and AlloMap, testing services revenue in the Q1 increased 46% year over year to $31,400,000 Our Q1 product revenue increased 6% year over year to $4,700,000 and our digital revenue was 2,200,000 dollars Moving to our gross margins. For the Q1 of 2020, the gross margin was 68% compared to a gross margin of 63% in the same period of 2019. On a sequential basis, gross margins were up approximately 300 basis points compared to the Q4 of 2019. The non GAAP gross margin for the quarter was 71% compared to 67% in the prior year quarter. We do expect to see some impacts on our future gross margins because of the spend on Remotrek as the cost of a mobile phlebotomy draw is approximately $100 more expensive than a lab draw.
Although the full impact on margins will ultimately depend on the mix between RemoTract blood draws and draws done at labs. For the Q1 of 2020, net loss was $5,800,000 compared to a net loss of $7,500,000 in the same period of 2019. Our net loss per share was $0.14 for the quarter compared to a net loss per share of $0.18 in the Q1 of 2019. Non GAAP net income was $200,000 in the Q1 of 2020 compared to a non GAAP net income of $2,200,000 in the same period of 2019. Our non GAAP net income per share in the Q1 of 2020 was approximately 0 point 0 dollars compared to a non GAAP net income of $0.05 in the same period of 2019.
As a reminder, we define adjusted EBITDA as non GAAP net income before interest, income tax, depreciation, amortization and other income and expense. For the Q1 of 2020, we recorded a positive adjusted EBITDA of $200,000 compared to an adjusted EBITDA of $1,800,000 in the Q1 of 2019. Despite the impact of COVID-nineteen on our Q1 revenues, this is our 7th consecutive quarter of positive adjusted EBITDA. In the Q1 of 2020, our operating expenses were more or less in line with our plan, although there was a reduction in travel expenses in March. We expect to see our operating expenditure in Q2 stay flat to Q1 due to the impact of less travel and the switch of industry conferences from in person to virtual.
Regarding our cash position and liquidity, cash and cash equivalents on March 31, 2020, were 32,200,000 dollars Net operating cash flow was negative $3,100,000 in the Q1 of 2020. The operating cash outflow in the quarter was due to the annual incentive positive. Over the past few weeks, we have added $49,000,000 to our cash balance and currently our cash and cash equivalents are approximately $80,000,000 The increase in cash has come from 3 areas. Firstly, we used our at the market program to issue and sell exactly 1,000,000 shares, which generated net proceeds of $23,500,000 Secondly, we received $20,500,000 from CMS through its expanded accelerated and advanced payment program. The $20,500,000 will be recouped by CMS between August November this year.
We also received an initial distribution of $4,800,000 from the CURS Act Provider Relief Fund to support healthcare related expenses and lost revenue attributable to COVID-nineteen. Note that we did not participate in the Federal Paycheck Protection Program, also known as PPP. Based on our current improved cash position and our cash flow forecast, we feel KDX continues to be well positioned for the foreseeable future. Turning to guidance. As we stated in our press release earlier this month, due to the uncertainty surrounding the impact of COVID-nineteen will have on our business, we will not currently be providing revenue guidance for the full year 2020.
Now, I'll hand back over to Peter.
Thank you, Mike. In closing, I want to thank all of our employees for their hard work and dedication during this unprecedented time. One of our most significant themes is that it takes a village and throughout this challenging time our CareDx Village has come together to support each other while remaining steadfast in our dedication and passion to transplant patient care. Thank you all for joining the call and I will open the call for questions.
The first question comes from Brandon Couillard from Jefferies. Please go ahead.
Hey, good afternoon.
Peter, maybe just starting with RemoTrak, surprised to hear it's already 50% of volumes. Is this just a new operating model for the business now? I mean, why go back to the old way? And as we think about the unit economics, are there some other positive offsets, spending avoidance that you might be able to realize such as lower requirements on your back end compliance and call centers that might help you offset some of the $100 added for the mobile phlebotomy?
Thank you, Brandon. Excellent question. I think there is really 2 types of feedbacks. One is, patients absolutely love it. Patients don't need to drive in for an hour or 2 or maybe sometimes 3 since they live remotely into the transplant center then be in a waiting room, wait for their blood work, have then maybe sometimes only 5 to 10 minute interactions with a nurse and everything is good and then they travel back home.
So, patients love the mobile phlebotomy, especially for those that are doing well. Clinicians, I would say they are probably half half. They love to see patients face to face and they think there is a significant value in having the patient in this visiting the center. But they also have the other half is just completely convinced and telehealth is here to stay. What does that mean for Remotrach that I think we continue to be flexible.
It's very clear that in a COVID crisis center like New York, most of these patients are going mobile, while in other transplant centers there might be a stronger mix. But what it tells me that CareDx is actually excellent prepared in order to answer to these individual patient strategy even. To your point about offsetting, I think one thing that will be very true is that RemoTrak allows us to have direct to patient communication that we have for office been seeking and allows us to monitor and apply the surveillance schedule. You might recall that we have updated that we're losing sometimes a few surveillance visits on the go. And the closer we get to the patient and the more interactions we have and the better we can actually help scheduling this visit, the more the fulfillment on their regular surveillance schedule will be true.
So, we see actually that there is a bit of an upside for us in terms of volume, making sure that these patients stick to their surveillance visit and get all their blood draws.
Maybe from a high level, as best you are aware, could you maybe just talk a little bit about what your sense is in terms of what transplant activity is today? How far off of normal that might be? It's kind of what the timeline might look like and whether you would expect some lag effect from the delay in those new transplant procedures to maybe show up in your business as a headwind maybe in a few months? Can we sort of think through that?
Excellent question, Brandon. I think, first of all, this is we are still very early in the penetration of all patients. Maybe we are 5% penetrated against the overall opportunity. So there is not going to be a shortage of patients anywhere near in terms of our ability to convert into AlloSure patients. Secondly, yes, that might be short term, especially living donations is down right now.
If you have an organ from a friend or family member, These transplantations probably are not occurring in many transplant centers right now in the country. But maybe overall volume is down by 30% to 40% and some centers by 50%. But I think that will swing back. We hear actually that the transplant centers since they are a key driver for many of these medical centers also for profitability, that probably they will be one of the first units to open back up. And there are some that are actually anticipating a bit of a surge in the moment that we are coming back to normal in these centers.
My guess is that this will not happen all at once at all centers at the same time, but we will see regional differences. So I would see that we are some months out to complete normal, but we will actually see a number of centers coming back online relatively quickly.
Hey, lastly, you did mention in your prepared remarks, but curious if you could just maybe touch on the Aliselle product, which you disclosed a few weeks ago. Could you maybe just share with us a little bit more about how your offering serves in that surveillance of patients who are receiving those therapies? And if you could maybe talk about who the biopharma partner is that you noted in the press release?
I think there's a number of companies and partners that we talk to and one came we wanted to announce the first one because I think that's a meaningful step as our pharma services. The original model is truly to develop this, co develop this and make it available through clinical trials with pharma partners establishing the concept. We see this as moving the company from a heart transplant focused to a kidney focused now into a cell therapy. These engineered cell transplants are nothing else than a transplant and we with our technology are present to detect these non owned cells. So in a way you'll hear us talk about allo transplantation in the future a lot more.
I think this is an exciting new opportunity. This is not going to be short term tremendously revenue relevant from a testing service perspective, but more so from a relationship and pharma research and development perspective. So bear with me, we'll be communicating more on that as we progress through the year.
Very good. Thank you.
The next question comes from Stephen Ma from Poker Sandler. Please go ahead.
Hi, Peter. Hi, Mike. How are you guys doing?
Steven, thank you very much. Welcome to the analyst team. So, this must be the first time that we hear you in this capacity.
Yes, that's right. Yes, you're the first one. Yes. So, yes, I appreciate the warm welcome. Congratulations.
Yes. And congratulations for your post transplant volumes returning to normal. So that's really great news. And yes, I wanted to get maybe a little bit more color on that and kind of square away your comments that you said earlier in your prepared remarks where you said that physicians and patients are either by choice or just because things are closed that they're avoiding transplant centers. But I would expect that the post transplantation test to be seen more as an essential test rather than elective procedure.
So maybe can you give us some sense on how doctors and patients are viewing post transplant?
Yes. I think we had initially in the last couple of weeks of March a bit of a shell shock response from transplant centers saying, well, every patient that's doing well do not come in and don't have your surveillance visit. And so that led to a drop in volume of surveillance visits in March. But you're absolutely right that both patients and caregivers want to maintain surveillance visits of these patients. That's why RemoTrak is so important.
I did comment on that we're almost back to pre COVID levels, which probably is because of that, that it's not elective. After transplantation, you need to be constantly monitored for a rejection episode. And that's why our value is now more seen than ever. It's also true that right now having this liquid biopsy concept that a simple blood test is giving you a lot of information and taking in the patient now for an invasive procedure like a biopsy and have them spend significant time at a transplant center, the balance is really tipping in our favor very, very clearly on the liquid biopsy. So in terms of our value proposition, it has never been stronger and clear articulated.
So I would agree with you that we'll see transplant patients come back to transplant center very, very quickly again.
Okay, great. And just a follow-up question. On RemoTrak, do you think transplant centers are going to integrate it into their protocols, given that COVID-nineteen is relatively uncertain? Again, yes, there's going to be a second wave or every flu season, this is we're going to go through the same thing?
Elektor, I like also Reg Seedo, who's on the call, comment on that. But I would see that we will see probably flare ups of COVID-nineteen in the country in different locations over the year. So I don't think that this will be entirely going away, but then we will have very local and regional responses to COVID-nineteen. So I would say, we will stay flexible and this will be a center by center approach. But maybe Reg, over to you, talking about RemoTrack and our ability to pivot.
Yes. Thanks, Peter. I mean, we have seen more than 150 centers expressed interest in RemoTrak and with that, we have a lot of protocols and surveillance patients being used. So, I think with RemoTrak being incorporated as part of that with the current offering, I think in the future, we'll as Peter mentioned, we'll start seeing more of this adoption potentially even on a profile basis.
Okay, great. That's helpful. And real quick, if I have time, one for Mike. Can you give us a sense on the clinical trials? Do you expect enrollments and timing to slow down?
And how should we think about R and D expense this year?
Yes, Steve. I think, yes, obviously, patient enrollment on OCCRA and SHORE are going to slow down in the near term and probably on OCCRA as well as we're ramping up the census, that sensor enrollment is probably going to slow down. So I think we will see a slight slowdown in that R and D expense until those volumes pick back up. In the remarks before, I mentioned that in Q2, we expect our operating expense to be relatively in line with Q1 because there will be savings on travel costs, on the conference costs and the clinical study costs will also be one of those savings if you like in Q2.
But it also gives me Stephen, it gives me like just our medical team has done a great job. We would probably have reported a number of 25 Okra sites up and running in the Q1. We chose not to stress this in the prepared remarks because I think right now many of these centers are not actively enrolling because of that. But as soon as they are opening up, we will anticipate that Okra is going to full steam and we are actually pretty proud to have 25 sites up and running on Okra.
Great. All right.
Thanks for all the time.
The next question comes from Alex Nowak from Craig Hallum. Please go ahead.
Great. Good afternoon, everyone, and congrats on the Q1 in spite of COVID here and congrats on seeing the testing levels return to the previous highs. I wanted to go back on a comment you made, Peter, about biopsy. I mean, biopsy is obviously the gold standard here. You recently hosted a conference, a virtual conference, and there was a lot of talk about centers adjusting their protocols for social distancing guidelines and largely getting rid of biopsies.
So I've got to imagine this is a big boost for CareDx, but is there any way to quantify just how beneficial the shift away from biopsies almost completely could be to CareDx both in the near and the long term?
Well, I think this would I would say this is organ specific a little bit. On heart, the opportunity is very significant. The heart transplant patients receive 12 to 18 biopsies in the 1st year 1st 2 years after transplantation. So think about this as we are right now rolling out heart care. There's ample opportunity for us to grow on the heart franchise.
On the kidney transplant side, there are many transplant centers that actually do not use kidney biopsies because of the invasiveness and the risk reward ratios might not be as high. So we only see 25% of transplant centers doing routine protocol biopsies. And I would say those protocol biopsies right now, we would probably see in many transplant centers replaced because this routine biopsy where you are basically just checking if everything is okay has very, very low yield. We know about 10% to 15% of these biopsies are showing something to follow-up on. So there the risk reward ratio doesn't seem to be strong.
But I think on the heart side significant opportunity, kidney maybe a little bit less, but still also on the biopsy for cost where we have a lot of serum creatinine goes up and then you do a biopsy and then still you have no yield. Many transplant centers might now first do an AlloSure before they have the patient come in and do a biopsy. So I think clearly the value proposition is significant. We just see that as total confirmation of our approach to blood based testing.
Understood. And Peter, how are
you positioning the sales force now to sell on this post COVID world where access to the transplant centers could be really limited? And on the flip side, do
you think these restrictions will actually make your business even more sticky from potential competition?
Well, I would tell you that on our products business right now is probably not the best time to launch products. Access is limited. This is right now, mines are preoccupied. And so, doing something new and different on your daily routine is probably not the best time to do. So, yes, I think we have really another quarter where CareDx can build out its 1st mover advantage.
So I think we are very extremely well positioned there. On the transplant account managers or the individuals that are out in the field, I think our business model has shifted. I mean, there's not a day going by where we don't have significant hour spent in front of video conference. And also our team is pivoting and we have a lot of video calls and video interactions. Our webinars are now substantial for distributing information and sharing education.
So, right now our office looks more like a virtual telemarketing type of outset than a traditional diagnostics company. So it's we have been pivoting really quickly and so has our field force. But let's face it, I think for us right now it's all leaning in making sure that every patient that needs AlloSure AlloMap gets access to our technology. And there I just applaud the entire field team of being on the ready.
Absolutely, understood. That's good to hear. And then Mike, can you just elaborate on the $20,000,000 advanced payment program with CMS? Just what is that program? And really how does it work?
Yes, Alex. Alec, the program is that companies, well, medical providers can request an advance of up to 3 months' worth of expected payments from CMS. So that was provided to us. That amount $20,500,000 And then CMS, per the current projections, they would start to recoup that back around August, between August November during this year. So every time we would do a Medicare test in that period, they would not pay us and they would just recoup the money advance that they've paid us.
Got it. So I assume that sits on the balance sheet as a prepaid revenue item?
It won't be as revenue, but it will just sit on the balance sheet as cash and then that will just get sort of withdrawn down over time. Got it.
Okay, understood. Well, thank you again and good luck to everyone here.
Thank you, Alex.
The next question comes from Andrew Cooper from Raymond James. Please go ahead.
Hey, guys. Thanks for the questions. A lot has been covered, so I'll keep them kind of quick. But I was wondering if maybe you could give a little bit of color on RemoTrak. Is there any level of difference between kind of what patients are adopting it or whether it's the folks that are in protocols or new transplant patients are more likely or anything like that?
Is there any difference between who says, this is what I want to do versus not?
Yes. I think our response has been to many patients are worried. They are worried about leaving the house. They are worried about going into a transplant center. But I would like to hand over to Rexito to answer your question more specifically.
Yes, thanks. I mean, we have seen the majority of patients from one segment being those on surveillance today, but we have also seen a new segment of patients who currently on surveillance, but where as we talked about with the greater need to monitor these patients where they have now been brought into Remitrac. So, there's been 2 specific segments.
Okay, that's helpful. And then maybe just kind of tying Remotrac to something you said Peter around telehealth, but given what you've done on sort of the digital side and started to do and what you've now added with Remotracker in your comment that some physicians still want to have the face to face conversation. Is there an opportunity there to sort of tie in whether it's developed yourself or partnering with a telehealth provider to add to the capabilities from that perspective and what would that opportunity potentially look like?
Well, I think the opportunity is relatively simple that the doctor when he sees the patient also receives his information on AlloSure plus the entire blood workup. And having that at his fingertips when he makes decisions about that patient continuum and that patient journey, I think that would be ideal. Unfortunately, what sounds relatively simple is incredibly difficult in terms of a workflow at a transplant center to make sure that the patient that the clinician actually has all that information at the time of decision making, that has to do with the integration of diagnostics into the electronic medical record and that has to do with even as simple as making sure that the patient can turn on the button on the Zoom video, right. So, there is a lot of things in the workflow, but I think we really are in a new era and this will become the standard. I think clinicians will have that information available and maybe with our smart algorithms and predictive tools, we can even help clinicians to decide which patients they want to see on a televisit or which patients they are completely they have to ask to come into the center and maybe some patients will be seen only by the nurse and some other patients will really need to have the specialists attending.
So I think we can with our smart solutions, we started that with Ibox and the integration into our auto care program, we can really support clinical decision making down the line. We're very early on this, but I think eHealth has become a has gotten a boost through COVID-nineteen. And my guess is that this business is here to stay. So having a more integrated approach that CureDS is offering potentially offers a competitive advantage in future as we're building our mode in transplantation.
Great. Thanks. I'll leave it there.
The next question comes from Yi Chen from H. C. Wainwright. Please go ahead.
Thank you for taking my question. First question is, what is the volume capacity of testing RemoteTrack can support if COVID-nineteen persists throughout the year?
That's an excellent question. And I think we're unlimited in the sense of being able to manage blood draws coming into our lab. I would say we're probably having more capacity doing blood draws than we would have capacity on testing them. But we have always scaled our lab alongside volumes. So don't think of CareDx being capacity constrained in any form of fashion.
Okay. And then, what evidence do you need to have to reinstate revenue guidance?
That's a really good question. And Yi Chen, I was anticipating that question. That's why I gave a bit of how I'm thinking about it. First of all, who knows if there's going to be a second wave? I personally anticipate that there will be second waves in different places in the United States and it's incredibly difficult to forecast where those will be.
If there were to be in locations where there is significant transplant volume, CureDx would be more impacted than in others. The second one is really RemoTrak has been a phenomenal success in the 1st few weeks and the team has done a phenomenal job, but the devil is in the detail and how successful can we roll that out across the United States in all centers for all patients, That's to be seen. And I'd be happy to update you on that. And the last one is really around, is there an opportunity for us to capture in the transplant centers that are going back to normal? I just heard yesterday that Cleveland Clinic is actually getting a transplant from Detroit and down from Michigan where there is significant COVID and they actually now are now doing more transplants than before.
So the question will be how do individual transplant centers come back up on stream and when are we back to overall transplant volume? And that's incredibly difficult to forecast. I think after all saying that, I think it's the prudent way for us to withdraw guidance right now. But we'll let you know as soon as we can to think about guidance again.
Got it. Last question is digital and other revenue had a significant quarter over quarter growth in Q1. Could you provide more color on the potential of this revenue stream?
Well, Yi Chen, the reason why quarter over quarter is because that revenue comes from the acquisitions that we made last year. So the Otter acquisition was in May and the same acquisition was in August. So there was no like for like revenue in the Q1 of
2019. No,
I meant compared to the Q4 of last year.
The 4th quarter.
The Q4.
Yes. Yes. I mean, well, some of that's
coming from new contracts that we're getting from both the Opta business and the ZYN business. I think before the COVID crisis and when we had revenue guidance out there, we said we expected revenue for the digital business to be around $8,000,000 for the year. So the Q1 was in line with that. Whether or not in the remaining quarters there would be a slowdown of that because maybe some sensors get slower at making decisions to adopt a new platform that could have an impact. So Q1 was very good and we were really pleased with that.
But yes, we'll have to see what happens for the remainder of the year.
Okay, got it. Thank you.
This concludes our question and answer session. I'd like to turn the conference back over to Peter Megg for any closing remarks.
Well, thank you so much for joining us for the Q1 call, and I'm looking very much forward to continue to update you of our progress. I'll end with a shout out to TransplantProud and thank you so much for being part of the community that allows us to do what we're doing. We're focusing on transplant patients every day. Thank you very much and bye bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.