Welcome, everyone, to day three of the Stephens Conference. I'm Mason Carrico. I'm the med tech and diagnostics analyst here. Excited to have CareDx with us today. We've got John Hanna, CEO, and Keith Kennedy, COO. Thank you, guys, for making it.
Thanks for having us, Mason. We really appreciate it.
Thank you, Mason.
Yeah. Maybe just to start, you guys just reported the third quarter. Maybe start us off with a quick recap, and then we can just jump into Q&A.
Yeah, that sounds great. We had a great third quarter. I think just the highlight there is our strategy of solution selling is working. We grew in every business segment: 21% top-line revenue growth, 13% growth in our testing services volume. We had 15% approximately adjusted EBITDA. Year to date, we've repurchased 10% of our stock, nearly. As a company, we're doing very strong. We've got approximately $200 million in cash on the balance sheet and no debt.
Got it. Maybe just from a market perspective, organ transplant growth has been pretty muted the last handful of quarters. Maybe just give us an update of the current state of the market. Are transplant centers back to focusing on driving growth or are there lingering disruptions?
Yeah. We look at transplant growth on a five-year CAGR basis, and it continues to be roughly 5%, which is what we laid out in our LRP. We believe that it will return to that trend over the next two years. Transplantation is a profitable service line in hospital systems. They are always looking to grow that business and drive more revenue and profit for the centers and service the patients that need transplantation. We've seen the waitlist for transplant grow now over 100,000 patients in the United States. We are seeing some uptick here moving into the fourth quarter. They just published the October numbers on transplantation. We believe that we'll continue to see some strong numbers through the end of the year. In the transplant market, it's very interesting. Surgeons are very competitive.
You may have seen when you arrived in the airport here, the big billboard in the most heart transplants ever at Vanderbilt University. I think that's a point of pride, right, as these centers try to help these patients that need this lifesaving care. That's persistent across the country.
Got it. What's your current view on IOTA? I mean, do you expect the program in its current form to still provide you with some tailwinds over the next handful of years?
We do. We do. You recall, Mason, IOTA wasn't initiated until July of this year. We have still got another nine months until the final numbers are locked that will set the reimbursement differential for the centers that are participating in the program. I think as we go into 2026, we will see an uptick in kidney volumes as people really start to think about the impact that is going to have on reimbursement for kidney transplantation.
Moving to your testing services business, you've highlighted kidney as a key growth driver in recent quarters. Where does protocol adoption stand across the 200 kidney centers in the U.S.? How many have a formal surveillance protocol in place at this point?
Yeah, protocol adoption has been strong. We said in Q3 of last year that we had initiated 10 programs after the restrictive language was removed from the draft LCD. In Q2, we reported 60 programs now back online with kidney protocols. We continue to see growth in that through this quarter. We haven't provided an updated number beyond the 60, but we'll continue to do that. There are many programs that utilize testing without a formal written protocol on surveillance. The 60 is those that have a protocol, have it documented, and have actually shared the protocol with us so that we put it in our system and make sure that we support them in managing the patients the way they want on their protocol.
Got it. Maybe just higher level, what does it take to get a protocol in place? What does the process look like?
It takes agreement and alignment, right? Just like any other kind of political corporate process, right? You got to get everyone around the table here, in this case, a group of clinicians, be it surgeons, cardiologists, or nephrologists, or pulmonologists in that department, as well as the transplant coordinators, all to agree to manage these patients in a consistent way across the entire practice. They go through and document that. It's not just about cell-free DNA testing, right? It's about everything they're doing to manage the care of these patients, from drawing their serum creatinine to infection testing. It's a follow-up visit, it's bronchoscopies on the pulm side, cath procedures on the heart side for biopsy. There is a lot that goes into alignment around a protocol.
That includes extensive data analyses, both within a system as well as the literature to understand best practice for managing these patients.
Got it. Has the draft LCD impacted your ability to get those in place at all?
No, it hasn't. The draft LCD is purely a reimbursement policy, right, and describes how many tests are going to get paid for. It does not necessarily restrict, at least today in its draft form, clinicians from ordering testing. We have seen no disruption in our testing volumes as a result of the draft LCD. In fact, we continue to see growth in the number of tests performed per patient in the first year and over three years, which are numbers that we track very closely. Those numbers continue to tick up as we do a better job driving adherence to the protocols that the institutions have already put in place.
Got it. What does the average testing frequency or adherence look like at a protocol center versus a center that does not have one? What is, I guess, the delta look like?
Yeah, it's pretty wide, right? We've said previously, we'll take kidney as an example. We've said previously that we do somewhere around three and a half to four tests per year per patient. That spectrum ranges from centers that do a 744 protocol to those that only test in a for-cause setting. That's how you get to that average.
Yeah. For protocol centers, do you see that they're more likely to utilize your digital service solutions, product, business? Is there some synergies there?
Absolutely. Absolutely. I think of the synergies in the sense that our job as a service provider to the transplant center is to bring solutions to them to help them operate the center more efficiently and improve the quality of outcomes for their patients. The more services we can sell across the continuum, be it quality reporting software, medication therapy management, our pharmacy, which is doing very well and has been adopted by a number of centers. I called out on the call a center in Georgia that recently adopted our pharmacy because they have a lot of high-risk patients at this particular center. They get a lot of sensitized patients. They use higher-risk organs. They are concerned about these patients having rejection post-transplantation due to non-adherence to the medication, given all the other comorbidities they have.
Our service, from a pharmacy perspective, is very high touch, right? We do things that are specialized for patients, like individual pill packs for them by day so they know which meds to take. We have consultations with them. That type of medication therapy management is something that helps them manage their patients more efficiently. When we look at their data overall and the utilization of our testing on top of the pharmacy, they see better outcomes. That drives greater adoption of our services. It's a great case study to then go to other centers and say, "See what's been done here and look how we can help you.
Yep. As much as you're willing, what does the current split of volumes look like between surveillance and for-cause? I guess how much of your surveillance volume is tied to protocol centers?
I don't know the answer to that. That's a very detailed question. I don't think we've given out the surveillance for-cause split, but we're certainly looking at that information and trying to understand the trends better. We've seen surveillance increase in kidney in particular. When the draft restrictive language was removed, we went back to selling surveillance and now have the 60 centers. Naturally, surveillance has gone up. A large part of the market today is still for-cause testing, right? In that period between the billing article of 2023 and the removal of the restrictive language around surveillance, a lot of the growth that we experienced was in for-cause testing. We were able to do that by driving an expanded context of use of the product. When I say that, I mean scenarios like immune suppression minimization.
When patients are six or nine months post-transplant, part of the protocol is to say, "Well, I want to reduce immune suppression on this patient because of the long-term effects of immune suppression, such as cancer, poor renal function, etc." They'll utilize testing for-cause as they dose that patient down and titrate the meds to make sure they get them in an immune quiescent state. That type of context of use is really what the company had focused on for a year and a half. That continues to grow across the marketplace as we see clinicians present at conferences and talk about how they use the tests in all of these different scenarios, not just in surveillance.
I'm curious how are nephrologists in the community setting utilizing AlloSure? Is that a focus near-term, long-term? I guess, how do we think about that opportunity?
Yeah, it's something we're starting to look at more and more, in particular as we see these practices grow, right? When you have a transplant center that does over 200 kidney transplants a year, they can't manage all those patients inside the transplant center for the rest of their lives. They are actively transitioning these patients back to community nephrology. We're working on that center-to-community transition and how we maintain a relationship with that patient to ensure they continue on their AlloSure protocol. Just like a clinician, we're a provider. We're a laboratory. We have an NPI number. We bill for our testing. We have that patient-to-clinician relationship that we can engage with them on utilization of the tests on a go-forward basis. It's predominantly a direct-to-patient strategy today versus a field-force strategy going after all the nephrologists.
Yeah. That makes sense. You guys launched HistoMap relatively recently, or you will, I guess, launch it relatively soon. What are your expectations around that product over the next 12, 18 months? I guess, run us through how it fits into the current clinical workflow. Where do we kind of stand from a reimbursement standpoint?
Yeah. HistoMap is a fantastic product because it helps us provide another solution that kind of encapsulates our end-to-end service with transplant centers. I say that because patients who are detected by AlloSure to have high levels and are undergoing rejection ultimately go on to biopsy. Those biopsies have a very high inter-observer variability in their diagnosis. There is only so much you can see under a microscope. What HistoMap does is it takes that biopsy tissue and does a gene expression profiling of the tissue to give you a molecular view of the status of rejection and what phenotype is present molecularly in that tissue. Is it antibody-mediated rejection? Is it an expression signature of cellular rejection? Or is there really no rejection in the tissue? It is just another layer of resolution.
It also helps us building more data cohorts so that we can build more products, right? We'll have the ability now to run trials. We talked about launching this initially in a study in 2026. We're going to run a trial where we're going to collect AlloSure, HistoMap on patients that get biopsy, as well as clinical variables and enable us to enhance our products and add product extensions because we have that molecular truth of the tissue.
On heart, that's been in the market, obviously, for a lot longer. Where do you stand, I guess, from a center penetration standpoint? Is there meaningful white space still available there? Is there really the growth opportunity in heart about driving adherence at this point?
No, I think there's still white space. There's still centers that are biopsy centers. That's what they do. They don't use molecular. There is opportunity to penetrate more centers with our product. Certainly, the larger opportunity is utilization of the testing over biopsy in these centers. What you typically see is when they adopt the product, they start to remove biopsies. Maybe they'll do testing quarterly and biopsies in between on a monthly basis. They will go biopsy test, biopsy test, biopsy test. Ultimately, they'll start removing all of the biopsies and get down to a schedule that's one-month, six-month, nine-month biopsy or 6-12, and then fill in the rest of the schedule with molecular.
We think that some of the data that has come out on SHORE from the SHORE registry recently has been incredibly compelling for clinicians to show that, number one, regardless of how many biopsies you do, whether you did two biopsies in the first year or 12, outcomes were exactly the same, right? There is no reason to subject these patients to monthly biopsies when you can manage them with molecular testing and have the same outcome in your cohort. The second thing is that molecular testing is prognostic for outcome. Data that we've shown at conferences and that will come out in manuscript here soon, hopefully, shows that when you have a dual positive HeartCare result, that is prognostic for reduced graft function and death relative to patients that have only a single positive molecular test or no positive molecular test.
That prognostic value is incredibly important to managing those patients. There was a paper that came out this quarter where they were treating patients as a result of HeartCare positivity, even when their pathology was negative. This was at Columbia University. What they found was by prophylactically treating these patients due to their HeartCare result, their outcomes were equivalent to patients that had negative HeartCare results or had no rejection whatsoever. I think what we're going to see here in heart, in particular over the next several years, is a shift from utilizing the testing to rule out rejection and changing clinical practice around biopsy to now utilizing the testing to determine how to treat therapeutically. That's just the next evolution of the evidence in the product.
Have you seen at least a material change in how HeartCare is getting utilized, either incremental adoption or adherence gains since SHORE has come out?
Oh, absolutely. Absolutely. I think 2024, we had an outsized growth in heart testing relative to kidney, right? Kidney was a little more suppressed because we had the billing article issue and the LCD thing that said you could only use it in lieu of a biopsy, right? People were a little more tepid about utilizing the surveillance testing in kidney. Heart, that was really the prime year of that HeartCare data getting presented at ISHLT and subsequent conferences that really drove greater utilization of HeartCare rather than biopsy in these practices. We continue to see that growth year over year in heart testing.
Got it. All right, Keith, revenue cycle management has been an important initiative for you guys. You guys have made great progress there. I guess when we think about the Q4 revenue for test guide, how much of that reflects prior period collections that are more one-time in nature versus some sort of sustainable-based pricing going forward?
Great question. As Nathan laid out on the call, I believe that number was $4 million- $6 million is in the Q4 implied number on the revenue per test. We're in the middle, as I've talked about in previous quarters when John and I got here last year, having the right to win in revenue cycle management and building a really great team that understands how to bill insurance carriers is really important. Our investors always ask, "I'm surprised that insurance companies don't pay for this given the transplant and the severity of the cases that you're dealing with." I like to tell them, "They deny everything." You have to have a really good operation. If you have 100 workflows you have to accomplish, you have to have the software and the workflows to do that.
We're building out bot farms and things like that to automate this and it is having a real impact. We're super excited about that. Essentially, the more we're collecting, as you saw in our earnings release, we're collecting more than we're recognizing in revenue. We're compressing the look-back period that you see in accounting. They're looking at matured claims to evidence your ASP. As time goes on and we start looking back after I put the team in place in the first quarter of 2025, when that falls into the window, we're in the middle of 2026, and you start looking at the middle of 2025, that ASP will reflect this cash that's coming in. We're super excited about compressing the window, making this more reliable, giving clearer guidance, which we'll do next year.
The Q4 call will give more guidance on ASP and revenue per test.
Got it. So much better than looking back 12 quarters or 8 quarters for a one-time kind of payment from whoever.
Yeah. That leads to a lot of uncertainty. We wrote off $5 million in the first half of this year. Then we turned around and collected $6 million more in the next quarter. As an operator, thinking about the investor and the buy side of our stock, that's a whiplash that you don't want to put anybody through. At the time, our CFO, that was the best decision based on the data you have. You can't convince people, sometimes even auditors, that we're making these changes. You see the cash coming in. That cash is going to get applied to AR. After my AR goes to zero, where does that go? It goes into revenue or deferred revenue. We're really excited about it. It's a good guide.
Got it. You guys have expanded coverage pretty well over the past two years. I mean, I think it was 29 million lives for AlloMap Heart, and 36 million new commercial covered lives for AlloSure in 2024. You've added more to that this year, I guess. When we think about the ASP benefit of those coverage wins, how long does it typically take to start flowing through what we see in ASP? I guess, how much of the benefit are we seeing right now versus how much is still ahead of us?
First, I'd say the insurance companies pay for tests even if they don't cover the test sometimes. We get to appeal if we're out of network and things like that. You definitely want to get coverage for the test, and you want to get it contracted. Those things can take 18 months to two years in some cases. Oftentimes, what you'll do is you'll go into appeals, and you'll elevate the level of appeals. It gets very expensive for the insurance companies when they start losing these appeals. We're doing a really, really good job. You're seeing our appeal volume went up over 200%. They just historically were not appealing many claims at the company. They were just filing the claims, and they didn't get paid. They didn't get paid. That's an interesting take in diagnostics.
That's not generally how it's done. We've been building out that team. We actually had no one dedicated to that prior to me getting here inside the company as an FTE. We're building out that team and doing appeals and all that. It'll be a journey. We say three years to get up to over $2,000 internally. That's our goal.
Got it. Yeah, I guess on that point, the progress with RCM initiatives, cash collections, coverage, have you become more optimistic about the ASP outlook versus the, I think, 3% that's built into the long-range guide?
We hope to come out and lay that out when we do the Q4 call and talk more about that. Obviously, the cash is greater than the revenue. We said on our call in October, we had the highest cash collections in the history of the company in October. Signaling that this trend is continuing. We are bullish at the 3% that we set when we came in here because we really did not know when we started. We just had a pretty good idea that it did not make sense that we were collecting $1,300 or $1,250 a test when our Medicare rate was $2,700 and $2,800. It just did not make any sense to us. That has proven to be true when we come in here.
Yeah. So AlloSure's been on the market for a while now at this point. I mean, it seems like there is broad clinical adoption of these types of tests. I guess, what do you think is required to get some of the large national payers to start paying for it?
United is paying for it. We don't have a contract with United, and they're paying. We are obviously in discussions with these payers. We have all the discussions going with the top 100 payers. That covers probably 90%, 95% of all of our tests are the top 100 payers. It's just a process that we're going through.
Yeah. Sometimes it's more than evidence, right? This year, the team got a CPT code for the product. We had contracts. This is great. We had contracts that said, "We will not pay. We'll pay zero for miscellaneous codes." We were billing with 81479 for AlloSure. All the claims we were billing by some payers were just getting paid zero by contract, which is crazy. We went and got the CPT code. This year, the drill of the market access team has been two things. One is turn over all the contracts so that they have the new code in them so that we can get paid and we have a right to get paid and we don't have any kind of bad contracts. Number two has been focused on the LCD process. That's what the team has been focused on.
We have not been talking a lot about new covered lives on our calls because that has been the main focus of the team. To Keith's point, sometimes it is not the evidence. It is the mechanics of claim submission, appeals, eligibility verification, prior authorization, what code you are billing. You have to get all these things ironed out in the company and make sure you are doing the blocking and tackling and the business processes correctly.
Got it. Right now, I'd say Medicare Advantage is the big challenge for our industry. We spend a lot of time, and we even terminate contracts. We will say, "Hey, you're using a contract to try to get around paying us." Even though we have a PLA code, they'll say, "Well, it's not in the contract." We're like, "We have to amend the contract." They're like, "Well, it's in this person's hand over here." They will just delay putting it in the contract to not pay you. They know that that's what they're doing.
Yeah.
It's an interesting business. You can tell on the quarter ends, they're trying to make their earnings, and they'll do things like recoupments. You can almost tell the timing of how the managed care companies are managing their side of the equation to get their medical loss ratios at a certain percentage.
Right. Yeah. That's interesting. On clinical evidence, though, what should we be looking out for over the next 12 to 18 months? What are some of the larger data sets that we should be paying attention to?
Yeah. I mean, we have the SHORE trial that has now wrapped. We have the KOAR study in kidney that has completed. We have ALAMO in lung that has not yet reached last patient last visit because we're still following those patients. We're starting to produce manuscripts there as well. SHORE 1 and 2 are in print. SHORE 3 on its way. The first KOAR study is in print. KOAR 2 has been written and submitted as a manuscript. The first ALAMO manuscript is in process. These are things, right? These are external authors, the PIs on the studies that write the manuscripts. Sometimes we see them. Sometimes we don't before they go out. We largely know what's happening because we're doing all the statistical analysis and supporting them.
The evidence wave is coming, and it's going to continue to support that market access push to drive coverage. We always talk about this as kind of a 50/50 split, right? Half of the ASP gains are going to come from coverage. Half of them are going to come from the blocking and tackling of the RCM function and just doing that process correctly.
Got it. On Epic integrations, I think you're targeting 10% of volume going through Epic by the end of this year, 50% by the end of next year. You've also called out that there's typically a 10% volume bump after going live. How long does it typically take after integration for you to see that volume uplift?
We do not have enough integrations to tell you that. We are trying to get to about 40 integrations next year. We are pushing for like 10 a quarter, essentially. This is very much driven by the customer. We are trying to make it easy to access our test and easy to order our test. Doing business in diagnostics where you are collecting blood samples is challenging. You have the logistics. You have UPS, FedEx, all the things you see inside your company with labor and reliability of people and all that stuff is affecting transportation. I would say there is about 3% of all volume that has some logistical issue associated with it. We are spending a lot of time inventing new technology. We have a new RFID tag that we are putting on tubes. We are doing NFC tokens in our boxes.
We're trying to do things with our phones that we can do in order to track these samples and make it more reliable for the physicians. Epic is in 75%-80% of our centers. That's what they elected to use for their EMR. We're going to meet them where they are. We also have a CarePortal, which is an amazing web application. Customers really like ordering through there because we can control that. We do probably 30 different updates a month in that CarePortal. It is very robust, and accessing it and communicating is secure. We're super excited about Epic. We got eight integrations going on right now. We got 20 that we expect to launch by the end of the year. We got about 150 conversations going.
Of the 250 centers, when they want to take that on, we're engaged in getting into the funnel. It's us. It's Natera's. Everybody's in there trying to get in line to get Aura implemented.
Got it.
They may say, "Hey, I'm scheduled 12 months out," or they'll call you and say, "Hey, we can't do this other one. We're going to slot you in here." That's the process going on. At the bigger institutions, it's somewhat easier because they have more people on the IT side. The smaller institutions are not as sophisticated in terms of rolling out and making this a flywheel for their institutions. We do more hand-holding and we're more involved in the smaller centers.
Got it. Maybe moving to the draft LCD, I guess, starting higher level. Why do you think this has been a long process, obviously? Why do you think this has become such a focus for the MACs?
I'm not sure. I think this all started with a perception of over-utilization of the product, which was, I think, a perception, right? These products in COVID, you recall, COVID really accelerated the adoption of AlloSure across the country because you had patients that were immune suppressed. The mortality rate on immune suppressed patients that contracted COVID was very high, significantly higher than the general population. They wanted to keep these patients out of the hospital, right? You can't bring them in and biopsy them on a monthly basis in the case of heart and lung. Therefore, the adoption of these remote services, these blood-based testing really accelerated. When you're in a managed care organization, and I worked in insurance for five years, I have seen this. I've done it myself. You look at utilization trend reports, right?
When you see a trend report go up, you're like, "What's going on here? There's over-utilization of this service. Let's stop it." The main mechanism that managed care organizations, including Medicare, have to limit the utilization of services is medical policy, right? I think that's why there's been attention to this, is that unlike other services that declined during COVID, this is one that really accelerated in its adoption. You've seen this focus. I think a bunch of missteps and misunderstandings along the way around how the services are utilized and what the standard of care is across the country, right? The language that was initially written around in lieu of biopsy was incredibly restrictive, particularly in kidney. Now there's alignment that, well, the evidence has evolved, and it's clear that surveillance testing does improve patient outcomes.
Now the draft LCD affirms coverage for surveillance in kidney in particular, which we're really pleased to see that progress.
You laid out two scenarios. I think it may have been on the Q2 call of kind of potential outcomes there, I guess. Could you just walk us through those two scenarios? What assumptions kind of underpin them? If you can probability weight them or how you would kind of think about them, maybe that's unrealistic.
No, no. I probably weighted them. I think the two scenarios, we tried to make this straightforward because I think scenario one is the policy is implemented as it is written, right? As the reading of the document, meaning that in heart and lung, the allotted testing is 12, 2, 2. In kidney, it's 4, 2, 2. In that scenario, what we said was that would create about a $15 million headwind to the company because we anticipate in kidney that the average number of tests done per year per patient in surveillance over time will exceed four. In heart and lung, in particular, the average number of tests, particularly in heart with HeartCare in years two and beyond, is significantly more than two today.
Therefore, that created in heart a $7 million headwind and in kidney $7 million on the four surveillance versus seven. That is the $15 million, $7.5 million, $7.5 million. That is the $15 million in scenario one, right? The downside of the policy. Scenario two, and that is the most likely outcome because that is how the policy is written today. That is what we view as the base case scenario. Scenario two, we wanted to model what the impact would be if AlloMap Heart was no longer reimbursed because there is some language in there questioning the utility of running both tests simultaneously as HeartCare versus one test alone. We would argue that the evidence is very strong supporting dual testing and that outcomes, it is prognostic for outcome and that there is value in doing that.
Nevertheless, just so that we had transparency around what the downside risk potentially could be, we said that if AlloMap is no longer reimbursed, that would be a $30 million headwind to the company. Those are the two scenarios. We again assign a greater probability to scenario one versus scenario two. Within scenario one, we continue to, and we did submit a very extensive comment letter on the LCD and made that public on our website, arguing that A, dual testing in heart is extremely valuable to patients and is the standard of care.
B, doing a 7, 4, 4 protocol in kidney, and then in particular, testing four times or quarterly in year two and beyond in all organs should be the policy and standard because largely when you look at the kinetics of rejection, we find that with testing, you tend to detect that rejection somewhere around three to four months in advance of clinical signs and symptoms. A quarterly protocol in the subsequent years makes more sense than semi-annually because you're just going to miss a lot of rejection events if you only test semi-annually.
Got it. Depending on the outcome of the LCD, I mean, I guess who knows what happens, but finalized as written, for example, I mean, could this cause you guys to change your cost basis at all?
I mean, we have really good gross margins on our business. We're about 80% in testing services. I think it's important for everyone to remember that Medicare is a segment of a segment of the business, right? You have Medicare Advantage, then you have Medicare Fee- for- Service. These policies that have been written over the past several years now in Medicare Fee- for- Service have not propagated into the commercial market at all, right? We don't see any delineation between surveillance and for cause in commercial policies. We don't have to report it when we file claims. There's no limits on testing in commercial policies that affirmatively cover the testing.
For us, we're focused on driving total market adoption of the products where it's medically necessary for patients at the clinician's discretion versus promoting the product to one specific policy that's a segment of a segment of the business, right? What I anticipate is that we will continue to make progress in driving protocol adoption across all indications, increasing adherence to those protocols and the number of tests per patient in year one and then beyond. The LCD will allow us to solidify payment for some subset of those tests. If a clinician decides that they need to order five instead of four or seven instead of four, we're going to continue to support that clinician in the management of their patients because they're not just managing Medicare patients. They're managing commercial patients that have many, many different insurance companies behind them.
We want to make sure that we can service that customer regardless of the insurance policy of that patient.
Got it. It does not, I guess, whatever the LCD outcome is, it does not require you to go back and change protocols.
Absolutely not. We are not going to do that. We are going to continue to support patients.
Got it.
Remember, today, we get paid $13.50 on a 20-hour. We only get paid for half the test today, right? We are not going to stop driving total adoption in the market and trying to service the entire market.
Got it. On that second shorter publication that came out, just given the, I guess, rules and regulations of kind of the open meeting and what has to be published prior or after, do you know if that's something that MolDX would still review?
I don't know for certain. We certainly shared that data with them in our comment letter. It was in the comment letter, as was the SHORE 3 data was in the comment letter. As the manuscripts get accepted and in press, we share the formal manuscript. I anticipate that they will consider that evidence, but I don't know for certain. As you know, in these processes, you have a public comment, but then beyond that, they go and do their work, and there's not a lot of open dialogue about that. That's for a good reason, right?
Okay. Yeah. Fair enough. Maybe on the product and inpatient digital services business, I mean, these have both been growing really well. I guess what has been driving strength across those two segments, and how do we think about the durability of that moving forward?
Yeah, it's about solution selling, right? It's a way that we approach the center trying to help them solve their problems and then innovation in the background. In the product business, we've done a nice job both with software development as well as product innovation. We announced our new Tx11 assay, so an assay that had greater resolution in class II HLA. We announced the addition of ABO blood typing for our QTYPE PCR typing assay for deceased donor organs. It's about innovating the products and meeting the customer's needs and where they are. They're all doing blood typing on these patients. Why don't we just integrate that into the HLA kit? You run one reaction, and you get both answers, right? Those types of innovations in our R&D lab help us drive that forward.
On the digital and patient side, again, these tools are incredibly valuable in a center that is a profitable service line for the hospital. There's a willingness to pay for products. They're going to help them operate the center more efficiently and improve patient outcomes. That's our whole suite of products are focused on that aim.
Got it. Since we only have a couple of minutes here, I'll see if there's anything. No? All right. Maybe on capital allocation, you've repurchased 9% of shares year to date. How are you balancing kind of buybacks against organic growth opportunities, or I guess where does even M&A kind of stack up in that priority list?
I'd say we feel our stock is undervalued relative to our peers and relative to the profitability and long-term outlook of the business. That's why we're buying back the stock. We just think it's the right way to deploy the cash right now. We do look at M&A and opportunities, and John and I and the BD team are constantly in discussions with other people. As you know, Exact announced their deal today. These don't come very often in diagnostics, and they tend to be very scientific. Tests are developed based on someone's belief and how they want to design the test, but it may not be how we go to market with a test. There's a lot of discovery that has to happen in this industry before you do a deal. It's not as simple as buying an off-the-shelf product, and it looks a certain way.
You're looking for clinical validity and utility of that test. We really got to be comfortable that that's a right fit for CareDx. We spent a lot of time thinking about those aspects in M&A. We're open to it, and we look at it in organic growth.
Absolutely. Organic growth. You see that we have increased our spend on commercial the past several quarters because we think there's an opportunity out there to go get and continue to drive growth in the market, which is paying off with over 20% revenue growth in the past quarter. We're going to continue to do that and look at internal organic R&D opportunities to build new products. In particular, an area that I'm super excited about is our product line in cell therapy. In February, we read out the interim results of a two-year trial for our product AlloHeme for patients that have AML and MDS and have undergone a stem cell transplant to treat that hematologic malignancy. That trial had last patient last visit in this quarter. That trial is nearing completion.
The data is being analyzed, and we anticipate that the full results will be read out at the Tandem Cell Therapy and CAR-T meeting in February of 2026. We will be prepared to start talking about commercialization of that product. The whole suite of products we have in cell therapy, including pharmacokinetic monitoring for CAR-T infusion, as well as products in indications like GVHD, graft versus host disease. We think this is a really fantastic space for us to move into. It is a natural extension of our solid organ transplant business because the centers that do bone marrow transplant for these hematologic malignancies are the same 200 centers that do solid organ transplant. It is just another service line in our same customer set around the country.
Got it. I guess just wrapping up here, generic question. What do you think, if anything, is misunderstood about the CareDx growth story? Or how are you thinking about the opportunity ahead of you guys?
I don't know if it's misunderstood, but I think the key here is CareDx has a very innovative approach to the market. We have innovated the business model of diagnostics by creating a solution set of software, testing, pharmacy that really services the customer in a different way than any other diagnostics provider. This business has incredible earnings power behind it with the repeat testing and the way we wrap ourselves around the customer in a very concentrated market. From my view, coming into the company, I felt like it was extremely underappreciated. We have a great investor base that continues to believe in the story and the stock. I think it's just continued growth for us into the future as we extend into areas like cell therapy.
Awesome. All right. We'll wrap it there.
Great. Thanks so much, James.