Greetings, ladies and gentlemen, and welcome to CareDx Incorporated First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, David Kramer. Thank you.
You may begin.
Good afternoon. Thank you for joining us today. Earlier today, CareDx released financial results for the quarter ended March 31, 2019. The release is currently available on the company's website at www.caredx.com. Peter Maude, 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 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 expectations 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 descriptions of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. CareDx disclaims any intention or obligation, except as required by law, to update or revise any financial projections or other forward looking statements, whether because of new information, future events or otherwise. This conference call contains sensitive information and is accurate only as of the live broadcast today, May 8, 2019. This call will also include a discussion of a financial measure that is 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. Thanks, David, and good afternoon, everyone. We had another exciting quarter at CareDx as we continue to accelerate our leadership position in transplantation diagnostics. Our first mover advantage gives CareDx a considerable leap and we are strengthening our platform every day. In March, we announced a partnership with Cedars Sinai to study the use of AlloSure to characterize the Also in March, we announced the clinical validation of AlloSure used in Also in March, we announced the clinical validation of AlloSure use in heart transplant patients, which was published in the American Journal of Transplantation.
This study is the 1st large prospective multicenter clinical validation showing the ability of our AlloSure heart testing service to detect acute cell mediated and antibody mediated rejection in heart transplant recipients. In late April, we announced an agreement to acquire Otter Complete Transplant Management, the leading provider of transplant patient tracking software, which is currently used in over 60 of the leading solid organ transplant centers in the U. S. Importantly, other software will simplify the transplant center workflow for ordering AlloSure and AlloMap. The addition of the other team increases the CareDx value proposition to transplant centers, enable the EMR integration of our surveillance solutions and the ability to manage patients longitudinally.
It also provides the backbone to build artificial intelligence tools for providing care pathway. I am pleased to confirm that the transaction closed yesterday and that we are excited to welcome the order team to CareDx and we expect a seamless integration. Just last week, we announced an exclusive in licensing agreement with Alex Snoopy and his Paris based team from Cibotec. Alex is a leading transplant pathologist in the field of machine learning and artificial intelligence. We have built a strong relationship over the years with Cibotec and we are excited by this group's work.
Cibotec's RediGraph data analysis tool represents the start of being able to use data to stratify transplantations based on the risk for long term outcomes. Besides the pretty graph tool, we are equally excited to be able to closely collaborate with the brainpower of this team. We see this as only the beginning. Let me stop here and provide some context on how this all fits together. Over the last 20 years, we have been dedicated to transplantation.
We have been a trailblazer developing proprietary clinical biomarkers and successfully navigating the reimbursement landscape. We are now setting the valve for multimodality testing, combining our know how of gene expression and next generation sequencing based technologies. Our goal is to add smart analytics and machine learning to provide artificial intelligence solutions in transplantation. You will hear us talk about iTrack, which stands for artificial intelligence in transplant care. Our large clinical data sets collected through our registry study will provide caregivers with point of care decision making support tools that allow them to stratify their patient population.
Our strategy to provide precision medicine tools with high value diagnostics to a highly complex and costly patient population is coming to life. The first example of our multimodality testing was our HeartCare solution. HeartCare combines both AlloSure Heart and AlloMap rendering a higher precision assessment of the heart allograft than either test alone. In early April, the reception to HeartCare was strong at the International Society For Heart and Lung Plantation, and we remain excited about the benefits of combining these tests for the heart transplant patient community. The logical second example of our multimodality testing is KidneyCare.
KidneyCare combines not only AlloSure and AlloMap Kidney, but also adds Cibotec's data analysis tool, Predigraft. We will launch Kidney Care at the American Transplant Congress in Austin in a few weeks' time. We are very excited as this marks the next step in providing insights into organ injury, immune quiescent and also provides the prognostic element of allograft survival at 3, 5 10 years. Now turning back to execution and our performance. Another aspect of maintaining our substantial need in the industry is to ensure that the race is a fair contest.
Along these lines, we will vigorously defend our intellectual property and our good name from inappropriate conduct from potential competitors. We are the leader in PARP and kidney transplant surveillance and we continue to fortify our competitive role. We are on our way in lung transplant surveillance and we don't intend to stop there as we have a global presence with our transplant product. For the Q1 of 2019, total revenues grew 85% to $26,000,000 compared to the year ago quarter. AlloSure, Alimat and our products business all contributed to this growth.
Growth in the quarter was broad based with testing service revenue up 103% and product revenue up 34%, reflecting continued traction in this market segment of consultation. Turning to numbers on AlloSure. During the Q1, 101 centers provided AlloSure results to their transplantation. We estimate these 101 centers account for approximately 60% of the transplant volume in the United States. CareDx provided 5,710 AlloSure results in the Q1 to approximately 4,300 kidney transplant patients.
Since launching AlloSure in October 2017, we have provided results to over 8,000 patients, which equates to approximately 4% of the total number of living kidney transplant patients. Demand for AlloSure remains broad and includes both patients who recently received a kidney transplant as well as patients that received their kidney allograft in previous years. Overall reimbursement in the Q1 was consistent with previous quarters with 70% to 80% of our aerosol volume attributed to Medicare patients. We finished the Q1 of 2019 with 3,644 surveillance patients. We define surveillance patients as patients that are managed by CareDx on a predefined transplant center testing protocol.
These 3,644 surveillance patients helped build the recurring revenue effect of AlloSure. We continue to make progress enrolling centers and patients in KO, our kidney outcome AlloSure registry, having surpassed our initial 1,000 patient enrollment goal. As of the end of March 2019, 50 centers have been initiated as K OAR study sites and 1,006 patients have been enrolled. Recall that in the K OAR study, we target 75% adherence to our AlloSure surveillance protocol. Multi center studies like K OAR widen our mode as these studies provide us with additional touch points with transplant centers and keep us in direct dialogue with the key innovation hubs and opinion leaders.
These studies also drive compliance and adherence to standard protocols, which is crucial element to our work in the transplant community. I would like to take this moment to mention Doctor. Jim Yee, our Chief Medical Officer. After an extremely successful career at CareDx, Jim has decided to retire from his full time role as a physician to an advisor for CareDx at the end of the quarter. During his 13 year tenure at CareDx, Jim was instrumental in developing and executing our Image, Cargo 2, DART, Dior and Kior have launched AlloSure in heart care, participated in hundreds of conferences and speaker events and joined thousands of clinician conversations, all of which has led to tens of thousands of patient results.
I'm extremely sad to see Jim move on, but honored to have shared this transplant patient journey together. With the success of Jim and the team on our K OAR study and unrivaled peer reviewed publications together with our transplant center partnerships, which account for over 60% of the kidney transplant performed in the U. S, our EMR integration initiatives and our new multi modality solutions, we are adding to our formidable mode around kidney transplant patient care. Now shifting to our heart transplant surveillance solution AlloMap. Q1 2019 test volume increased 11% year over year, translating into 4,280 patient results, with the adoption of HeartCare accelerating volumes in the quarter.
This novel heart transplant surveillance solution combining both AlloMap and AlloSure Heart is resonating with the transplant community with both physicians and patients appreciating the comprehensive view of the health of the heart allograft enabled by heart care. Our Surveillance Heart Care Outcomes Registry or SHORE study continues to be well received by transplant cardiologists, and we have recruited 9 centers today. I'm also very pleased to report from April AlloMap is in network for all of Anthem's network of plants across the U. S. Anthem is one of the nation's largest payers with approximately 40,000,000 members and AlloMap is now a covered test for approximately 80% of all insured lives in the U.
S. Now turning to our transplant led products. Our HLA typing products are used in labs throughout the world to help determine which organs or bone marrow are a transplantation match between the donor and the recipient. Our first quarter product revenue growth was 34%, contributing $4,400,000 to our revenue in the quarter. Growth was driven by continued traction of TruSight HLA and QTYPE.
We remain on track to fortify our product offerings with the introduction of new AlloSeq next generation sequencing products in 2019, AlloSeq TX for HLA typing, AlloSeq cell free DNA kit and AlloSeq BMT for bone marrow transplant testing. With the addition of Otter, our patient engagement model is expanding. CareDx remains the leading provider of high value transplant surveillance solutions and has added capabilities to manage patients longitudinally and further impact long term patient outcomes. Today, we care for approximately 4% of the U. S.
Kidney transplant patient population. This is a great start as the need for organ transplantation is ever increasing. Mike, I'll hand the call over to you to discuss financials.
Thank you, Peter. Turning first to the income statement. Our Q1 2019 testing services revenue increased 103% year over year to $21,500,000 The significant growth in testing services revenue was primarily driven by
the 5,710 AlloSure
patient results we provided in the Q1. Growth also came from the 4,280 AlloMap patient results we provided, which was an 11% increase compared to the prior year quarter. Our Q1 product revenue increased 34% year over year to $4,400,000 and as such, total revenue for the Q1 of 2019 was $26,000,000 representing an 85% increase compared to the prior year's $14,100,000 For the Q1 of 2019, the net loss was $7,500,000 compared to a net loss of $9,000,000 in the same period of 2018. Our net loss per share was $0.18 for the quarter compared to $0.30 in the Q1 of 2018. Our Q1 2019 net loss included a $6,100,000 stock based compensation expense and a $3,000,000 loss from the change in estimated fair value of common stock warrant liabilities.
For the Q1 of 2019, our non GAAP net income was $2,200,000 compared to a non GAAP net loss of $4,000,000 in the same period of 2018. Our non GAAP net income per share was $0.05 for the quarter compared to a non GAAP net loss per share of $0.14 in the Q1 of 2018. As a reminder, we define adjusted EBITDA as non GAAP net income before interest, income tax, depreciation, amortization, other expense and net loss attributable to non controlling interest. For the Q1 of 2019, adjusted EBITDA was a gain of $1,800,000 compared to a loss of $3,200,000 in the Q1 of 2018. While this marks the 3rd consecutive quarter of positive adjusted EBITDA, we will be modestly further increasing our operating expenditures as 2019 progresses to further enhance our leadership position in transplantation.
Cash and cash equivalents at March 31, 2019 was $57,400,000 compared to $64,600,000 at the start of the quarter. Net operating cash flow was negative 5 $900,000 in the Q1 of 2019. The operating cash outflow in the quarter was primarily related to annual incentive compensation payments for 2018 performance that were paid during the quarter. We continue to expect positive operating cash flow for the full year 2019. As Peter mentioned, yesterday, we completed the acquisition of OTTR Complete Transplant Management for $16,000,000 The transaction has been funded with cash on hand, and we expect OTTA revenue for the full year 2019 to be in the $6,000,000 to $8,000,000 range or $4,000,000 to $5,000,000 from May through December, with net income anticipated to be breakeven.
Turning to guidance. We are updating our 2019 revenue expectations to reflect the continued growth of AlloSure and anticipate $113,000,000 dollars to $115,000,000 for the year, including $4,000,000 to $5,000,000 for the Alta acquisition. With that, I will open the call for questions.
Our first question comes from the line of Bill Quirk with Piper Jaffray. Please proceed with your question.
Great. Thanks and good afternoon everyone.
Hi Bill.
Hi. So I guess first question is, should we expect to see data on kidney care at the upcoming meeting here or when might this be released?
I think we have very strong data packages obviously on AlloSure. The Predigraft data is readily available because Alexander Rudney and the transplant team in Paris have actually published extensively on iBox, as it was called before. On AlloMap kidney, I think there is a bit of a surprise waiting, and we're very excited about also applying gene expression profiling technology to the field of transplantation. This will be initially launched as a combination of the 3 and launched out probably in what we always do in form of a clinical trial, making that available to transplant patients and clinicians on a trial basis.
Understood. And Peter, would you be seeking out any additional reimbursement for the combination of the 3? Or how should
we be thinking about that? No, I think we have been talking about AlloSure is really the driver for the company in the short term. I think we are building out a strong molding transplantation. The reimbursement strategy has not been laid out as soon as we have laid out the strategy on the reimbursement side, which will be predominantly again focused on Medicare reimbursement, will be communicated to the Street.
Okay, great. And then just last one for me. Is just thinking a little bit about your strategy from earlier, excuse me,
I think you brought it up
on the quarter call, but wanted to get deeper with your existing accounts versus necessarily just adding new accounts just for the sake of adding them. Does the new kidney care, does that change that strategy at all? Maybe make it essentially kind of bimodal? Are you going basically in both directions, deeper as well as broader? Thanks.
Helpful. Thank you very much. A good question. And no, I think you see that we are now in this quarter in 101 centers, 100 and 1 centers, which is completely confirming our strategy. We also see for Kidney Care, the same strategy play It's going deep into these transplant centers that we have an established presence.
And there's a lot of opportunity for us to converting these centers into surveillance testing. So I think our strategy continues to execute against the path that we laid out. There's no change to the strategy. The strategy is working.
Okay, got it. Thanks very much, guys.
Thank you. Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed with your question.
Thanks. Good afternoon. Peter, I would actually like
to start with AlloMap. The 11% volume growth has been announced since we've seen that business through double digit growth. Could you perhaps spike out or sort of quantify the impact from heart care and perhaps the breadth of users in terms of docs or centers that have ordered? And then that changed at all how you're thinking about AlloMap growth for the year relative to sort of the mid single digit assumption you've penciled in there for 2019?
Brendan, excellent question. I think heart care is really changing the paradigm in heart transplantation and the excitement that we felt in the IHLC Congress was palpable and was great to see. You actually see the number of centers that have adopted SHORE, our registry study, is exceeding our expectation. The primary driver for the close in the Q1, however, was actually a bit of a slow quarter the previous year. So we had a few days out with heavy, heavy storms in the Northeast that were leading to a bit of a catch up in the Q2 last year.
So we continue to be modeling our math in this mid single digit range. We obviously are happy about the double digit volume growth for this quarter, but I think we continue to look for a mid single digit volume growth for Alamar.
Thanks. And then a couple on the Otter and iBox deals. First on Otter, how long
do you think it will take for
you to sort of be able to build in direct ordering functionality for AlloSure and AlloMap? And then on Ibox, is this something that would ultimately sort of require an FDA approval? Or is this sort of a feature or data incremental data that you can just drop into the AlloSure test results?
Both excellent question. I think on the other, there are obviously easy drop ins for fuel centers, but it will take quarters and quarters for us to adopt AlloSure testing or AlloSure functionality or AlloMap functionality via simple mouse click. In some centers, it will be great. The team is actually right now sketching out the strategy and we'll be updating you as we're progressing on this. Having workflow up to 2 orders with AlloMap and AlloSure is really the low hanging fruit for us and that's the primary focus.
Longer term, I think it is great to monitor patients longitudinally and make sure that there is adherence and compliance opportunity to increase that together with vendors, realizing that they're actually skipping a lot of the surveillance opportunities for these patients. And then longer term, there's the artificial intelligence option. But shifting over to the regulatory and the reimbursement strategy for kidney care, I think we'll be launching Kidney Care and test the excitement of the transplant community at the American Transplant Congress. And we'll be then informing about the reimbursement and regulatory strategy. That may include FDA.
That may not include the FDA at this stage. I don't think we have detailed that out yet. Overall, I think it's a significant contribution to transplant patients having on the one hand cell free DNA testing as an early injury marker than having AlloMap kidney as an opportunity to measure immune activity. And then on the 3rd leg would be allograft prediction in terms of how long does the allograft actually function, which is very exciting with the eyeballs. So this comprehensive concept, multi modality testing is very exciting for
us. That's helpful. And then one more for Mike, just in terms of the outlook for the year. Should we expect or I guess, how should we expect operating expenses to sort of trend sequentially from the Q1 over the balance of the year? And do you still expect positive EBITDA for the full year?
And then I guess thirdly, how will Otter sort of impact gross margins and operating margins? Thanks.
Yes, Brandon. On the operating expense, if I look at it from a non GAAP viewpoint in Q1, the operating expense was about $60,000,000 I would say by the end of the year in Q4, that operating expense would be about $21,000,000 so probably going about $5,000,000 Increase being driven by OTTA expense, about $1,000,000 a quarter. And the rollout offshore and the continued rollout of Kale, and by the end of Q1, we'd filled out our sales and marketing team as we talked about previously. And so we'll be getting the full expense for those over the next couple of quarters. I think though with our increased revenue guidance, we're still targeting to be EBITDA positive throughout the year.
And from a margin perspective, also it's going to be breakeven from an EBITDA perspective. So very, very small impact on gross margins and very small impact on EBITDA margin overall.
Very good. Thank you.
Thank you. Our next question comes from the line of Per Ostlund with Craig Hallum Capital. Please proceed with your question.
Thanks. Good afternoon, everybody, and congratulations to Jim on his well deserved retirement. I want to start out with AlloSeq cfd and A. So Peter, you guys are featuring this in some presentations at EFI this week. I assume that that's a pretty good signal that you're very much on plan for the 2019 introduction.
Have you started to sketch out your go to market strategy, whether it's geographic areas of focus and that sort of thing? And how much does the Allenex infrastructure from that acquisition help sort of grease the skids for you to get to market with that product?
Very excellent question and thank you so much for shedding light on the product business. I'm actually today in Portugal at the EFI Congress And it's great to see to be together with our distributor network, to be here with the team and see the excitement that AlloSeq's healthy DNA is bringing. Obviously, everybody is looking at our success in the United States and what this could bring to the transplant patients outside of the U. S. As well as we're adopting cell free DNA testing.
We're actually launching 2 products. 1 would be the AlloSeq Tx17, which is our HLA typing product for that market, very exciting. And then the other one is the AlloSeq cell cDNA, which we will launch the same strategy in a way that we have done in the U. S. We will make sure that transplant centers get their hands on a clinical study that we are getting them acquainted with the product and how to use it in a surveillance setting and then inform very important around reimbursement.
We don't think that this will be revenue relevant this year and it will take mainly into the middle of next year in order to be really that revenue relevant. But this is a long thought out strategy for us, and we're very excited to be launching these products very soon in this market.
Okay. Very good. Coming back to domestic AlloSure in the kidney market. In terms of some of the competitive noise, I guess, we'll call it, that's out there, have you I guess 2019, I think you've well telegraphed as the year of building the competitive moat and you've established yourself in 100 centers and 100 and 1 ordered this quarter and the utilization seems to be ticking up very, very nicely. Is that is any competitive noise impacting ordering activity at current centers?
Is it having any impact on the periphery of those centers that have yet to order AlloSure from you?
No, I think the answer is no. I do think that there is growing excitement and having someone else talk about cell free DNA testing is not negative for CareDx as we are the predominant provider of these solutions at this stage. There are now a couple of companies out there that are making noise, which is just supporting our efforts as we are the solutions that is here and now. I do think we have a 1st mover advantage, and we are capitalizing on that 1st mover advantage. So right now, I think this is the moment for us to continue to widen our margin transplantation, and we have a new strategy and we're executing against them.
This quarter really demonstrates that our execution is working very well.
Okay. Last question for me, and it's kind of a follow-up to Bill's actually related to kidney care. So looking forward to that launch here coming up in a few weeks. Peter, did you suggest that that would probably see something a kidney version of SHORE essentially to get center adoption of the multimodality test?
If you are part of the company, we are really science based and evidence based. And if we are bringing out a new concept, which is really an exciting concept of combining 3 very different approaches to surveillance of kidney patients, we would always do that in a responsible and scientific way. And the right way to do that is to support the community generating valuable clinical information with a multicenter prospective initiative. As K OAR has been such a great success with more than 50 centers, including more than 1,000 patients, I think there is something to build on from K OAR. And that allows us to just continue to build scientific evidence how these novel biomarkers and now a digital biomarker in addition will potentially change how transplant to admissions and caregiving for self care and for these patients.
Okay, excellent. Thank you very much, Peter.
Thank you. Our next question comes from the line of John Hsu with Raymond James. Please proceed with your question.
Good afternoon. If I could just start off with the guidance, the increase, it looks like with the $4,000,000 to $5,000,000 from Otter that the raise was somewhere in the $3,000,000 to $4,000,000 range, I guess, organically or ex software. So maybe Mike or Peter, if you could start with where you're seeing the strength in the business and what's really kind of driving the increase organically in the revenue guidance?
So I'd like Mike to talk to it at least the closest to the number. Mike?
Yes, Jon. I mean, I think the growth on the guidance, yes, you're right, roughly half of that comes from the acquisition of OTTA. The other is really being driven by our expectations on continued AlloSure growth. I think again for the quarter, AlloSure slightly exceeded our expectations, and so we increased the guidance to represent that. So yes, it's just continued acceptance of AlloSure.
Got it. And then just turning to the K OAR study, it looks like things are tracking pretty nicely there. But just based on the pace of patients that you've been adding, are you still targeting 1500 patients? Because it seems like based on the pacing that would imply that it might extend a little bit longer than mid-twenty 19.
We have originally talked about 1,000 patients to be recruited by June this year. And in a good fashion, I think we over exceeded against this in a quarter early. Now it's end of March that we had exceeded the 1,000 patient recruitment target. You are right that there is probably the 1500 will take some time. I think there will be some centers that are not fully recruiting.
So if we had 50 centers and maybe they're here or there an additional center and they're all recruiting 30 patients. So it will be in this range between 141500 patients and it will go beyond June. And we are in a way continuously seeing these centers being very excited about adopting the technology. Now there are some centers that actually do want to gain additional insight. So we have a few centers where we're actually increasing the recruitment from 30 to 50 patients or so.
And that's also an option. But we're extremely pleased with how K OAR has really established the surveillance protocol in kidney transplantation. 50 transplant centers are now using the 7 plus 4 plus 4 protocol, which in itself is a key accomplishment for the stronger company.
Excellent. And then I guess if we could just stay on enrollment. If we just fast forward a little on Kidney Care, clearly you said that there will be some incremental enrollment. So again, just thinking about the mode, I know most high volume centers typically do, call it 100 to 150 or so kidney transplants a year, of which these centers are typically looking to enroll up to 30 patients, right, the 50 centers on K OAR. So is the right way to think about it that potentially you could reach another, call it, up to 30 patients in some of these centers?
I'm sure there will be a lot of overlap once you rollout kidney care and the registry study associated with that.
And our strategy always has been that we get transplant centers accustomed with the surveillance protocol through the K OAR study, which is a study that we had discussed with Medicare to make sure that we have coverage and the data development. And now I think there is a broad based adoption in many centers that have used AlloSure beyond the ARDS surveillance protocol. I think this next study will really be based on how can we accumulate information based on these 3 data points that we are providing or at least 3 markers that we're providing. And so I think that that's up to be defined. And we'll probably talk about it following ATC and give you more guidance on that.
But our goal is to substantially penetrate a number of centers this year and go really deep in as many as possible and get a lion's share of these 100 to 200 in some centers even 300 kidney transplant patients per year.
Okay, great. That's very helpful. And then last one for me. Just thinking about the surveillance patients added in the quarter, clearly, you gave a nice breakout last quarter of it's really just kind of a combination of K OAR patients plus first time patients plus maintenance patients and then a true up for attrition. So I don't know if you could just ballpark help us think about that.
Obviously, the K OAR, we can back into the math based on the patients added for K OAR specifically. But can you just help us think about maybe the other three pieces associated with that number? Thank you.
Yes, John. I think what we saw in this Q1 of 2019 was very similar surveillance patient movements as previous quarters. So yes, the attrition rate was again in that sort of 10% ballpark. The split between newly transplanted patients and patients more than 1 year out was again similar to before, which was roughly around the sort of 60% in the 1st year. So yes, I mean, that led to an addition of approximately 800 new surveillance patients in the quarter.
Okay, great. That's really helpful. And sorry, just last one for me. How do are we seeing any movement on the renal care front in terms of Secretary Azar made some comments and Peter you had alluded to last quarter just around some movement from a legislative level in terms of maybe just starting to increase the availability of kidney organs?
Yes. I think this is a very exciting development that there is broad based support of kidney issues in the current HHS bedding and Asar is really spearheading great momentum there. There hasn't come out something very specific yet, but we do anticipate that something will come out within the next 3 to 6 months. I actually spent last week in Washington talking about the various issues around contribution of transplantation that we can do to the kidney field because it's clear that transplantation is actually cost effective versus dialysis. And so there is a lot of tailwind, so to speak.
I don't think that this will be relevant this year, but see transplantation gaining share and momentum, I think increasing the donor population will be a long term positive for us. And these type of issues will be helping the company going forward as transplantation is an exciting field.
Okay, great. Thank you so much.
Thank you. Our next question comes from the line of Yi Chen with H. C. Wainwright. Please proceed with your question.
Thank you for taking my question. My first question is, is the raised revenue guidance simply driven by the acquisition of OTTR, which has annual revenue of $6,000,000 $1,000,000 to $8,000,000 or is it also driven by anticipated higher than prior previous anticipated test volume?
Yi, thank you very much for the question. I'll talk I'll hand it over to Mike for the guidance.
Yes, Yi. The increase is roughly half. It's coming from OTTA. So that sort of $6,000,000 to $8,000,000 is for the full year for Otter. So probably for May through to December since the acquisition, we're looking at something like $4,000,000 to $5,000,000 revenue coming from Otter.
So the delta for the increase in the guidance, which is about $8,000,000 at the midpoint is coming really from AlloSure and sort of continued expected growth of that.
Got it. Is Ibox Technology expected to add any revenue to the top line?
One? I think we haven't talked about the reimbursement and the regulatory path for the product. Right now, it is a concept. I would say Kidney Care really is encapsulating a concept similar to heart care, where we're combining AlloMap and AlloSure. Here, we don't expect right now, for sure, for this year, contributions from Predigraft, which is the iBox technology as a product for as a contribution for this year.
Got it. And how much impact should we expect from the inclusion of AlloMap in Ancen Blue Cross in the coming years?
I'll turn to Mike. I do think that we see this as a very positive that rather than battling every AlloMap reimbursement and going back and having negotiations on everything or AlloMap is up, we are now in more than 80% under contract on alumina. We've seen a network with Anthem, that's a key signal for transplantation issues and high value diagnostics. And so we see the signaling effect as a very important effect. Mikey, do you want to add to that?
Yes.
Anthem for AlloMap represents just under sort of 5% of the AlloMap volume. We've had a positive coverage decision from Anthem on AlloMap for several years. So we have been getting paid. Of course, we've been getting paid on an out of network basis, and it takes a longer time to get paid on the out of network basis. So being in network, it will improve the speed at which we get paid and the simplicity, but I wouldn't expect much of a revenue impact on that because, again, we've been getting paid over the last few years regardless.
Got it. And a final question. Is there an update regarding the litigations against Natera?
Nothing specific. We've those litigations were roughly a month ago. Natera still has time throughout the rest of this month in order to respond. So there's been no response yet, so no movement on that.
Got it. Thank you.
Thank you. Ladies and gentlemen, at this time, there are no further questions. I'd like to turn the floor back
Thank you very much.
Thank you. Ladies and gentlemen, this concludes today's teleconference.