Greetings, ladies and gentlemen, welcome to CareDx, Inc. 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. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, David Klanner. Thank you. You may begin.
Good afternoon. Thank you for joining us today. Earlier today, CareDx released financial results for the quarter ended March 31st, 2019. 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 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 8th, 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 lead, 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 response to therapy with an interleukin-6 agent, tocilizumab, as a treatment for patients with antibody-mediated rejection. 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 first 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 OTTR 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, OTTR Software will simplify the transplant center workflow for ordering AlloSure and AlloMap. The addition of the OTTR team increases the CareDx value proposition to transplant centers, enables the EMR integration of our surveillance solution, and the ability to manage patients longitudinally. It also provides the backbone to build artificial intelligence tools for providing care pathways. I am pleased to confirm that the transaction closed yesterday, and that we are excited to welcome the OTTR team to CareDx, and we expect a seamless integration. Just last week, we announced an exclusive in-licensing agreement with Alex Loupy and his Paris-based team from Sibyl-Tech.
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 Sibyl-Tech, and we are excited by this group's work. Sibyl-Tech's Predigraft data analysis tool represents the start of being able to use data to stratify transplant patients based on the risk for long-term outcomes. Besides the Predigraft 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 bar for multimodality testing, combining our know-how of gene expression and next-generation sequencing-based technology.
Our goal is to add smart analytics and machine learning to provide artificial intelligence solutions in transplantation. You will hear us talk about iTrak, 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 Transplantation, 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 Sibyl-Tech's data analysis tool, Predigraft. We will launch KidneyCare at the American Transplant Congress in Boston in a few weeks' time. We are very excited as this marks the next step in providing insights into organ injury, immune quiescence, and also provides the prognostic element of allograft survival at three, five, and 10 years. Turning back to execution and our performance. Another aspect of maintaining our substantial lead 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 heart and kidney transplant surveillance, and we continue to fortify our competitive moat.
We are on our way in lung transplant surveillance. We don't intend to stop there as we have a global presence with our transplant products. For the first quarter of 2019, total revenues grew 85% to $26 million compared to the year-ago quarter. AlloSure, AlloMap, 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 transplantation. Turning to numbers on AlloSure. During the first quarter, 101 centers provided AlloSure results to their transplant patients. We estimate these 101 centers account for approximately 60% of the transplant volume in the U.S. CareDx provided 5,710 AlloSure results in the first quarter 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 first quarter was consistent with previous quarters, with 70%-80% of our AlloSure volume attributed to Medicare patients. We finished the first quarter 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 help build the recurring revenue effect of AlloSure. We continue to make progress enrolling centers and patients in KOAR, 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 KOAR study sites, and 1,006 patients have been enrolled. Recall that in the KOAR study, we target 75% adherence to our AlloSure surveillance protocol. Most center studies like KOAR widen our moat in transplantation, 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 protocol, which is crucial elements to our work in the transplant community. I would like to take this moment to mention Dr. Jim Yee, our Chief Medical Officer. After an extremely successful career at CareDx, Jim has decided to retire from his full-time role and position 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 II, DART, DIOR, and KOAR, helped launch AlloSure and HeartCare, participated in hundreds of conferences and speaker events, and joined thousands of clinician conversations, all of which have led to tens of thousands of patient results. I'm extremely sad to see Jim move on, but honored to have shared this transplantation journey together. With the success of Jim and the team on our KOAR study and unraveled peer-reviewed publications, together with our transplant center partnerships, which account for over 60% of the kidney transplants performed in the U.S., our EMR integration initiatives and our new multimodality solutions, we are adding to our formidable moat around kidney transplant patient care. Shifting to our heart transplant surveillance solution, AlloMap.
First quarter 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 HeartCare. Our surveillance HeartCare Outcomes Registry, or SHORE study, continues to be well received by transplant cardiologists, and we have recruited nine centers to date. I'm also very pleased to report from April, AlloMap is in network for all of Anthem's network of plans across the U.S. Anthem is one of the nation's largest payers with approximately 40 million members, and AlloMap is now a cover test for approximately 80% of all insured lives in the U.S. Turning to our transplant lab 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 $4.4 million 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 cfDNA Kits, and AlloSeq-BMT for bone marrow transplant testing. With the addition of others, 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 first quarter 2019 testing services revenue increased 103% year-over-year to $21.5 million. The significant growth in testing services revenue was primarily driven by the 5,710 AlloSure patient results we provided in the first quarter. Growth also came from the 4,280 AlloMap patient results we provided, which was an 11% increase compared to the prior-year quarter. Our first quarter product revenue increased 34% year-over-year to $4.4 million, and as such, total revenue for the first quarter of 2019 was $26.0 million, representing an 85% increase compared to the prior year's $14.1 million. For the first quarter of 2019, the net loss was $7.5 million, compared to a net loss of $9 million in the same period of 2018.
Our net loss per share was $0.18 for the quarter, compared to $0.30 in the first quarter of 2018. Our first quarter 2019 net loss included a $6.1 million stock-based compensation expense and a $3.0 million loss from the change in estimated fair value of common stock warrant liabilities. For the first quarter of 2019, our non-GAAP net income was $2.2 million, compared to a non-GAAP net loss of $4.0 million 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 first quarter 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 first quarter of 2019, adjusted EBITDA was a gain of $1.8 million, compared to a loss of $3.2 million in the first quarter of 2018. While this marks the third 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 31st, 2019, was $57.4 million, compared to $64.6 million at the start of the quarter. Net operating cash flow was negative $5.9 million in the first quarter 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 million.
The transaction has been funded with cash on hand, and we expect OTTR revenue for the full year 2019 to be in the $6 million-$8 million range, or $4 million-$5 million from May through December, with net income anticipated to be break even. Turning to guidance, we are updating our 2019 revenue expectations to reflect the continued growth of AlloSure and anticipate $113 million-$115 million for the year, including $4 million-$5 million for the OTTR acquisition. With that, I will open the call for questions.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question comes from the line of Bill Quirk with Piper Jaffray. Please proceed with your question.
Great, thanks. Good afternoon, everyone.
Hi, Bill.
Hi. I guess first question is, should we expect to see data on KidneyCare 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 Alexandre Loupy 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
Applying gene expression profiling technology to the field of transplantation. This will be initially launched as a combination of the three 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. Peter, would you be seeking out any additional reimbursement for the combination of the three, or how should we be thinking about that?
I think we have been talking about AlloSure as really the driver for the company in the short term. I think we are building out a strong mode in 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, we'll be communicating to the street.
Okay, great. Just last one from me, is just thinking a little bit about your strategy from earlier, actually, I think you brought it up on the fourth quarter call, but wanting to get deeper within existing accounts, versus necessarily just adding new accounts just for the sake of adding them. Does the new KidneyCare, does that change that strategy at all? Maybe make it essentially kind of bimodal, where you're going basically in both directions, deeper as well as broader? Thanks.
No. Thank you very much. A good question, no, I think you see that we are now in this quarter in 101 centers, which is completely confirming our strategy. We also see for KidneyCare the same strategy play out. It's going deep into these transplant centers where we have an established presence, and there's a lot of opportunity for us to converting these centers into surveillance testing. 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.
Hey, thanks. Good afternoon. Peter, would actually like to start with AlloMap, the 11% volume growth. It has been a while since we have seen that business do double-digit growth. Could you perhaps spike out or sort of quantify the impact from HeartCare and perhaps the breadth of users in terms of docs or centers that have ordered? Does that change at all how you are thinking about AlloMap growth for the year relative to sort of the mid-single-digit assumption that you have penciled in there for 2019?
Brandon, excellent question. I think HeartCare is really changing the paradigm in heart transplantation and the excitement that we felt in the ISHLT Congress was palpable and was great to see. We actually see the number of centers that have adopted for our registry study is exceeding our expectation. The primary driver for the growth in the first quarter, however, was actually a bit of a slow quarter the previous year. We had a few days out with heavy storms in the Northeast that were leading to a bit of a catch-up in the second quarter last year. We continue to be modeling AlloMap 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 AlloMap.
Thanks. A couple on the OTTR and iBox deals. First on OTTR, 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? On iBox, is this something that would ultimately sort of require an FDA approval, or is this sort of a feature or incremental data that you can just drop into the AlloSure test results?
Both excellent question. I think on the OTTR, they are obviously easy drop-ins for a few 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 quick. The team is actually right now sketching out the strategy, and we will be updating you as we are progressing on this. Having workflow options through OTTR with AlloMap and AlloSure is really the low-hanging fruit for us, and that is the primary focus. Longer term, I think it is great to monitor patients longitudinally and make sure that there is adherence and compliance opportunities to increase that together with centers, realizing that they are actually skipping a lot of the surveillance opportunities for these patients. Longer term, there is the artificial intelligence option.
Shifting over to the regulatory and the reimbursement strategy for KidneyCare, I think we'll be launching KidneyCare 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, then having AlloMap Kidney as an opportunity to measure immune activity. Then on the third leg with the allograft prediction in terms of how long does the allograft actually function, which is very exciting with the iBox. This comprehensive concept, multi-modality testing, is very exciting for us.
I think it's helpful. 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 first quarter over the balance of the year? Do you still expect a positive EBITDA for the full year? Then, I guess thirdly, how will OTTR impact gross margins and operating margins? Thanks.
Yeah, Brandon. On the operating expense, if I look at it from a non-GAAP viewpoint in Q1, the operating expense was about $16 million. I would say by the end of the year in Q4, that operating expense will be about $21 million. Probably growing about $5 million. Increase being driven by OTTR expense about $1 million a quarter and the rollout of AlloSure and the continued rollout of AlloMap. By the end of Q1, we'd filled out our sales and marketing team as we talked about previously. 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. From a margin perspective, OTTR's going to be break-even from an EBITDA perspective.
Very small impact on gross margins and very small impact on the 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. Want to start out with AlloSeq cfDNA. 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. 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. Thank you so much for sharing that on the product as well. I'm actually today in Portugal at the EFI Congress. It's great to be together with our distributor network, to be here with the team and see the excitement that AlloSeq cfDNA is bringing. Obviously, everybody is looking at our success in the U.S. and what this could bring to the transplant patients outside of the U.S. as well, as we are adopting cell-free DNA testing. We're actually launching two products. One would be the AlloSeq Tx17, which is our HLA typing product for that market. Very exciting. The other one is the AlloSeq cfDNA, 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. Very important around reimbursement. We don't think that this will be revenue relevant this year, and it'll take roots maybe into the middle of next year in order to be really that revenue relevant. 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. I guess 2019, I think you've well telegraphed is the year of building the competitive moat and you've established yourself in 100 centers and 101 ordered this quarter and the utilization seems to be ticking up very nicely. 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 solution that is here and now. I do think we have a first-mover advantage, and we are capitalizing on that first-mover advantage. By now, I think this is the moment for us to continue to widen our moat in transplantation, and we have a clear strategy, and we're executing again within this quarter really demonstrate 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 KidneyCare. Looking forward to that launch here coming up in a few weeks. Peter, did you suggest that would probably see something, a kidney version of AlloSure essentially to get center adoption of the multimodality test?
If you have followed the company, we are really science-based and evidence-based, if we are bringing out a new concept, which is really an exciting concept of combining three very different approaches to surveillance of kidney patients, we would always do that in a responsible and scientific way. The right way to do that is to support the community with generating valuable clinical information with a multi-center prospective initiative. As K-OAR has been such a great success with more than 50 centers recruiting more than 1,000 patients, I think there's 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 clinicians and caregivers are caring 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 million-$5 million from OTTR, that the raise was somewhere in the $3 million-$4 million range, I guess, organically or ex software. 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.
I would like Mike to talk to it. I think he's the closest to the number. Mike?
Yeah, John. I think the growth on the guidance, yeah, you're right. Roughly half of that comes from the acquisition of OTTR. The other is really being driven by our expectations on continued AlloSure growth. I think, again, for the quarter, AlloSure slightly exceeded our expectations, we increased the guidance to represent that. Yeah, it's just continued acceptance of AlloSure.
Got it. 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 1,500 patients? It seems like based on the pacing, that would imply that it might extend a little bit longer than mid-2019.
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 have exceeded the 1,000 patients recruitment target. You are right that probably the 1,500 will take some time. I think there will be some centers that are not fully recruiting. If we're at 50 centers and maybe they're K-OAR, they're an additional center, and they're all recruiting 30 patients. It will be in this range between 1,400 and 1,500 patients, and it will go beyond June. 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.
We have a few centers where we are actually increasing the recruitment from 30 to 50 patients or so. That is also an option. We are extremely pleased with how K-OAR has really established the surveillance protocol in kidney transplantations. 50 transplant centers are now using the 7+4+4 protocol, which in itself is a key accomplishment from the company.
Excellent. Then I guess if we could just stay on enrollment. If we just fast-forward a little bit on KidneyCare. Clearly, you said that there will be some incremental enrollment. 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. The 50 centers on K-OAR. 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 am sure there will be a lot of overlap once you roll out KidneyCare and the registry study associated with that.
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 under data development. Now, I think there is a broad-based adoption in many centers that have used AlloSure beyond our surveillance protocol. I think this next study will really be based on how can we accumulate information based on these three data points that we are providing, or these three markers that we are providing. I think that is up to be defined. We will probably talk about it following ATC and give you more guidance on that.
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, and some centers, even 300 kidney transplant patients per year.
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. 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 Care specifically, can you just help us think about maybe the other three pieces associated with that number? Thank you.
Yeah, John. I think what we saw in this first quarter of 2019 was very similar. Surveillance patient movements as previous quarters. Yeah, the attrition rate was again in that sort of 10% ballpark. The split between newly transplanted patients and patients more than one year out was again similar to before, which was roughly around the sort of 60% in the first year. Yeah, that led to an addition of approximately 800 new surveillance patients in the quarter.
Okay, great. That's really helpful. Sorry, just the last one for me. Are we seeing any movement on the renal care front in terms of Secretary Azar made some comments, Peter, you had alluded to last quarter, just around some movement from a legislative level, in terms of maybe starting to increase the availability of kidney organs?
Yeah, I think this is a very exciting development, that there is broad-based support of kidney issues in the current HHS setting, Azar is really spearheading a great momentum there. There hasn't come out something very specific yet, we do anticipate that something will come out within the next two to six 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. There's a lot of tailwind, so to speak. I don't think that this will be relevant this year. As we 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. As a reminder, ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. 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 the raised revenue guidance simply driven by the acquisition of OTTR, which has annual revenue of $6 million-$8 million? Or is it also driven by higher than previous anticipated test volume?
Yi, thank you very much for the question. I'll hand it over to Mike for the guidance. Yes, Yi. The increase is roughly half is coming from OTTR. That sort of $6 million-$8 million, is for the full year for OTTR, so probably from May through to December, since the acquisition. We're looking at something like $4 million-$5 million, revenue coming from OTTR. The delta for the increase in the guidance, which is about $8 million at the midpoint, is coming really from AlloSure and our sort of continued expected growth of that.
Got it. Is iBox technology expected to add any revenue to the top line?
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 KidneyCare really is encapsulating a concept similar to HeartCare, where we're combining AlloMap and AlloSure. Here, we don't expect right now for sure for this year a contribution from Predigraft, which is the iBox technology as a product for as a contribution for this year.
How much impact should we expect from the inclusion of AlloMap in Anthem 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 every single AlloMap result, that we're now in more than 80% under contract on AlloMap. Being in-network with Anthem sets a key signal for transplantation issues and high-value diagnostics. So we see the signaling effect as a very important effect. Mike, did you want to add to that?
Yeah. Anthem for AlloMap represents just under 5% of the AlloMap volume. We've had a positive coverage decision from Anthem on AlloMap for several years. We have been getting paid. Of course, we've been getting paid on an out-of-network basis. It takes a longer time to get paid on the out-of-network basis. Being in-network, it'll 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. A final question. Is there an update regarding the litigations against Natera?
Nothing specific. Those litigations were roughly a month ago. Natera still has time throughout the rest of this month in order to respond. 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. You may disconnect your lines at this time. Thank you for your participation.