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CareDx, Inc.

CareDx, Inc.CDNAEarnings & Financial Report

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What changed in CareDx, Inc.'s 10-K — 2024 vs 2025

Top changes in CareDx, Inc.'s 2025 10-K

499 paragraphs added · 419 removed · 325 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

105 edited+43 added−29 removed90 unchanged
In April of 2022, a multicenter study of 175 patients published in the Journal of Heart and Lung Transplantation demonstrated that AlloSure Lung reduced surveillance bronchoscopies by 82%, and that AlloSure Lung can identify subclinical acute lung allograft dysfunction in stable patients without clinical signs and symptoms.
In April 2022, a multicenter study of 175 patients published in the Journal of Heart and Lung Transplantation demonstrated that AlloSure Lung reduced surveillance bronchoscopies by 82%, and that AlloSure Lung can identify subclinical acute lung allograft dysfunction in stable patients without clinical signs and symptoms.
Typing with QTYPE requires one hour compared to the up to 2-3 hours that it takes to do traditional SSP typing and the 5-7 hours that it takes with sequence-specific oligonucleotides, or SSO. Olerup SSP is used to type HLA alleles based on the sequence specific primer, or SSP, technology.
Typing with QTYPE requires one hour compared to the up to 2-3 hours that it takes to do traditional sequence specific primer, or SSP, typing and the 5-7 hours that it takes with sequence-specific oligonucleotides, or SSO. Olerup SSP is used to type HLA alleles based on the SSP technology.
In addition to federal privacy regulations, there are a number of state laws governing confidentiality of health information that are applicable to our operations. New laws governing privacy may be adopted in the future as well. We have taken steps intended to address health information privacy requirements to which we are aware that we are subject.
In addition to federal privacy regulations, there are a number of state laws governing the confidentiality of health information that are applicable to our operations. New laws governing privacy may be adopted in the future as well. We have taken steps intended to address health information privacy requirements to which we are aware that we are subject.
Our business or financial results may be adversely impacted by adhering to these regulatory requirements and the related costs of ensuring and maintaining compliance. In addition, we cannot predict how future regulatory conditions will affect our business and may also have an adverse impact on our results of operations or financial condition.
In addition, we cannot predict how future regulatory conditions will affect our business and may also have an adverse impact on our results of operations or financial condition. Our business or financial results may be adversely impacted by adhering to these regulatory requirements and the related costs of ensuring and maintaining compliance.
Department of Health and Human Services, or HHS, has issued regulations to protect the privacy and security of protected health information and standardize data content, codes and formats used in healthcare transactions and the standardized identifiers used by healthcare providers, such as us, and health plans. We have developed policies and procedures in view of these regulations.
Department of Health and Human Services, or HHS, has issued regulations to protect the privacy and security of protected health information, or PHI, and standardize data content, codes and formats used in healthcare transactions and the standardized identifiers used by healthcare providers, such as us, and health plans. We have developed policies and procedures in view of these regulations.
Our Ottr software consists of two unique offerings, Ottr Organ and Ottr Cellular, which provide comprehensive solutions for transplant patient management and enable integration with electronic medical records, or EMR, systems, including Cerner and Epic, providing patient surveillance management tools and outcomes data to transplant centers.
Workflow Solutions: Our Ottr software consists of two unique offerings, Ottr Organ and Ottr Cellular, which provide comprehensive solutions for transplant patient management and enable integration with electronic medical records, or EMR, systems, including Cerner and Epic, providing patient surveillance management tools and outcomes data to transplant centers.
The care of organ transplant recipients is an intense and costly effort and requires life-long surveillance and management by highly specialized clinicians and other healthcare providers. Unsuccessful treatment of rejection can result in an additional transplant or worse, death of the patient.
The care of organ transplant recipients is an intense and costly effort and requires life-long surveillance and management by highly specialized clinicians and other healthcare providers. Unsuccessful management of organ rejection can result in an additional transplant or worse, death of the patient.
Our XynQAPI software simplifies transplant quality tracking and Scientific Registry of Transplant Recipients reporting, and our XynCare offering includes a team of transplant assistants who maintain regular contact with patients on the waitlist to help prepare for their transplant and maintain eligibility.
Quality Solutions: Our XynQAPI software simplifies transplant quality tracking and Scientific Registry of Transplant Recipients reporting, and our XynCare offering includes a team of transplant assistants who maintain regular contact with patients on the waitlist to help prepare for their transplant and maintain eligibility.
Due to the high standards and FDA requirements applicable to the manufacturing of our products, we may not be able to quickly establish additional or replacement sources for certain components or materials.
Due to the high standards and ISO/FDA requirements applicable to the manufacturing of our products, we may not be able to quickly establish additional or replacement sources for certain components or materials.
We believe leveraging our core scientific and technological expertise in organ transplantation will enable an expansion into adjacent markets, such as pre- and peri-transplant areas of organ assessment, precursor disease areas that often lead to organ failure (such as autoimmune disorders, renal, hepatic, cardiovascular and lung diseases, and hematologic disorders), and cancer or other medical conditions that could require cell therapy or cell transplant.
We believe leveraging our core scientific and technological expertise in organ transplantation will enable an expansion into adjacent markets, such as pre- and peri-transplant areas of organ assessment, precursor disease areas that often lead to organ failure (such as autoimmune disorders, renal, hepatic, cardiovascular and lung diseases, and hematologic disorders), and cancer or other medical conditions that could require cell therapy or bone marrow transplant.
We develop, manufacture, market and sell products that increase the chance of successful transplants by facilitating a better match between a solid organ or stem cell donor and a recipient, and help provide post-transplant surveillance. Our Lab Product portfolio includes QTYPE, Olerup SSP and SBT, AlloSeq Tx, AlloSeq HCT, and AlloSeq cfDNA.
We develop, manufacture, market and sell products that increase the chance of successful transplants by facilitating a better match between a solid organ or stem cell donor and a recipient, and help provide post-transplant surveillance. Our laboratory product portfolio includes QTYPE, Olerup SSP and SBT, AlloSeq Tx, AlloSeq HCT, and AlloSeq cfDNA.
In addition, we believe it is important to have regular engagement with our employees to understand their needs. Apart from regular weekly meetings with managers, monthly town hall meetings and quarterly earnings reports and calls, we also conduct annual anonymous employee surveys to understand current employee sentiment, areas we are excelling in as well as areas for improvement.
In addition, we believe it is important to have regular engagement with our employees to understand their needs. Apart from regular scheduled meetings with managers, monthly town hall meetings and quarterly earnings reports and calls, we also conduct annual anonymous employee surveys to understand current employee sentiment, areas we are excelling in as well as areas for improvement.
Lab Products Manufacturing We have historically purchased many of the components and raw materials used in our product kits from numerous suppliers worldwide. For reasons of quality assurance, sole source availability or cost effectiveness, certain components and critical raw materials used in the manufacture of our products are available only from one supplier.
Laboratory Products Manufacturing We have historically purchased many of the components and raw materials used in our product kits from numerous suppliers worldwide. For reasons of quality assurance, sole source availability or cost effectiveness, certain components and critical raw materials used in the manufacture of our products are available only from one supplier.
However, we still have a tremendous opportunity to unlock growth and innovation by driving greater value for transplant patients, clinicians, our employees, and shareholders. CareDx is differentiated in the molecular diagnostics market because we innovated the go-to-market model for a lab developed test (LDT) business.
However, we still have a tremendous opportunity to unlock growth and innovation by driving greater value for transplant patients, clinicians, our employees, and shareholders. CareDx is differentiated in the molecular diagnostics market because we innovated the go-to-market model for a laboratory developed test (LDT) business.
That market dynamic makes the cost of revenue acquisition high which coupled with high research and development spend on new products, makes the pursuit of profitability challenging. In fact, very few LDT lab companies have reached cash flow break even or become profitable enterprises.
That market dynamic makes the cost of revenue acquisition high, which, coupled with high research and development spend on new products, makes the pursuit of profitability challenging. In fact, very few LDT laboratory companies have reached cash flow break even or become profitable enterprises.
We believe the principal competitive factors in our target markets include: • quality and strength of clinical and analytical validation data; • confidence in diagnostic results; • technical performance and innovation to deliver new products that provide clinically actionable results; • reputation among customers as a provider of high value transplant diagnostic tests and diagnostic test services; • the extent of reimbursement; • inclusion in practice guidelines; • cost-effectiveness; and • ease of use.
We believe the principal competitive factors in our target markets include: • quality and strength of clinical and analytical validation data; • confidence in diagnostic results; • technical performance and innovation to deliver new products that provide clinically actionable results; • reputation among customers as a provider of high value transplant diagnostic tests and diagnostic test services; • the extent of reimbursement; • inclusion in practice guidelines; 13 Table of Contents • cost-effectiveness; and • ease of use.
Programs and benefits differ internationally for a variety of reasons, such as local legal requirements, market practices, and negotiations with works councils and other employee representative bodies. From time to time, we also employ independent contractors, consultants and temporary employees to support our operations. Currently, our SSP production group in Sweden is represented by an IF Metall collective bargaining agreement.
Programs and benefits differ internationally for a variety of reasons, such as local legal requirements, market practices, and negotiations with employee representative bodies. From time to time, we also employ independent contractors, consultants and temporary employees to support our operations. Currently, our SSP production group in Sweden is represented by an IF Metall collective bargaining agreement.
Second, we intend to fully integrate our digital and patient solutions and lab products teams into a single go-to-market model designed to deliver comprehensive 5 Table of Contents solutions that drive loyalty and maximize customer value.
Second, we intend to fully integrate 5 Table of Contents our digital and patient solutions and laboratory products teams into a single go-to-market model designed to deliver comprehensive solutions that drive loyalty and maximize customer value.
Accelerate Profitable Growth We plan to accelerate profitable growth by first focusing on cross-selling at transplant centers, with the goal of increasing the acquisition of new patients and improving patient adherence to our testing protocols.
Accelerate Profitable Growth We plan to accelerate profitable growth by first focusing on solutions-selling at transplant centers, with the goal of increasing the acquisition of new patients and improving patient adherence to our testing protocols.
AlloMap Heart has been a covered service for Medicare beneficiaries since January 2006. The Medicare reimbursement rate for AlloMap Heart is currently $3,240. AlloSure Heart has been a covered service for Medicare beneficiaries since December 2020. In October 2020, we received a final MolDX Medicare coverage decision for AlloSure Heart.
The Medicare reimbursement rate for AlloMap Heart is currently $3,240. AlloSure Heart has been a covered service for Medicare beneficiaries since December 2020. In October 2020, we received a final MolDX Medicare coverage decision for AlloSure Heart.
HeartCare provides robust information about distinct biological processes, such as immune quiescence, active injury, acute cellular rejection and antibody mediated rejection. The International Society for Heart and Lung Transplantation, or ISHLT guidelines published online in 2022 reinforced the use of AlloMap Heart and referenced the combined use of AlloSure Heart and AlloMap Heart for surveillance purposes.
HeartCare provides robust information about distinct biological processes, such as immune quiescence, active injury, acute cellular rejection and antibody mediated rejection. 7 Table of Contents The International Society for Heart and Lung Transplantation, or ISHLT guidelines published online in 2022 reinforced the use of AlloMap Heart and referenced the combined use of AlloSure Heart and AlloMap Heart for surveillance purposes.
In 2023, a HistoMap validation study was published in the journal Laboratory Investigation , demonstrating its ability to accurately identify rejection and type as antibody mediated rejection, cellular rejection, mixed rejection, or no rejection. AlloSure Lung AlloSure Lung, our solution for lung transplant patients, is a leading indicator of injury and early rejection identification.
In 2023, a HistoMap validation study was published in the journal Laboratory Investigation , demonstrating its ability to accurately identify rejection and type as antibody mediated rejection, cellular rejection, mixed rejection, or no rejection. 8 Table of Contents AlloSure Lung AlloSure Lung, our solution for lung transplant patients, is a leading indicator of injury and early rejection identification.
The qui tam provisions of the federal False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has violated the federal False Claims Act and to share in any monetary recovery. In recent years, the number of suits brought against healthcare providers by private individuals has increased dramatically.
The qui tam provisions of the federal False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has violated the federal False Claims Act and to share in any monetary recovery. 17 Table of Contents In recent years, the number of suits brought against healthcare providers by private individuals has increased dramatically.
Environmental Matters Our operations require the use of hazardous materials (including biological materials), which subjects us to a variety of federal, state and local environmental and safety laws and regulations. Some of these regulations provide for strict liability, or holding a party potentially liable without regard to fault or negligence.
Environmental Matters Our operations require the use of hazardous materials (including biological materials), which subjects us to a variety of federal, state and local environmental and safety laws and regulations. Some of these regulations provide for strict liability, or holding a 19 Table of Contents party potentially liable without regard to fault or negligence.
Department of Health and Human Services Office of Inspector General has the authority to impose such penalties and the final rule relating to such developers went into effect in August 2023.
Department of Health and Human Services Office of Inspector General has the authority to impose such penalties and the final rule relating to such developers went into effect in August 2023. The U.S.
These regulations apply to all of our products sold in the United States, as well as our facilities in Stockholm, Sweden, used to produce some of our products. The FDA has also asserted that it has the authority to regulate laboratory-developed tests, or LDTs, as medical devices under the FFDCA.
These 15 Table of Contents regulations apply to all of our products sold in the United States, as well as our facilities in Stockholm, Sweden, used to produce some of our products. The FDA has also asserted that it has the authority to regulate laboratory-developed tests, or LDTs, as medical devices under the FFDCA.
AlloSure Kidney 7 Table of Contents AlloSure Kidney, our kidney transplant solution, is a molecular diagnostic test intended for the early detection of kidney allograft injury and rejection. AlloSure Kidney is validated to detect all types of clinical rejection including antibody mediated rejection (ABMR) and T-cell mediated rejection (TCMR).
AlloSure Kidney AlloSure Kidney, our kidney transplant solution, is a molecular diagnostic test intended for the early detection of kidney allograft injury and rejection. AlloSure Kidney is validated to detect all types of clinical rejection including antibody mediated rejection (ABMR) and T-cell mediated rejection (TCMR).
The requirements under these regulations may change periodically and could have an effect on our business operations if compliance becomes substantially more costly than under current requirements, business practices change or a significant breach to protected health information, or PHI, occurs.
The requirements under these regulations may change periodically and could have an effect on our business operations if compliance becomes substantially more costly than under current requirements, business practices change or a significant breach to PHI occurs.
Distributed PCR Kits for HLA Typing 8 Table of Contents QTYPE enables Human Leukocyte Antigen, or HLA, typing at a low to intermediate resolution for samples that require a fast turnaround time and uses real-time polymerase chain reaction, or PCR, methodology. QTYPE primarily focuses on typing where rapid typing results are required, such as for deceased donor typing.
Distributed PCR Kits for HLA Typing QTYPE enables Human Leukocyte Antigen, or HLA, typing at a low to intermediate resolution for samples that require a fast turnaround time and uses real-time polymerase chain reaction, or PCR, methodology. QTYPE primarily focuses on typing where rapid typing results are required, such as for deceased donor typing.
Additionally, through our digital business, we generate multiple terabytes of data on how transplant centers operate, which we expect will drive the next wave of innovation for the company by building new products and solutions to help transplant centers operate more efficiently, do more transplants, and grow profitably.
Additionally, through our digital business, we generate multiple terabytes of data on how transplant centers operate, which we expect will drive the next wave of innovation for the company by enabling us to build new products and solutions to help transplant centers operate more efficiently, do more transplants, and grow profitably.
Through our global pay philosophy, principles and consistent implementation, we are committed to providing fair and equitable pay for employees. Eligible full-time employees in the United States also have access to medical, dental, and vision plans; savings and retirement plans; an employee stock purchase plan; and other resources.
Through our global pay philosophy, principles and consistent implementation, we are committed to providing fair and equitable pay for employees. Eligible full-time employees in the U.S. also have access to medical, dental, and vision plans; savings and retirement plans; an employee stock purchase plan; and other resources.
The SCC and Health Canada's Therapeutic Products Directorate developed this system. CMDCAS came into effect January 1, 2003. GDPR and UK GDPR The General Data Protection Regulation (EU) 2016/679, or the GDPR, is a regulation on data protection and privacy in the EU, and the European Economic Area, or the EEA, that went into effect in May 2018.
The SCC and Health Canada's Therapeutic Products Directorate developed this system. CMDCAS came into effect January 1, 2003. GDPR and UK GDPR The General Data Protection Regulation (EU) 2016/679, or the GDPR, is a regulation on data protection and privacy in the EU, and the European Economic Area, or the EEA.
The FDA has traditionally chosen not to exercise its authority to regulate LDTs because it regulates the primary components in most laboratory-developed tests and because laboratories, such as ours, certified as high complexity under the CLIA are regulated and reviewed by CMS to ensure that lab expertise and test procedures and correct analyses are followed.
The FDA has traditionally chosen not to exercise its authority to regulate LDTs because it regulates the primary components in most laboratory-developed tests and because laboratories, such as ours, certified as high complexity under the CLIA are regulated and reviewed by CMS to ensure that laboratory expertise and test procedures and correct analyses are followed. In April 2025, the U.S.
AlloSure Kidney was developed specifically for transplant patients and is a non-invasive blood test that analyzes SNPs selected across all 22 somatic chromosomes to detect DNA released from a patient’s kidney allograft, known as donor-derived cell-free DNA (dd-cfDNA).
AlloSure Kidney was developed specifically for transplant patients and is a non-invasive blood test that analyzes SNPs selected across all 22 somatic chromosomes to detect DNA released from a patient’s kidney allograft, known as dd-cfDNA.
AlloSure Lung was developed specifically for transplant patients and is a non-invasive blood test that analyzes SNPs selected across all 22 somatic chromosomes to detect DNA released from a patient’s lung allograft, known as donor-derived cell-free DNA (dd-cfDNA).
AlloSure Lung was developed specifically for transplant patients and is a non-invasive blood test that analyzes SNPs selected across all 22 somatic chromosomes to detect DNA released from a patient’s lung allograft, known as dd-cfDNA.
Our main buildings headquartered in California are energy efficiency certified and meet stringent San Francisco Bay Area requirements for environmental impact, and several of 18 Table of Contents our offices are in new energy efficient buildings.
Our main buildings headquartered in California are energy efficiency certified and meet stringent San Francisco Bay Area requirements for environmental impact, and several of our offices are in new energy efficient buildings.
AlloSure Heart is validated to detect all types of clinical rejection including antibody mediated rejection (AMR) and acute cellular mediated rejection (ACR). AlloSure Heart was developed specifically for transplant patients and is a non-invasive blood test that analyzes SNPs selected across all 22 somatic chromosomes to detect DNA released from a patient’s heart allograft, known as donor-derived cell-free DNA (dd-cfDNA).
AlloSure Heart is validated to detect all types of clinical rejection, including antibody mediated rejection (AMR) and acute cellular mediated rejection (ACR). AlloSure Heart was developed specifically for transplant patients and is a non-invasive blood test that analyzes Single Nucleotide Polymorphisms (SNPs) selected across all 22 somatic chromosomes to detect DNA released from a patient’s heart allograft, known as dd-cfDNA.
AlloSure Heart AlloSure Heart, our dd-cfDNA heart transplant solution, is a molecular diagnostic test intended for the early detection of heart allograft injury and rejection. AlloSure Heart helps provide peace-of-mind that injury is unlikely when dd-cfDNA levels are low.
AlloSure Heart AlloSure Heart, our donor-derived cell-free DNA (dd-cfDNA) heart transplant solution, is a molecular diagnostic test intended for the early detection of heart allograft injury and rejection. AlloSure Heart helps provide peace-of-mind that injury is unlikely when dd-cfDNA levels are low.
The Medicare reimbursement rate for AlloSure Kidney is currently $2,841. On August 10, 2023, MolDX and Noridian released a draft proposed revision to the LCD (DL38568, Palmetto; DL38629, Noridian) that, if adopted, would have revised the existing foundational LCD, MolDX: Molecular Testing for Solid Organ Allograft Rejection (L38568 and L38629).
The Medicare reimbursement rate for AlloSure Kidney is $2,753, effective January 1, 2026 . On August 10, 2023, MolDX and Noridian released a draft proposed revision to the LCD (DL38568, Palmetto; DL38629, Noridian) that, if adopted, would have revised the existing foundational LCD, MolDX: Molecular Testing for Solid Organ Allograft Rejection (L38568 and L38629).
As of December 31, 2024, we had seven U.S. patents related to diagnosing transplant rejection and autoimmune disease, which will expire between October 2025 and May 2035. In addition, we had three U.S. patents related to organ function recovery and allograft preservation, which will expire between July 2038 and June 2041.
As of December 31, 2025, we had seven U.S. patents related to diagnosing transplant rejection and autoimmune disease, which will expire between August 2027 and May 2035. In addition, we had four U.S. patents related to organ function recovery and allograft preservation, which will expire between July 2038 and June 2041.
We also offer high-quality products in the pre-transplant space that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. We also provide digital transplant solutions and various offerings that help transplant centers with patient management, outcomes quality and operational support.
We also offer high-quality products in the pre-transplant space that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. Additionally, we provide digital transplant solutions and various offerings that help transplant centers with workflow and list management, outcomes quality and patient medication adhearance.
We are also actively working with our notified body to bring the quality management system at the sites to be compliant with IVDR requirements by May 2025. Certain of our products also comply with the CMDCAS, which is a system designed to implement Canadian regulations requiring some medical devices be designed and manufactured under a registered QMS.
We also worked with our notified body to bring the quality management system at the sites to be compliant with IVDR requirements. Certain of our products also comply with the CMDCAS, which is a system designed to implement Canadian regulations requiring some medical devices be designed and manufactured under a registered QMS.
Third, we intend to focus on generating clinical evidence to gain optimal payer coverage and reimbursement for our products leading to average selling price (ASP) appreciation. Finally, we intend to execute on our existing research and development pipeline, with the goal of generating incremental revenues from both in-line and new products that provide solutions to unmet medical needs in transplantation.
Third, we intend to focus on generating clinical evidence to gain optimal payer coverage and reimbursement for our products leading to revenue per test (RPT) appreciation. Finally, we intend to execute on our existing research and development pipeline, with the goal of generating incremental revenues from both in-line and new products that provide solutions to unmet medical needs in transplantation.
In April 2020, we entered into a license agreement with Cornell University pursuant to which we were granted exclusive rights to four U.S. patents covering methods and technology for the measurement of gene expression in urine to diagnose kidney transplant rejection.
Six issued U.S. patents for HLA genotyping are licensed as part of this agreement. In April 2020, we entered into a license agreement with Cornell University pursuant to which we were granted exclusive rights to four U.S. patents covering methods and technology for the measurement of gene expression in urine to diagnose kidney transplant rejection.
Effective April 1, 2023, HeartCare, a multimodality testing service that includes both AlloMap Heart and AlloSure Heart provided in a single patient encounter for heart transplant surveillance, is covered for Medicare beneficiaries through the MolDX LCD (Noridian L38629). The Medicare reimbursement rate for HeartCare is $5,993.
The Medicare reimbursement rate for AlloSure Heart is currently $2,753 . 11 Table of Contents Effective April 1, 2023, HeartCare, a multimodality testing service that includes both AlloMap Heart and AlloSure Heart provided in a single patient encounter for heart transplant surveillance, is covered for Medicare beneficiaries through the MolDX LCD (Noridian L38629).
Testing Services We develop and provide diagnostic testing services for solid organ transplant recipients, hematopoietic stem cell transplant recipients and recipients of cell therapies. During 2024, we performed more than 175,000 commercial tests from our Brisbane, California laboratory.
Testing Services We develop and provide diagnostic testing services for solid organ transplant recipients, hematopoietic stem cell transplant recipients and recipients of cell therapies. During 2025, we performed approximately 200,000 commercial tests from our Brisbane, California laboratory.
Controllers and processors of personal data must put in place appropriate technical and organizational measures to implement the data protection principles. Business processes that handle personal data must be designed and built with consideration of the GDPR and UK GDPR principles and provide safeguards to protect data. Data controllers and processors must design information systems with privacy in mind.
Business processes that handle personal data must be designed and built with consideration of the GDPR and UK GDPR principles and provide safeguards to protect personal data. Data controllers and processors must design information systems with privacy in mind.
Congress regarding their plans to repeal and replace the Affordable Care Act. We cannot predict whether future healthcare initiatives, including at the federal level, will be initiated or the effect any such initiatives could have on our business, financial condition or results of operations.
There have previously been public announcements by President Trump and members of the U.S. Congress regarding their plans to repeal and replace the Affordable Care Act. We cannot predict whether future healthcare initiatives, including at the federal level, will be initiated or the effect any such initiatives could have on our business, financial condition or results of operations.
Tests performed on patients covered by Medicare represented 26%, 27% and 34% of all tests in 2024, 2023 and 2022, respectively. Approximately 50%, 53% and 64% of all testing services revenue was derived from Medicare for the years ended December 31, 2024, 2023 and 2022, respectively.
Tests performed on patients covered by Medicare represented 25%, 26% and 27% of all tests in 2025, 2024 and 2023, 10 Table of Contents respectively. Approximately 46%, 50% and 53% of all testing services revenue was derived from Medicare for the years ended December 31, 2025, 2024 and 2023, respectively.
Refer to Note 15, Segment Reporting, of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our Differentiated Approach We aim to create life changing solutions that enable transplant patients to thrive.
We are organized and operate as a single reportable segment. Refer to Note 13, Segment Reporting, of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our Differentiated Approach We aim to create life-changing solutions that enable transplant patients to thrive.
The European Commission recently confirmed adoption of a proposal for a progressive rollout of the IVDR to prevent disruption in the supply of in vitro diagnostic products to the market.
The IVDR requirements were applied starting May 26, 2022. The European Commission recently confirmed adoption of a proposal for a progressive rollout of the IVDR to prevent disruption in the supply of in vitro diagnostic products to the market.
In March 2023, we entered into a license and collaboration agreement with a private entity pursuant to which we were granted an irrevocable, non-transferable right to commercialize its proprietary software, iBox, for the predictive analysis of post-transplantation kidney allograft loss in the field of transplantation for a period of four years with exclusive rights in the United States. 13 Table of Contents Regulation Our business is subject to and impacted by frequently changing laws and regulations in the United States and internationally.
In March 2023, we entered into a license and collaboration agreement with a private entity pursuant to which we were granted an irrevocable, non-transferable right to commercialize its proprietary software, iBox, for the predictive analysis of post-transplantation kidney allograft loss in the field of transplantation for a period of four years with exclusive rights in the United States.
To date, we have executed multiple agreements with biopharma therapeutics companies to use AlloCell in research and clinical studies. Lab Products We access global markets through our RUO and CE-marked Lab Products.
AlloCell is currently being utilized in research partnerships with biopharma companies developing cell therapies. To date, we have executed multiple agreements with biopharma therapeutics companies to use AlloCell in research and clinical studies. Laboratory Products We access global markets through our RUO and CE-marked lab products.
Private payers that have adopted a positive coverage policy include BCBS payers as well as other regional payers. Most Medicaid payers have not yet adopted positive coverage policies for AlloSure Kidney. AlloSure Heart and AlloSure Lung are covered by Medicare Advantage plans for beneficiaries who meet the coverage criteria. AlloSure Heart and AlloSure Lung are covered by several commercial payers.
Most Medicaid payers have not yet adopted positive coverage policies for AlloSure Kidney. AlloSure Heart and AlloSure Lung are covered by Medicare Advantage plans for beneficiaries who meet the coverage criteria. AlloSure Heart and AlloSure Lung are covered by several commercial payers.
Distributed NGS Kits for HLA Typing and Transplant Monitoring Our distributed NGS products include: AlloSeq Tx, a high-resolution HLA typing solution; AlloSeq cfDNA, our surveillance solution designed to measure dd-cfDNA in blood to detect injury and active rejection in transplant recipients; and AlloSeq HCT, an NGS solution for chimerism testing for stem cell transplant recipients.
Distributed NGS Kits for HLA Typing and Transplant Monitoring Our distributed NGS products include: AlloSeq Tx, a high-resolution HLA typing solution; AlloSeq cfDNA, our surveillance solution designed to measure dd-cfDNA in blood to detect injury and active rejection in transplant recipients; and AlloSeq HCT, an NGS solution for chimerism testing for stem cell transplant recipients. 9 Table of Contents AlloSeq Tx is the first of its kind NGS high-resolution HLA typing solution utilizing hybrid capture technology.
The regulation contains provisions and requirements related to the processing of personal data of individuals, or data subjects, who reside in the EEA, and applies to any enterprise—regardless of its location and the data subjects' citizenship or residence—that is processing the personal information of data subjects inside the EEA.
It also addresses the transfer of personal data outside the EU and EEA. The regulation contains provisions and requirements related to the processing of personal data of individuals, or data subjects, who reside in the EEA, and applies to any enterprise—regardless of its location—that is processing the personal data of data subjects inside the EEA.
We have developed trade secrets and know-how since our inception. These trade secrets and know-how are found particularly in technical areas such as optimized systems for making precise and reproducible q-PCR, measurements, and in the analysis of genomic data and algorithm development. AlloMap, AlloSure, AlloSeq, AlloCell, AlloHeme, QTYPE, Ottr and CareDx are registered trademarks of ours in the United States.
We have developed trade secrets and know-how since our inception. These trade secrets and know-how are found particularly in technical areas such as optimized systems for making precise and reproducible q-PCR, measurements, and in the analysis of genomic data and algorithm development.
The common policy LCD is titled “MolDX: Molecular Testing for Solid Organ Allograft Rejection” and the associated LCD numbers are L38568 (MolDX) and L38629 (Noridian). The Medicare reimbursement rate for AlloSure Heart is currently $2,753.
The common policy LCD is titled “MolDX: Molecular Testing for Solid Organ Allograft Rejection” and the associated LCD numbers are L38568 (MolDX) and L38629 (Noridian).
The law includes a limited number of exceptions, some of which closely align with corresponding Anti-Kickback Statute exceptions and safe harbors and others that materially differ. 15 Table of Contents Information Blocking Prohibition On May 1, 2020, the Office of the National Coordinator for Health Information Technology promulgated final regulations under the authority of the 21st Century Cures Act to impose new conditions to obtain and maintain certification of certified health information technology and prohibit certain covered actors—developers of certified health information technology, health information networks / health information exchanges, and healthcare providers (including laboratories)—from engaging in activities that are likely to interfere with the access, exchange or use of electronic health information (information blocking).
Information Blocking Prohibition On May 1, 2020, the Office of the National Coordinator for Health Information Technology promulgated final regulations under the authority of the 21st Century Cures Act to impose new conditions to obtain and maintain certification of certified health information technology and prohibit certain covered actors—developers of certified health information technology, health information networks / health information exchanges, and healthcare providers (including laboratories)—from engaging in activities that are likely to interfere with the access, exchange or use of electronic health information (information blocking).
We also face competition from hospital and commercial reference labs that develop their own in-house testing solutions. We 12 Table of Contents believe that our product line competes favorably with Thermo Fisher as a leading supplier of HLA test kits based on performance, reputation and service.
We also face competition from hospital and commercial reference laboratories that develop their own in-house testing solutions. We believe that our product line competes favorably with Thermo Fisher as a leading supplier of HLA test kits based on performance, reputation and service. We expect future competition for post-transplant surveillance kitted solutions for AlloSeq cfDNA and AlloSeq HCT.
In 2023, we added contract manufacturing in the U.S. and Europe to our global manufacturing capabilities to support our growth. Additionally, we seek to manufacture to current Good Manufacturing Practice requirements and our QMS is implemented in accordance with FDA Quality System Regulations.
Annual surveillance audits are also conducted by the site’s notified body to ensure ongoing compliance. In 2023, we added contract manufacturing in the U.S. and Europe to our global manufacturing capabilities to support our growth. Additionally, we seek to manufacture to current Good Manufacturing Practice requirements and our QMS is implemented in accordance with FDA Quality System Regulations.
For all tests performed outside the scope of the payer’s policy, and for tests performed where the payer has not adopted a coverage policy, we pursue reimbursement on a case-by-case basis.
For all tests performed outside the scope of the payer’s policy, and for tests performed where the payer has not adopted a coverage policy, we pursue reimbursement on a case-by-case basis. If a reimbursement claim is denied, we generally pursue payment through the particular payer’s appeal process.
To first and foremost empower local teams to devise effective tactical strategies for selling our solutions into each transplant center, we have created a regional structure.
To first and foremost empower local teams to devise effective tactical strategies for selling our solutions into each transplant center, we have created a regional structure. Each region consists of multiple territory account managers responsible for specific transplant centers.
TxAccess is a cloud-based service that allows nephrologists and dialysis centers to electronically submit referrals to transplant programs and closely follow and assist patients through the transplant waitlist process, and ultimately through transplantation. MedActionPlan provides medication safety, medication adherence and patient education. MedActionPlan is a leader in patient medication management for transplant patients and beyond.
Referral Management: TxAccess is a cloud-based service that allows nephrologists and dialysis centers to electronically submit referrals to transplant programs and closely follow and assist patients through the transplant waitlist process, and ultimately through transplantation.
In May 2018, we entered into a license and commercialization agreement with Illumina, which provides us with worldwide distribution, development and commercialization rights to Illumina’s next generation sequencing product line for use in transplantation diagnostic testing. Six issued U.S. patents for HLA genotyping are licensed as part of this agreement.
Of the seven existing U.S. patents related to transplant rejection and autoimmunity, four are exclusively licensed. In May 2018, we entered into a license and commercialization agreement with Illumina, which provides us with worldwide distribution, development and commercialization rights to Illumina’s next generation sequencing product line for use in transplantation diagnostic testing.
This technology has the potential to provide better sensitivity and data analysis compared to current solutions on the market. AlloSeq HCT received CE mark authorization in May 2022.
AlloSeq HCT is an NGS solution for chimerism testing for stem cell transplant recipients. This technology has the potential to provide better sensitivity and data analysis compared to current solutions on the market. AlloSeq HCT received CE mark authorization in May 2022.
Clinical Laboratory Improvement Amendments of 1988 Having a clinical laboratory in California, we are required to hold certain federal, state and local licenses, certifications and permits to conduct our business.
We also are subject to inspections and audits by governmental agencies. Below are certain key regulations applicable to our business. Clinical Laboratory Improvement Amendments of 1988 Having a clinical laboratory in California, we are required to hold certain federal, state and local licenses, certifications and permits to conduct our business.
AlloSeq Tx is the first of its kind NGS high-resolution HLA typing solution utilizing hybrid capture technology. This technology enables the most comprehensive sequencing, covering more of the HLA genes than other solutions on the market as well as non-HLA genes that may impact transplant patient matching and management. AlloSeq Tx17 received CE mark authorization in May 2020.
This technology enables the most comprehensive sequencing, covering more of the HLA genes than other solutions on the market as well as non-HLA genes that may impact transplant patient matching and management. AlloSeq Tx17 received CE mark authorization in May 2020. AlloSeq Tx9 is a high throughput version of AlloSeq Tx17 for HLA typing in high volume laboratories.
We rely on a combination of patents, copyrights, trademarks, material and data transfer agreements and licenses to protect our intellectual property rights. We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop and maintain our competitive position. We generally protect this information with confidentiality agreements and reasonable security measures.
We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop and maintain our competitive position. We generally protect this information with confidentiality agreements and reasonable security measures.
The Affordable Care Act also allocates additional resources and tools for the government to police healthcare fraud, with expanded subpoena power for HHS, additional funding to investigate fraud and abuse across the healthcare system and expanded use of recovery audit contractors for enforcement. There have previously been public announcements by President Trump and members of the U.S.
The Affordable Care Act also allocates additional resources and tools for the government to police healthcare fraud, with 16 Table of Contents expanded subpoena power for HHS, additional funding to investigate fraud and abuse across the healthcare system and expanded use of recovery audit contractors for enforcement.
In the event that we are unable to obtain sufficient quantities of raw materials or components on commercially reasonable terms or in a timely manner, our ability to manufacture our products on a timely and cost-competitive basis may be compromised, which may have a material adverse effect on our business, financial condition and results of operations.
In the event that we are unable to obtain sufficient quantities of raw materials or components on commercially reasonable terms or in a timely manner, our ability to manufacture our products on a timely and cost-competitive basis may be compromised, which may have a material adverse effect on our business, financial condition and results of operations. 12 Table of Contents Our manufacturing facility in Stockholm, Sweden is used to support the production, packaging and labeling of our proprietary test kits: Olerup SSP, QTYPE, AlloSeq Tx, AlloSeq cfDNA and HCT.
A manufacturer placing devices on the market in its name must notify its national competent authorities. These CE-labeled products are also falling under the requirements of the In Vitro Diagnostic Regulation (2017/746) (IVDR). The IVDR requirements were applied starting May 26, 2022.
Devices considered to meet the essential requirements must bear the CE marking of conformity, placed by the manufacturer, when introduced to the market. A manufacturer placing devices on the market in its name must notify its national competent authorities. These CE-labeled products are also falling under the requirements of the In Vitro Diagnostic Regulation (2017/746) (IVDR).
We are reimbursed for a substantial portion of the AlloMap Heart tests we perform on patients covered by private payers. Coverage policies approving AlloMap Heart have approached nearly 90% of all covered lives and are published by many of the largest private payers, including Blue Cross Blue Shield, or BCBS payers as well as national payers.
Coverage policies approving AlloMap Heart have approached nearly 90% of all covered lives and are published by many of the largest private payers, including Blue Cross Blue Shield, or BCBS payers as well as national payers and by more than half of the state Medicaid agencies in the U.S.
Importantly, diagnostic precision of biopsies is limited by sampling issues and interobserver variability. Finally, the interpretation of a biopsy relies on descriptive, empirically driven consensus classifications that change over time and frequently lack an etiologic basis. Improved post-transplant diagnostics are necessary to achieve further gains in the long-term care and health outcomes of heart, kidney and other organ transplant recipients.
Importantly, diagnostic precision of biopsies is limited by sampling issues and interobserver variability. Finally, the interpretation of a biopsy relies on descriptive, empirically driven consensus classifications that change over time and frequently lack an etiologic basis.
These laws and regulations include regulations particular to our business and laws and regulations relating to conducting business generally (e.g., U.S. Foreign Corrupt Practices Act, Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and similar laws of other jurisdictions). We also are subject to inspections and audits by governmental agencies. Below are certain key regulations applicable to our business.
Regulation Our business is subject to and impacted by frequently changing laws and regulations in the United States and internationally. These laws and regulations include regulations particular to our business and laws and regulations relating to conducting business generally (e.g., U.S. Foreign Corrupt Practices Act, Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and similar laws of other jurisdictions).
Each region consists of multiple territory account managers responsible for specific transplant centers. 11 Table of Contents Each region is also supported by the dedicated expertise of individuals that specialize in our digital products, lab products, and clinical experts in medical science liaisons.
Each region is also supported by the dedicated expertise of individuals that specialize in our digital products, laboratory products, and clinical experts in medical science liaisons.
License Agreements We may in the future rely, at least in part, upon licensing agreements with third parties to obtain patent rights and transfers of technology, information and know-how that enable us to further our development of additional solutions for post-transplant surveillance. Of the seven existing U.S. patents related to transplant rejection and autoimmunity, four are exclusively licensed.
AlloMap, AlloSure, AlloSeq, AlloCell, AlloHeme, QTYPE, Ottr and CareDx are registered trademarks of ours in the United States. 14 Table of Contents License Agreements We may in the future rely, at least in part, upon licensing agreements with third parties to obtain patent rights and transfers of technology, information and know-how that enable us to further our development of additional solutions for post-transplant surveillance.
Our laboratory holds a certificate of accreditation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and is accredited by the College of American Pathologists, or CAP.
Testing Services Laboratory Operations AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung testing is performed in our clinical laboratory, which is located in our Brisbane, California location. Our laboratory holds a certificate of accreditation under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and is accredited by the College of American Pathologists, or CAP.
More effective solutions for the surveillance and risk assessment of recipients would improve the clinician’s ability to individualize immunosuppression therapy and to detect and treat rejection earlier when the treatment is most effective.
Improved post-transplant diagnostics are necessary to achieve further gains in the long-term care and health outcomes of heart, kidney and other organ transplant recipients. More effective solutions for the surveillance and risk assessment of recipients would improve the clinician’s ability to individualize immunosuppression therapy and to detect and treat rejection earlier when the treatment is most effective.
Our headquarters is located in Brisbane, California. Our primary operations are in Brisbane, California; Omaha, Nebraska and Stockholm, Sweden. We were originally incorporated in Delaware in December 1998 under the name Hippocratic Engineering, Inc. In April 1999, we changed our name to BioCardia, Inc., and in June 2002, we changed our name to Expression Diagnostics, Inc.
We were originally incorporated in Delaware in December 1998 under the name Hippocratic Engineering, Inc. In April 1999, we changed our name to BioCardia, Inc., and in June 2002, we changed our name to Expression Diagnostics, Inc. In July 2007, we changed our name to XDx, Inc. and in March 2014, we changed our name to CareDx, Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Relying on partners for our sales and marketing subjects us to various risks, including: 31 Table of Contents • our partners may fail to commit the necessary resources to develop a market for our products, may spend the majority of their time selling products unrelated to ours, or may be unsuccessful in marketing our products for other reasons; • under certain agreements, our partners’ obligations, including their required level of promotional activities, may be conditioned upon our ability to achieve or maintain a specified level of reimbursement coverage; • agreements with our partners may terminate prematurely due to disagreements or may result in disputes or litigation with our partners; • we may not be able to renew existing partner agreements, or enter into new agreements, on acceptable terms; • our existing relationships with partners may preclude us from entering into additional future arrangements; • our partners may violate local laws or regulations, potentially causing reputational or monetary damage to our business; • our partners may engage in sales practices that are locally acceptable but do not comply with standards required under U.S. laws that apply to us; and • our partners may be negatively affected by the financial instability of, and austerity measures implemented by, the countries in which they operate.
Relying on partners for our sales and marketing subjects us to various risks, including: 33 Table of Contents • our partners may fail to commit the necessary resources to develop a market for our products, may spend the majority of their time selling products unrelated to ours, or may be unsuccessful in marketing our products for other reasons; • under certain agreements, our partners’ obligations, including their required level of promotional activities, may be conditioned upon our ability to achieve or maintain a specified level of reimbursement coverage; • agreements with our partners may terminate prematurely due to disagreements or may result in disputes or litigation with our partners; • we may not be able to renew existing partner agreements, or enter into new agreements, on acceptable terms; • our existing relationships with partners may preclude us from entering into additional future arrangements; • our partners may violate local laws or regulations, potentially causing reputational or monetary damage to our business; • our partners may engage in sales practices that are locally acceptable but do not comply with standards required under U.S. laws that apply to us; and • our partners may be negatively affected by the financial instability of, and austerity measures implemented by, the countries in which they operate.
We believe that our future revenue will depend on, among other factors: • the continued usage and acceptance of our current and future solutions; • demand for our testing services, products and patient and digital solutions; • the introduction and acceptance of new or enhanced products or services by us or by competitors; • our ability to maintain reimbursement for AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung and secure reimbursement for our future solutions; 27 Table of Contents • our decision to continue our Medicare reimbursement submissions for AlloSure Kidney; • our decision to issue future financial guidance and the terms of such guidance; • our ability to anticipate and effectively adapt to developing markets and to rapidly changing technologies; • our ability to attract, retain and motivate qualified personnel; • the initiation, renewal or expiration of significant contracts with our commercial partners; • pricing changes by us, our suppliers or our competitors; and • general economic conditions and other factors.
We believe that our future revenue will depend on, among other factors: • the continued usage and acceptance of our current and future solutions; • demand for our testing services, products and patient and digital solutions; • the introduction and acceptance of new or enhanced products or services by us or by competitors; • our ability to maintain reimbursement for AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung and secure reimbursement for our future solutions; • our decision to continue our Medicare reimbursement submissions for AlloSure Kidney; • our decision to issue future financial guidance and the terms of such guidance; • our ability to anticipate and effectively adapt to developing markets and to rapidly changing technologies; • our ability to attract, retain and motivate qualified personnel; • the initiation, renewal or expiration of significant contracts with our commercial partners; • pricing changes by us, our suppliers or our competitors; and 29 Table of Contents • general economic conditions and other factors.
Additionally, from time to time, payers change processes that may affect timely payment. For example, some commercial payers have instituted prior authorization requirements before our testing is performed. These changes may result in uneven cash flow or impact the timing of revenue recognized with these payers.
Additionally, from time to time, payers change processes that may affect timely payment. For example, some commercial payers have instituted prior authorization requirements before our testing is performed. These changes may result in uneven cash flow or impact the timing of revenue recognized from these payers.
Risks we may face in connection with acquisitions include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • reduction of available cash reserves, assumption of debt or dilutive issuances of equity securities due to payment of consideration; • coordination of research and development and sales and marketing functions; • integration of product and service offerings; • expectations for acquired technology or research and development may prove unsuccessful; • inability to retain key personnel from the acquired company; • financial reporting, revenue recognition or other financial control deficiencies of or arising from the acquired company that we do not adequately address and that cause our reported results to be incorrect or delayed; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties; • integrating a global workforce of the acquired company into our business; • obtaining the approval of minority shareholders to complete an acquisition; and • commercialization of new products being developed by the acquired company.
Risks we may face in connection with acquisitions include: • diversion of management time and focus from operating our business to addressing acquisition integration challenges; • reduction of available cash reserves, assumption of debt or dilutive issuances of equity securities due to payment of consideration; • coordination of research and development and sales and marketing functions; • integration of product and service offerings; • expectations for acquired technology or research and development may prove unsuccessful; • inability to retain key personnel from the acquired company; • financial reporting, revenue recognition or other financial control deficiencies of or arising from the acquired company that we do not adequately address and that cause our reported results to be incorrect or delayed; • liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties; 37 Table of Contents • integrating a global workforce of the acquired company into our business; • obtaining the approval of minority shareholders to complete an acquisition; and • commercialization of new products being developed by the acquired company.
A material liability claim, product recall or similar occurrence may cause us to incur significant expense, decrease market acceptance of our products and adversely impact our business and operating results. 30 Table of Contents In addition, the marketing, sale and use of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and our other products and solutions, or activities related to our research and clinical studies could lead to the filing of product liability claims if someone were to allege that one of our products contained a design or manufacturing defect which resulted in the failure to adequately perform the analysis for which it was designed.
A material liability claim, product recall or similar occurrence may cause us to incur significant expense, decrease market acceptance of our products and adversely impact our business and operating results. 32 Table of Contents In addition, the marketing, sale and use of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and our other products and solutions, or activities related to our research and clinical studies could lead to the filing of product liability claims if someone were to allege that one of our products contained a design or manufacturing defect which resulted in the failure to adequately perform the analysis for which it was designed.
We may not be able to achieve the anticipated strategic benefits from our acquisition of Ottr, XynManagement, TransChart, MedActionPlan, TTP, HLA Data Systems, MediGO, or any other businesses or assets that we may acquire. The integration of any businesses or assets we may acquire will be a time-consuming process.
We may not be able to achieve the anticipated strategic benefits from our acquisition of Ottr, XynManagement, TransChart, MedActionPlan, TTP, HLA Data Systems, or any other businesses or assets that we may acquire. The integration of any businesses or assets we may acquire will be a time-consuming process.
Our expanding international operations could be affected by changes in laws, trade regulations, labor and employment regulations, and procedures and actions affecting approval, production, pricing, reimbursement and marketing of our current and future products and solutions, as well as by inter-governmental disputes.
Our expanding international operations could be affected by changes in laws, trade regulations and tariffs, labor and employment regulations, and procedures and actions affecting approval, production, pricing, reimbursement and marketing of our current and future products and solutions, as well as by inter-governmental disputes.
In addition to the Affordable Care Act, there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payers to reduce costs while expanding individual healthcare benefits.
In addition to the Affordable Care Act and the OBBBA, there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payers to reduce costs while expanding individual healthcare benefits.
Any such interruption in access, improper access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as HIPAA, and regulatory penalties.
Any such interruption in access, improper access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal data, such as HIPAA, and regulatory penalties.
Discovery of previously-unknown problems with our current or future solutions, or failure to comply with regulatory requirements, may result in actions such as: • restrictions on operations of our laboratory; • restrictions on manufacturing processes; • restrictions on marketing of a test; • warning or untitled letters; • withdrawal of the test from the market; • refusal to approve applications or supplements to approved applications that we may submit; 39 Table of Contents • fines, restitution or disgorgement of profits or revenue; • suspension, limitation or withdrawal of regulatory clearances; • exclusion from participation in U.S. federal or state healthcare programs, such as Medicare and Medicaid; • refusal to permit the import or export of our products; • product seizure; • injunctions; and • imposition of civil or criminal penalties.
Discovery of previously-unknown problems with our current or future solutions, or failure to comply with regulatory requirements, may result in actions such as: • restrictions on operations of our laboratory; • restrictions on manufacturing processes; • restrictions on marketing of a test; • warning or untitled letters; • withdrawal of the test from the market; • refusal to approve applications or supplements to approved applications that we may submit; • fines, restitution or disgorgement of profits or revenue; • suspension, limitation or withdrawal of regulatory clearances; • exclusion from participation in U.S. federal or state healthcare programs, such as Medicare and Medicaid; • refusal to permit the import or export of our products; • product seizure; • injunctions; and • imposition of civil or criminal penalties.
See Note 9, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations”, which is incorporated herein by reference, for a discussion of our recently completed and ongoing litigation with Natera.
See Note 8, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations”, which is incorporated herein by reference, for a discussion of our recently completed and ongoing litigation with Natera.
Unauthorized access, loss or dissemination could also disrupt our operations, including our ability to perform tests, provide test 45 Table of Contents results, bill our payers or patients, process claims and appeals, provide customer assistance services, conduct research and development activities, collect, process and prepare company financial information, provide information about our current and future products and solutions and other patient and clinician education and outreach efforts through our website, and manage the administrative aspects of our business, any of which could damage our reputation and adversely affect our business.
Unauthorized access, loss or dissemination could also disrupt our operations, including our ability to perform tests, provide test results, bill our payers or patients, process claims and appeals, provide customer assistance services, conduct research and development activities, collect, process and prepare company financial information, provide information about our current and future products and solutions and other patient and clinician education and outreach efforts through our website, and manage the administrative aspects of our business, any of which could damage our reputation and adversely affect our business.
On April 1, 2013, cuts to the federal budget resulting from sequestration were implemented, requiring a 2% cut in Medicare payment for all services, including AlloSure Kidney and AlloMap Heart, and is expected to remain in effect through at least 2025.
On April 1, 2013, cuts to the federal budget resulting from sequestration were implemented, requiring a 2% cut in Medicare payment for all services, including AlloSure Kidney and AlloMap Heart, and is expected to remain in effect through at least 2032.
Our test development and commercialization efforts may be delayed or fail for many reasons, including: • failure of the test at the research or development stage; 23 Table of Contents • difficulty in accessing suitable testing samples, especially testing samples with known clinical results; • delays resulting from the failure of third-party suppliers or contractors to meet their obligations in a timely and cost-effective manner; or • failure to obtain or maintain necessary clearances or approvals to market the test.
Our test development and commercialization efforts may be delayed or fail for many reasons, including: • failure of the test at the research or development stage; • difficulty in accessing suitable testing samples, especially testing samples with known clinical results; • delays resulting from the failure of third-party suppliers or contractors to meet their obligations in a timely and cost-effective manner; or • failure to obtain or maintain necessary clearances or approvals to market the test.
Our business will suffer if these service providers do not support AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung or the other solutions that we may develop. For example, these laboratories may determine that processing the samples for our solutions requires too much additional effort.
Our business will suffer if these service providers do not support AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung or the future solutions that we may develop. For example, these laboratories may determine that processing the samples for our solutions requires too much additional effort.
International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. As part of our longer-term growth strategy, we intend to target select international markets to grow our presence outside of the U.S.
International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. As part of our longer-term growth strategy, we intend to target select international markets to grow our presence outside of the United States.
See Note 9, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations”, which is incorporated herein by reference. Litigation is inherently unpredictable.
See Note 8, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations”, which is incorporated herein by reference. Litigation is inherently unpredictable.
In addition, we may not be able to fully realize the anticipated strategic benefits of any such combination or integration and any other businesses or assets we have or may acquire, which includes, with respect to Ottr, the complementary Ottr software, with respect to XynManagement, XynQAPI, TransChart and MedActionPlan, as well as TTP, HLA Data Systems, and MediGO's services and technologies, and in each case the benefits of any significant cross-selling opportunities.
In addition, we may not be able to fully realize the anticipated strategic benefits of any such combination or integration and any other businesses or assets we have or may acquire, which includes, with respect to Ottr, the complementary Ottr software, with respect to XynManagement, XynQAPI, TransChart and MedActionPlan, as well as TTP, and HLA Data Systems' services and technologies, and in each case the benefits of any significant cross-selling opportunities.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of life sciences stocks; • changes in operating performance and stock market valuations of other life sciences companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • entering into financing or other arrangements with rights or terms senior to the interests of common stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; • public health emergencies; • our prior decision to withdraw our revenue guidance for fiscal 2023; • our decision to issue future financial guidance and the terms of such guidance; and • general economic conditions and slow or negative growth of our markets.
In addition to 50 Table of Contents the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of life sciences stocks; • changes in operating performance and stock market valuations of other life sciences companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • entering into financing or other arrangements with rights or terms senior to the interests of common stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; • public health emergencies; • our decision to issue future financial guidance and the terms of such guidance; and • general economic conditions and slow or negative growth of our markets.
We expect to continue to incur significant operating expenses and anticipate that our expenses will increase due to costs relating to, among other things: • researching, developing, validating and commercializing potential new testing services, products and patient and digital solutions, including additional expenses in connection with our continuing development and commercialization of KidneyCare, HeartCare, AlloSeq, AiTraC and other future solutions; • developing, presenting and publishing additional clinical and economic utility data intended to increase payer coverage and clinician adoption of our current and future solutions; • expansion of our operating capabilities; • maintenance, expansion and protection of our intellectual property portfolio and trade secrets; • the process of fully integrating acquired companies and operations and the associated potential disruptions to our business; • future clinical trials; • expansion of the size and geographic reach of our sales force and our marketing capabilities to commercialize our existing and future solutions; • employment of additional clinical, quality control, scientific, customer service, laboratory, billing and reimbursement and management personnel; • compliance with existing and changing laws, regulations and standards, including those relating to corporate governance and public disclosure and regulations implemented by the Securities and Exchange Commission, or the SEC, and The Nasdaq Stock Market LLC; • ongoing litigation; • employment of operational, financial, accounting and information systems personnel, consistent with expanding our operations and our status as a public company; and • failure to achieve expected operating results may cause a future impairment of goodwill or other assets.
We expect to continue to incur significant operating expenses and anticipate that our expenses will increase due to costs relating to, among other things: • researching, developing, validating and commercializing potential new testing services, products and patient and digital solutions, including additional expenses in connection with our continuing development and commercialization of our testing services and product portfolio, and other future solutions; • developing, presenting and publishing additional clinical and economic utility data intended to increase payer coverage and clinician adoption of our current and future solutions; • expansion of our operating capabilities; • maintenance, expansion and protection of our intellectual property portfolio and trade secrets; • the process of fully integrating acquired companies and operations and the associated potential disruptions to our business; • future clinical trials; • expansion of the size and geographic reach of our sales force and our marketing capabilities to commercialize our existing and future solutions; • employment of additional clinical, quality control, scientific, customer service, laboratory, billing and reimbursement and management personnel; • compliance with existing and changing laws, regulations and standards, including those relating to corporate governance and public disclosure and regulations implemented by the Securities and Exchange Commission, or the SEC, and The Nasdaq Stock Market LLC; • ongoing litigation; • employment of operational, financial, accounting and information systems personnel, consistent with expanding our operations; and • failure to achieve expected operating results may cause a future impairment of goodwill or other assets.
Sales made by our executive officers and directors pursuant to Rule 10b5-1, regardless of the amount of such sales, could adversely affect the market price of our common stock. We do not expect to pay dividends in the foreseeable future. As a result, you must rely on stock appreciation for any return on your investment.
Sales made by our executive officers and directors pursuant to Rule 10b5-1, regardless of the amount of such sales, could adversely affect the market price of our common stock. 51 Table of Contents We do not expect to pay dividends in the foreseeable future. As a result, you must rely on stock appreciation for any return on your investment.
Many of the countries in which we operate, including the U.S. and several of the members of the European Union, or EU, have experienced and continue to experience uncertain economic conditions resulting from global as well as local factors.
Many of the countries in which we operate, including the U.S. and several of the members of the European Union, have experienced and continue to experience uncertain economic conditions resulting from global as well as local factors.
Additionally, such allegations against us could negatively impact our business operations and stockholders' equity, and the value of any investment in our stock could be reduced. 52 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Additionally, such allegations against us could negatively impact our business operations and stockholders' equity, and the value of any investment in our stock could be reduced. 55 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our inability to control when, if ever, 26 Table of Contents results of such studies are published may delay or limit our ability to derive sufficient revenues from any test that may result from a collaboration. We cannot control the amount and timing of our collaborators’ resources that will be devoted to performing their responsibilities under our agreements with them.
Our inability to control when, if ever, results of such studies are published may delay or limit our ability to derive sufficient revenues from any test that may result from a collaboration. We cannot control the amount and timing of our collaborators’ resources that will be devoted to performing their responsibilities under our agreements with them.
Our competitors also include companies that are focused on the development and commercialization of molecular diagnostic tests. In the field of post-transplant surveillance, Natera, Eurofins, and Oncocyte have commercially available molecular diagnostics tests. Other entrants with kitted products have indicated they are entering the market for post-transplant surveillance, including Thermo Fisher, Devyser, Bio-Rad, EuroBio, and Oncocyte.
Our competitors also include companies that are focused on the development and commercialization of molecular diagnostic tests. In the field of post-transplant surveillance, Natera, Eurofins, iMDx, and Verici have commercially available molecular diagnostics tests. Other entrants with kitted products have indicated they are entering the market for post-transplant surveillance, including Thermo Fisher, Devyser, Bio-Rad, EuroBio, and iMDx.
Investors, particularly institutional investors, use these ratings to benchmark companies against their peers and if we are perceived as lagging with respect to ESG initiatives, these investors may engage with us to improve ESG disclosures or performance and may also make voting decisions, or take other actions, to hold 28 Table of Contents us and our Board of Directors accountable.
Investors, particularly institutional investors, use these ratings to benchmark companies against their peers and if we are perceived as lagging with respect to ESG initiatives, these investors may engage with us to improve ESG disclosures or performance and may also make voting decisions, or take other actions, to hold us and our Board of Directors accountable.
If a clinical validation study fails to demonstrate the prospectively defined endpoints of the study, we would likely abandon the development of the test or test feature that was the subject of the clinical trial, which could harm our business. The field of diagnostic testing in transplantation is evolving and is subject to rapid technological change.
If a clinical validation study fails to demonstrate the prospectively defined endpoints 25 Table of Contents of the study, we would likely abandon the development of the test or test feature that was the subject of the clinical trial, which could harm our business. The field of diagnostic testing in transplantation is evolving and is subject to rapid technological change.
These stockholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation 47 Table of Contents or sale of all or substantially all of our assets. In addition, they could dictate the management of our business and affairs.
These stockholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets. In addition, they could dictate the management of our business and affairs.
As it is in the short seller’s best interests for the price of 51 Table of Contents the stock to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a stock short.
As it is in the short seller’s best interests for the price of the stock to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a stock short.
To attract new laboratory customers, the performance of our products must provide performance or cost advantages over similar products sold by our competitors. 24 Table of Contents If clinicians, hospital administrators and laboratories do not adopt or continue to use our tests and products or our future solutions and tests, our business and financial results will suffer.
To attract new laboratory customers, the performance of our products must provide performance or cost advantages over similar products sold by our competitors. If clinicians, hospital administrators and laboratories do not adopt or continue to use our tests and products or our future solutions and tests, our business and financial results will suffer.
Our rights to use these and other licensed technologies, data and materials and to employ the inventions claimed in licensed patents are subject to the continuation of and our compliance with the terms of the applicable licenses. 44 Table of Contents Termination of the license could prevent us from producing or selling some or all of our products.
Our rights to use these and other licensed technologies, data and materials and to employ the inventions claimed in licensed patents are subject to the continuation of and our compliance with the terms of the applicable licenses. Termination of the license could prevent us from producing or selling some or all of our products.
Some of these companies may elect to develop and market diagnostic solutions in the post-transplant surveillance market. Many of our potential competitors may have greater brand recognition or substantially greater financial and technical resources and development, production and marketing capabilities than we do.
Some of these companies may elect to develop and market diagnostic solutions in the post-transplant surveillance market. 27 Table of Contents Many of our potential competitors may have greater brand recognition or substantially greater financial and technical resources and development, production and marketing capabilities than we do.
Among the factors complicating our billing of third-party payers are: • disputes among payers regarding which party is responsible for payment; • disparity in coverage among various payers; • different process, information and billing requirements among payers; and • incorrect or missing billing information, which is required to be provided by the prescribing clinician.
Among the factors complicating our billing of third-party payers are: • disputes among payers regarding which party is responsible for payment; • disparity in coverage among various payers; • different process, information and billing requirements among payers; and 38 Table of Contents • incorrect or missing billing information, which is required to be provided by the prescribing clinician.
For the year ended December 31, 2024, revenue from Medicare for AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung represented 50% of testing services revenue. However, we may not be able to maintain or increase our tests reimbursed by Medicare for a variety of reasons, including changes in reimbursement practices, general policy shifts, or reductions in reimbursement amounts.
For the year ended December 31, 2025, revenue from Medicare for AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung represented 46% of testing services revenue. However, we may not be able to maintain or increase our tests reimbursed by Medicare for a variety of reasons, including changes in reimbursement practices, general policy shifts, or reductions in reimbursement amounts.
In addition, the preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.
In addition, the preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses 36 Table of Contents incurred during the reporting periods.
For example, as a result of the Patient Protection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconciliation Act of 2010), or collectively, the Affordable Care Act, substantial changes have been made and may continue to be made to the current system for paying for healthcare in the U.S., including changes made in order to extend medical benefits to those who currently lack insurance coverage.
For example, as a result of the Patient Protection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconciliation Act of 2010), or collectively, the Affordable Care Act, substantial changes have been made and may continue to be made to the current system for paying for healthcare in the United States, including changes made in order to extend medical benefits to those who currently lack insurance coverage.
Our manufacturing facility in Sweden is used to support the production, packaging and labeling of our proprietary test kits: Olerup SSP, QTYPE, AlloSeq cfDNA and HCT. Disruptions to our manufacturing facility through various forms of labor disputes could adversely affect us.
Our 35 Table of Contents manufacturing facility in Sweden is used to support the production, packaging and labeling of our proprietary test kits: Olerup SSP, QTYPE, AlloSeq cfDNA and HCT. Disruptions to our manufacturing facility through various forms of labor disputes could adversely affect us.
Our business is dependent on licenses from third parties. We license technology from third parties necessary to develop and commercialize our products. On May 4, 2018, we entered into the License Agreement with Illumina, which provides us with worldwide distribution, development and commercialization rights to Illumina’s NGS product line for use in transplantation diagnostic testing.
Our business is dependent on licenses from third parties. We license technology from third parties necessary to develop and commercialize our products. On May 4, 2018, we entered into the License Agreement with Illumina, which provides us with worldwide distribution, development and commercialization 47 Table of Contents rights to Illumina’s NGS product line for use in transplantation diagnostic testing.
Additionally, any new clinical laboratory facility opened by us in the U.S. would be required to be certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease.
Additionally, any new clinical laboratory facility opened by us in the United States would be required to be certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease.
These products may compete with our current and future products in jurisdictions where we do not have any issued patents, and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our current and future products in jurisdictions where we do not have any issued patents, and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. 46 Table of Contents Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Future equity transactions may result in further substantial annual limitations on the utilization of our NOLs due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions.
Future equity transactions may result in further substantial annual limitations on the 52 Table of Contents utilization of our NOLs due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions.
Our ability to compete and to achieve and maintain profitability depends on our ability to protect our proprietary discoveries and technologies. We currently rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality agreements and license agreements to protect our intellectual property rights.
Our ability to compete and to achieve and maintain profitability depends on our ability to protect our proprietary discoveries and technologies. We currently rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality agreements and license agreements to protect our intellectual property rights related to our products and services.
If we are not able to acquire or negotiate access to new and archived donor and recipient data and tissue and blood samples with source institutions, or if other laboratories or our competitors secure access to these samples before us, our ability to research, develop and commercialize future solutions such as AlloSure Kidney will be limited or delayed.
If we are not able to acquire or negotiate access to new and archived donor and recipient data and tissue and blood samples with source institutions, or if other laboratories or our competitors secure access to these samples before us, our ability to research, develop and commercialize future solutions will be limited or delayed.
While in general it is difficult to predict specifically what effects the Affordable Care Act or any future healthcare reform legislation or policies will have on our business, current and future healthcare reform legislation and policies could have a material adverse effect on our business and financial condition. 37 Table of Contents In December 2020, the U.S.
While in general it is difficult to predict specifically what effects the Affordable Care Act or any future healthcare reform legislation or policies will have on our business, current and future healthcare reform legislation and policies could have a material adverse effect on our business and financial condition. In December 2020, the U.S.
Due to the historically limited monitoring options and the well-established coverage and reimbursement for biopsies, clinicians are accustomed to monitoring for acute rejection in kidney and heart transplant recipients by utilizing biopsies. Many clinicians use AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung in parallel with biopsies rather than as an alternative to biopsies.
Due to the historically limited monitoring options and the well-established coverage and reimbursement for biopsies, clinicians are accustomed to monitoring for acute rejection in kidney and heart transplant recipients by utilizing biopsies. Many clinicians 26 Table of Contents use AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung in parallel with biopsies rather than as an alternative to biopsies.
In June 2021, we entered into a strategic agreement, which was amended in April 2022, with OrganX to develop clinical decision support tools across the transplant patient journey. Together, we and OrganX will develop advanced analytics that integrate AlloSure with large transplant databases to provide clinical data solutions.
In June 2021, we entered into a strategic agreement, which was amended in April 2022, with OrganX to develop clinical decision support tools across the transplant patient journey. Together, we and OrganX are developing advanced analytics that are expected to integrate AlloSure with large transplant databases to provide clinical data solutions.
In addition, conducting international operations subjects us to risks that, generally, we have not faced in the U.S., including: • uncertain or changing regulatory registration and approval processes; • failure by us to obtain regulatory approvals or adequate reimbursement for the use of our current and future solutions in various countries; • competition from companies located in the countries in which we offer our products that may put us at a competitive disadvantage; • financial risks, such as longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • risks related to our operations in Russia and Iran, including restrictions on our access to banking services, changes in the U.S., EU or other sanctions laws that limit financial transactions or increase or compliance burden and potential legal exposure and counterparty risk; • logistics and regulations associated with shipping recipient samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to process solutions locally; • difficulties in managing and staffing international operations and assuring compliance with foreign corrupt practices laws; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, tax inefficiencies related to our corporate structure and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities; • multiple, conflicting and changing laws and regulations such as healthcare regulatory requirements and other governmental approvals, permits and licenses; • the imposition of trade barriers such as tariffs, quotas, trade wars, preferential bidding or import or export licensing requirements; • political and economic instability, including interruptions in international relations, wars, terrorism and political unrest, general security concerns, outbreak of disease, boycotts, curtailment of trade and other business restrictions, including the ongoing conflict between Ukraine and Russia, the global impact of restrictions and sanctions imposed on Russia and the Israel-Hamas war; • fluctuations in currency exchange rates; • regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977, its books and records provisions or its anti-bribery provisions, as well as risks associated with other anti-bribery and anti-corruption laws; and • reduced or varied protection for intellectual property rights in some countries. 32 Table of Contents The occurrence of any one of the above could harm our business and, consequently, our revenues and results of operations.
In addition, conducting international operations subjects us to risks that, generally, we have not faced in the United States, including: • uncertain or changing regulatory registration and approval processes; • failure by us to obtain regulatory approvals or adequate reimbursement for the use of our current and future solutions in various countries; • competition from companies located in the countries in which we offer our products that may put us at a competitive disadvantage; • financial risks, such as longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • risks related to our operations in Russia and Iran, including restrictions on our access to banking services, changes in the United States, EU or other sanctions laws that limit financial transactions or increase or compliance burden and potential legal exposure and counterparty risk; • logistics and regulations associated with shipping recipient samples, including infrastructure conditions and transportation delays; • limits in our ability to penetrate international markets if we are not able to process solutions locally; • difficulties in managing and staffing international operations and assuring compliance with foreign corrupt practices laws; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, tax inefficiencies related to our corporate structure and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities; • multiple, conflicting and changing laws and regulations such as healthcare regulatory requirements and other governmental approvals, permits and licenses; • the imposition of trade barriers such as tariffs, quotas, trade wars, preferential bidding or import or export licensing requirements; • political and economic instability, including interruptions in international relations, wars, terrorism and political unrest, general security concerns, outbreak of disease, boycotts, curtailment of trade and other business restrictions, including the ongoing conflict between Ukraine and Russia, the global impact of restrictions and sanctions imposed on Russia, tariffs imposed on global trade and the ongoing conflicts in the Middle East; • fluctuations in currency exchange rates; • regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977, its books and records provisions or its anti-bribery provisions, as well as risks associated with other anti-bribery and anti-corruption laws; and 34 Table of Contents • reduced or varied protection for intellectual property rights in some countries.
In addition, our exclusive license agreement with Stanford that previously covered certain patents related to diagnostic and predictive technologies terminated in October 2023. Third parties may independently develop similar or competing technology that avoids the patents we own or exclusively license.
In addition, our exclusive license agreement with Stanford that previously covered certain patents related to diagnostic and predictive technologies terminated in October 2023. Third parties may independently develop similar or competing technology that do not infringe the patents we own or exclusively license.
If another party has filed a United States patent application covering an invention that is similar to, or the same as, an invention that we own or license, we or our licensors may have to participate in an interference or other proceeding in the U.S.
If another party has filed a United States patent application covering an invention that is similar to, or the same as, an invention that we own or 44 Table of Contents license, we or our licensors may have to participate in an interference or other proceeding in the U.S.
Competitors may use our technologies or solutions in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export infringing products to territories where we have patent protection but where enforcement is not as strong as that in the U.S.
Competitors may use our technologies or solutions in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States.
In addition to the CLIA regulation, other federal and state healthcare laws and regulations that may affect our ability to conduct business, include, without limitation: • federal and state laws and regulations regarding billing and claims payment applicable to clinical laboratories and/or regulatory agencies enforcing those laws and regulations; • federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented to the government, claims for payment from Medicare, Medicaid or other third-party payers that are false or fraudulent, or making a false statement material to a false or fraudulent claim; • the federal Anti-Kickback Statute, which constrains our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce or reward, or in return for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • the federal physician self-referral law, commonly known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services, including clinical laboratory services, reimbursed by Medicare if the physician (or a member of the physician’s family); • has a financial relationship with the entity, and which also prohibits the submission of any claims for reimbursement for designated health services furnished pursuant to a prohibited referral; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; HIPAA also created criminal liability for knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • state laws regarding prohibitions on fee-splitting; • the federal healthcare program exclusion statute; and • state and foreign law equivalents of each of the above federal laws and regulations, such as anti-kickback, false claims, and self-referral laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 40 Table of Contents Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
In addition to the CLIA regulation, other federal and state healthcare laws and regulations that may affect our ability to conduct business, include, without limitation: • federal and state laws and regulations regarding billing and claims payment applicable to clinical laboratories and/or regulatory agencies enforcing those laws and regulations; • federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented to the government, claims for payment from Medicare, Medicaid or other third-party payers that are false or fraudulent, or making a false statement material to a false or fraudulent claim; • the federal Anti-Kickback Statute, which constrains our marketing practices, educational programs, pricing policies, and relationships with healthcare providers or other entities, by prohibiting, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce or reward, or in return 42 Table of Contents for, either the referral of an individual or the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; • the federal physician self-referral law, commonly known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services, including clinical laboratory services, reimbursed by Medicare if the physician (or a member of the physician’s family); • has a financial relationship with the entity, and which also prohibits the submission of any claims for reimbursement for designated health services furnished pursuant to a prohibited referral; • HIPAA, as amended by HITECH and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; HIPAA also created criminal liability for knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • state laws regarding prohibitions on fee-splitting; • the federal healthcare program exclusion statute; and • state and foreign law equivalents of each of the above federal laws and regulations, such as anti-kickback, false claims, and self-referral laws, which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Failure to achieve these anticipated benefits could result in increased costs and decreases in future revenue and/or net income following the acquisition. 35 Table of Contents Our License and Commercialization Agreement with Illumina may not result in material benefits to our business.
Failure to achieve these anticipated benefits could result in increased costs and decreases in future revenue and/or net income following the acquisition. Our License and Commercialization Agreement with Illumina may not result in material benefits to our business.
As a result, we seek to protect our proprietary position by filing patent applications in the U.S. and in select foreign jurisdictions and cannot guarantee that we will obtain the patent protection necessary to protect our competitive position in all major markets.
As a result, we seek to protect our proprietary position by filing patent applications in the United States and in select foreign jurisdictions and cannot guarantee that we will obtain the patent protection necessary to protect our competitive position in all major markets.
For example, QTYPE competes with other quantitative polymerase chain reaction, or PCR, products including products offered by Thermo Fisher, as well as alternatives to PCR such as next generation sequencing, or NGS, typing products. 25 Table of Contents Competition for our patient and digital solutions include various companies that develop application software and operate in the healthcare field.
For example, QTYPE competes with other quantitative polymerase chain reaction, or PCR, products including products offered by Thermo Fisher, as well as alternatives to PCR such as next generation sequencing, or NGS, typing products. Competition for our patient and digital solutions includes various companies that develop application software and operate in the healthcare field.
We may need to supplement and amend our current policies and procedures and implement additional policies and procedures in the future. In addition, despite our compliance policies and procedures, and related training and monitoring, we may experience situations in which employees may fail to fully adhere to our policies and procedures.
We may need to supplement and amend our current policies and procedures and implement additional 43 Table of Contents policies and procedures in the future. In addition, despite our compliance policies and procedures, and related training and monitoring, we may experience situations in which employees may fail to fully adhere to our policies and procedures.
In addition, it is possible that third parties who we believe are infringing our intellectual property rights are unwilling to license our intellectual property from us on terms we can accept, or at all.
In addition, it is possible that third parties who we believe are infringing our intellectual property rights are unwilling to license our intellectual property from us 45 Table of Contents on terms we can accept, or at all.
Our operating results and our share price may fluctuate from period to period due to a variety of factors, including: • demand by clinicians and recipients for our current and future solutions, if any; • coverage and reimbursement decisions by third-party payers and announcements of those decisions; • clinical trial results and publication of results in peer-reviewed journals or their presentation at medical conferences; • the inclusion or exclusion of our current and future solutions in large clinical trials conducted by others; • new or less expensive tests and services or new technology introduced or offered by our competitors or us; • the level of our development activity conducted for new solutions, and our success in commercializing these developments; • our ability to efficiently integrate the business of new acquisitions; • the level of our spending on test commercialization efforts, licensing and acquisition initiatives, clinical trials, and internal research and development; • changes in the regulatory environment, including any announcement from the FDA regarding its decisions in regulating our activities; • changes in recommendations of securities analysts or lack of analyst coverage; • failure to meet analyst expectations regarding our operating results; • additions or departures of key personnel; • public health emergencies; • share repurchases completed by us; and • general market conditions. 46 Table of Contents Variations in the timing of our future revenues and expenses could also cause significant fluctuations in our operating results from period to period and may result in unanticipated earning shortfalls or losses.
Our operating results and our share price may fluctuate from period to period due to a variety of factors, including: • demand by clinicians and recipients for our current and future solutions, if any; • coverage and reimbursement decisions by third-party payers and announcements of those decisions; • clinical trial results and publication of results in peer-reviewed journals or their presentation at medical conferences; • the inclusion or exclusion of our current and future solutions in large clinical trials conducted by others; • new or less expensive tests and services or new technology introduced or offered by our competitors or us; • the level of our development activity conducted for new solutions, and our success in commercializing these developments; • our ability to efficiently integrate the business of our acquisitions; • the level of our spending on test commercialization efforts, licensing and acquisition initiatives, clinical trials, and internal research and development; • changes in the regulatory environment, including any announcement from the FDA regarding its decisions in regulating our activities; • changes in recommendations of securities analysts or lack of analyst coverage; • failure to meet analyst expectations regarding our operating results; • additions or departures of key personnel; • public health emergencies; • share repurchases completed by us; and • general market conditions.
The decision to commence litigation over infringement of a patent is complex and may lead to several risks to us, including the following, among others: • the time, significant expense and distraction to management of managing such litigation; • the uncertainty of litigation and its potential outcomes; • the possibility that in the course of such litigation, the defendant may challenge the validity of our patents, which could result in a re-examination or post grant review of our patents and the possibility that the claims in our patents may be limited in scope or invalidated altogether; • the potential that the defendant may successfully persuade a court that its technology or products do not infringe our intellectual property rights; • the impact of such litigation on other licensing relationships we have or seek to establish, including the timing of renewing or entering into such relationships, as applicable, as well as the terms of such relationships; • the potential that a defendant may assert counterclaims against us; and • adverse publicity to us or harm to relationships we have with customers or others.
The decision to commence litigation over infringement of a patent is complex and may lead to several risks to us, including the following, among others: • the time, significant expense and distraction to management of managing such litigation; • the uncertainty of litigation and its potential outcomes; • the possibility that the substantial amount of discovery required in connection with intellectual property litigation results in our confidential information being comprised by disclosure during the litigation; • the possibility that in the course of such litigation, the defendant may challenge the validity of our patents, which could result in a re-examination, inter partes review or post grant review of our patents and the possibility that the claims in our patents may be limited in scope or invalidated altogether; • the potential that the defendant may successfully persuade a court that its technology or products do not infringe our intellectual property rights; • the impact of such litigation on other licensing relationships we have or seek to establish, including the timing of renewing or entering into such relationships, as applicable, as well as the terms of such relationships; • the potential that a defendant may assert counterclaims against us; and • adverse publicity to us or harm to relationships we have with customers or others.
If we are unable to remediate this material weakness and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner. • Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline. • Transplant centers may not adopt AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung, or our other solutions due to historical practices or due to more favorable reimbursement policies associated with other means of monitoring transplants. • If we cannot maintain existing clinical collaborations and enter into new ones, our efforts to commercialize and develop products could be delayed. • If we are unable to successfully manage our growth and support demand for our tests, our business may suffer. 19 Table of Contents • Our past revenue growth rates may not be indicative of future growth, and we may not grow at all, and revenue may decline. • If our laboratory facility in the U.S. becomes inoperable, we will be unable to perform AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and future testing solutions, if any, and our business will be harmed. • Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks. • Performance issues, service interruptions or price increases by our shipping carriers could adversely affect our business and harm our reputation and ability to provide our services on a timely basis. • If we seek to and are unable to raise additional capital on acceptable terms in the future, it may limit our ability to develop and commercialize new diagnostic solutions and technologies, and we may have to curtail or cease operations. • The loss of key members of our senior management team or our inability to attract and retain highly skilled scientists, clinicians and laboratory and field personnel could adversely affect our business. • Recent and future acquisitions and investments could disrupt our business, harm our financial condition and operating results, dilute your ownership of us and increase our debt or cause us to incur significant expense. • We rely extensively on third-party service providers.
If we are unable to develop solutions to keep pace with rapid medical and scientific change, our operating results could be harmed. • If clinicians, hospital administrators, medical centers and laboratories do not adopt our diagnostic solutions, we will not achieve future sales growth. • Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline. • Transplant centers may not adopt AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung, or our other solutions due to historical practices or due to more favorable reimbursement policies associated with other means of monitoring transplants. • If we cannot maintain existing clinical collaborations and enter into new ones, our efforts to commercialize and develop products could be delayed. 20 Table of Contents • If we are unable to successfully manage our growth and support demand for our tests, our business may suffer. • Our past revenue growth rates may not be indicative of future growth, and we may not grow at all, and revenue may decline. • If our laboratory facility in the U.S. becomes inoperable, we will be unable to perform AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and future testing solutions, if any, and our business will be harmed. • Investors’ expectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to new risks. • Performance issues, service interruptions or price increases by our shipping carriers could adversely affect our business and harm our reputation and ability to provide our services on a timely basis. • If we seek to and are unable to raise additional capital on acceptable terms in the future, it may limit our ability to develop and commercialize new diagnostic solutions and technologies, and we may have to curtail or cease operations. • The loss of key members of our senior management team or our inability to attract and retain highly skilled scientists, clinicians and laboratory and field personnel could adversely affect our business. • Recent and future acquisitions and investments could disrupt our business, harm our financial condition and operating results, dilute your ownership of us and increase our debt or cause us to incur significant expense. • We rely extensively on third-party service providers.
Specifically, we may need to raise additional capital to, among other things: • develop other solutions for clinical surveillance in transplantation; • increase our selling and marketing efforts to drive market adoption and address competitive developments; • expand our clinical laboratory operations; • fund our clinical validation study activities; • expand our research and development activities; • sustain or achieve broader commercialization of AlloSure Kidney, KidneyCare, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung, our products and patient and digital solutions or enhancements to those tests, products and patient and digital solutions; • acquire or license products or technologies including through acquisitions; and • finance our capital expenditures and general and administrative expenses.
Specifically, we may need to raise additional capital to, among other things: • develop other solutions for clinical surveillance in transplantation; • increase our selling and marketing efforts to drive market adoption and address competitive developments; • expand our clinical laboratory operations; • fund our clinical study activities; • expand our research and development activities; • sustain or achieve broader commercialization of our testing services, our products and patient and digital solutions or enhancements to those tests, products and patient and digital solutions; • acquire or license products or technologies including through acquisitions; and • finance our capital expenditures and general and administrative expenses.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency or combination of deficiencies in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis.
Brisbane, California is situated on or near earthquake fault lines. Our facility and the equipment we use to perform testing services would be costly to replace and could require substantial lead time to repair or replace if damaged or destroyed.
We do not have redundant laboratory facilities. Brisbane, California is situated on or near earthquake fault lines. Our facility and the equipment we use to perform testing services would be costly to replace and could require substantial lead time to repair or replace if damaged or destroyed.
Our current Medicare coverage through Noridian provides for reimbursement for tests performed for qualifying Medicare patients throughout the U.S. so long as the tests are performed in our California laboratory.
Our current Medicare coverage through Noridian provides for reimbursement for tests performed for qualifying Medicare patients throughout the United States so long as the tests are performed in our California laboratory.
A security breach or privacy violation that leads to disclosure or modification of or prevents access to consumer information (including personally identifiable information or protected health information) could harm our reputation, compel us to comply with disparate state breach notification laws, require us to verify the correctness of database contents and otherwise subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue.
A security breach or privacy violation that leads to disclosure or modification of or prevents access to consumer information (including personal data, such as PHI) could harm our reputation, compel us to comply with disparate 48 Table of Contents state breach notification laws, require us to verify the correctness of database contents and otherwise subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue.
Additional competition for kidney surveillance diagnostics currently comes from general, non-specific clinical chemistry tests such as serum creatinine, urine protein, donor specific antibodies, complete blood count, lipid profile and others that are widely ordered by physician offices and routinely performed in clinical reference labs and hospital labs.
Additional competition for kidney surveillance diagnostics currently comes from general, non-specific clinical chemistry tests such as serum creatinine, urine protein, immunosuppression drug levels, donor specific antibodies and others that are widely ordered by physician offices and routinely performed in clinical reference labs and hospital labs.
PAMA includes a substantial new payment system for clinical laboratory tests under the CLFS. Under PAMA, laboratories that receive the majority of their Medicare revenues from payments made under the CLFS report initially and then on a subsequent three-year basis thereafter (or annually for advanced diagnostic laboratory tests), private payer payment rates and volumes for their tests.
Under PAMA, laboratories that receive the majority of their Medicare revenues from payments made under the CLFS report initially and then on a subsequent three-year basis thereafter (or annually for advanced diagnostic laboratory tests), private payer payment rates and volumes for 39 Table of Contents their tests.
We rely heavily on providers of transport services for reliable and secure point-to-point transport of recipient samples to our laboratory and enhanced tracking of these recipient samples.
Expedited, reliable shipping is essential to our operations. We rely heavily on providers of transport services for reliable and secure point-to-point transport of recipient samples to our laboratory and enhanced tracking of these recipient samples.
If future reimbursement price levels are less than the current price, our revenues and our ability to achieve profitability could be impaired, and the market price of our common stock could decline.
If future reimbursement price or coverage levels are lower than the current prices or coverage level, our revenues and our ability to achieve profitability could be impaired, and the market price of our common stock could decline.
If we are unable to increase sales of our testing services or products or successfully develop and commercialize other solutions, tests or enhancements, or if we do not continue our Medicare reimbursement submissions for AlloSure Kidney at the same levels in place prior to the Billing Articles issued by Palmetto MolDX in 2023 (the “Billing Articles”), our revenues and ability to achieve profitability would be impaired, and the market price of our common stock could decline.
If we are unable to increase sales of our testing services or products or successfully develop and commercialize other solutions, tests or enhancements, or if we do not continue our Medicare reimbursement submissions for AlloSure Kidney at the same levels, our revenues and ability to achieve profitability would be impaired, and the market price of our common stock could decline.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $260.7 million and an accumulated deficit of $626.2 million. We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure, commercial operations and research and development activities.
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $201.4 million and an accumulated deficit of $735.4 million. We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure, commercial operations and research and development activities.
From 2023 to 2024, our revenue increased from $280.3 million to $333.8 million, which represents an annual increase of 19%. In the future, our revenue may not grow at all and it may continue to decline.
From 2024 to 2025, our revenue increased from $333.8 million to $379.8 million, which represents an annual increase of 14%. In the future, our revenue may not grow at all and it may continue to decline.
If our laboratory facility in the U.S. becomes inoperable, we will be unable to perform AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and future testing solutions, if any, and our business will be harmed. We perform all of our testing services for the U.S. in our laboratory located in Brisbane, California. We do not have redundant laboratory facilities.
If our laboratory facility in the United States becomes inoperable, we will be unable to perform AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare, AlloSure Lung and future testing solutions, if any, and our business will be harmed. We perform all of our testing services for the United States in our laboratory located in Brisbane, California.
In addition, an application, data security or network incident may allow unauthorized access to our systems or data or our customers’ data, disable access to our service, harm our reputation, create additional liability and adversely impact our financial results. • International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. • Our operating results may be adversely affected by unfavorable economic and market conditions. • Billing complexities associated with obtaining payment or reimbursement for our current and future solutions may negatively affect our revenue, cash flows and profitability. • Healthcare reform measures could hinder or prevent the commercial success of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung. • To operate our laboratory, we have to comply with the CLIA and federal and state laws and regulations governing clinical laboratories and laboratory-developed tests, including FDA regulations. • We are subject to numerous fraud and abuse and other laws and regulations pertaining to our business, the violation of any one of which could harm our business. • Our competitive position depends on maintaining intellectual property protection. • Our business is dependent on licenses from third parties. • Our operating results may fluctuate, which could cause our stock price to decrease. • The market price of our common stock has been and will likely continue to be volatile, and you could lose all or part of your investment. 20 Table of Contents Risk Factors Investing in our common stock involves a high degree of risk.
The actual or perceived failure to comply with such obligations could lead to government enforcement actions, fines, sanctions, private litigation, and/or adverse publicity and could negatively affect our operating results and business. • International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. • Our operating results may be adversely affected by unfavorable economic and market conditions. • Billing complexities associated with obtaining payment or reimbursement for our current and future solutions may negatively affect our revenue, cash flows and profitability. • Healthcare reform measures could hinder or prevent the commercial success of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung. • To operate our laboratory, we have to comply with the CLIA and federal and state laws and regulations governing clinical laboratories and laboratory-developed tests, including FDA regulations. • We are subject to numerous fraud and abuse and other laws and regulations pertaining to our business, the violation of any one of which could harm our business. • Our competitive position depends on maintaining intellectual property protection. • Our business is dependent on licenses from third parties. • Our operating results may fluctuate, which could cause our stock price to decrease. • The market price of our common stock has been and will likely continue to be volatile, and you could lose all or part of your investment. 21 Table of Contents Risk Factors Investing in our common stock involves a high degree of risk.
If we are unable to complete the required Section 404 assessment as to the adequacy of our internal control over financial reporting or otherwise fail to maintain or implement effective controls and procedures for financial reporting, we could be unable to accurately and timely report our financial position, results of operations, and cash flows or key operating metrics, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our consolidated financial statements or other corrective disclosures, a decline in our stock price, suspension or delisting of our common stock from the Nasdaq Global Market, SEC investigations, civil or criminal sanctions, an inability to access the capital and commercial lending markets, defaults under our debt and other agreements or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
If we experience additional material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately and timely report our financial position, results of operations, and cash flows or key operating metrics, or prevent fraud, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our consolidated financial statements or other corrective disclosures, a decline in our stock price, suspension or delisting of our common stock from the Nasdaq Global Market, SEC investigations, civil or criminal sanctions, an inability to access the capital and commercial lending markets, defaults under our debt and other agreements or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
On September 25, 2023, we reported that by letter dated September 19, 2023, we were notified by the staff of the SEC that the SEC has concluded its investigation as to our company and does not intend to recommend an enforcement action by the SEC against us. We also previously received an information request from a state regulatory agency.
On September 25, 2023, we reported that by letter dated September 19, 2023, we were notified by the staff of the SEC that the SEC has concluded its investigation as to our company and does not intend to recommend an enforcement action by the SEC against us.
Our business or financial results may be adversely impacted by these uncertain economic conditions, including: adverse changes in interest rates, foreign currency exchange rates, tax laws or tax rates; prolonged periods of increased inflation globally and in the U.S. in particular; liquidity concerns at financial institutions; a potential economic recession; contraction in the availability of credit in the marketplace due to legislation or other economic conditions, which may potentially impair our ability to access the capital markets on terms acceptable to us or at all; and the effects of government initiatives to manage economic conditions.
Our business or financial results may be adversely impacted by these uncertain economic conditions, including: adverse changes in interest rates, foreign currency exchange rates, tax laws or tax rates; the imposition of trade barriers such as tariffs (and judicial uncertainty about their enforceability), quotas, trade wars, preferential bidding or import or export licensing requirements; increased inflation globally and in the U.S. in particular; liquidity concerns at financial institutions; a potential economic recession; contraction in the availability of credit in the marketplace due to legislation or other economic conditions, which may potentially impair our ability to access the capital markets on terms acceptable to us or at all; and the effects of government initiatives to manage economic conditions.
Our product kits are sold to hundreds of laboratories, mainly in Europe and the U.S. Laboratories order our products based on the accuracy, speed and cost of the test together with the cost and availability of equipment on which to run the test. Switching to or adopting our products may require the purchase of new and costly testing equipment.
Laboratories order our products based on the accuracy, speed and cost of the test together with the cost and availability of equipment on which to run the test. Switching to or adopting our products may require the purchase of new and costly testing equipment.
Furthermore, we may not be able to generate sufficient taxable income to utilize our NOLs before they expire. If any of these events occur, we may not derive some or all of the expected benefits from our NOLs.
Furthermore, we may not be able to generate sufficient taxable income to utilize our NOLs before they expire. Our ability to use these NOLs could also be limited if the tax laws are amended or otherwise changed. If any of these events occur, we may not derive some or all of the expected benefits from our NOLs.
Retroactive adjustments may change amounts 22 Table of Contents realized from third-party payers. We are also subject to claims reviews and/or audits by such payers, including governmental audits of our Medicare claims, and have in the past been required to repay these payers in certain circumstances where a preliminary finding was made that we were incorrectly reimbursed.
We ar e also subject to claims reviews and/or audits by third-party payers, including governmental audits of our Medicare claims, and have in the past been required to repay these payers in certain circumstances where a preliminary finding was made that we were incorrectly reimbursed.
From time to time, we expect to engage in discussions with potential clinical collaborators, which may or may not lead to collaborations. We cannot guarantee that any discussions will result in clinical collaborations or that any clinical studies that may result will be enrolled or completed in a reasonable time frame or with successful outcomes.
We cannot guarantee that any discussions will result in clinical collaborations or that any clinical studies that may result will be enrolled or completed in a reasonable time frame or with successful outcomes.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The results of such assessments, audits, and reviews are evaluated by management and reported to the Audit and Finance Committee of the Board, or the Audit and Finance Committee, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits, and reviews.
The results of such assessments, audits, and reviews are evaluated by management and reported to the Audit and Finance Committee of the Board, or the Audit and Finance Committee, on a quarterly basis, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits, and reviews.
We conduct periodic assessments and testing of our policies, standards, processes, and practices in a manner designed to address cybersecurity threats and events.
We conduct quarterly assessments and testing of our policies, standards, processes, and practices in a manner designed to address cybersecurity threats and events.
Annually, the Board and the Audit and Finance Committee discuss our approach to overseeing cybersecurity threats with our Chief Technology Officer, or CTO, and other senior management members. 53 Table of Contents The CTO, in coordination with senior management including the Chief Executive Officer, Chief Financial Officer, and General Counsel, works collaboratively across our company to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any material cybersecurity incidents in accordance with our incident response and recovery plans.
The CTO, in coordination with senior management including the Chief Executive Officer, Chief Financial Officer, and General Counsel, works collaboratively across our company to implement a program designed to protect our information systems from cybersecurity threats and to promptly respond to any material cybersecurity incidents in accordance with our incident response and recovery plans.
We conduct annual tabletop exercises to test these plans. • Third-Party Risk Management: We maintain a risk-based approach to identifying and overseeing material cybersecurity threats presented by third parties, including vendors, service providers, as well as the systems of third parties that could adversely impact our business in the event of a material cybersecurity incident affecting those third-party systems, including any outside auditors or consultants who advise on our cybersecurity systems. • Education and Awareness: We provide regular, mandatory training for all employees regarding cybersecurity threats as a means to equip our employees with tools to make employees aware of and to address cybersecurity threats, as well as to communicate our evolving information security policies, standards, processes, and practices.
We conduct annual tabletop exercises to test these plans. • Third-Party Risk Management: We maintain a risk-based approach to identifying and overseeing material cybersecurity threats presented by third parties, including vendors, service providers, as well as the systems of third parties that could adversely impact our business in the event of a material cybersecurity incident affecting those third-party systems, including any outside auditors or consultants who advise on our cybersecurity systems.
The Board and the Audit and Finance Committee also receive prompt and timely information regarding any cybersecurity risk that meets pre-established reporting thresholds.
The Board and the Audit and Finance Committee also 56 Table of Contents receive prompt and timely information regarding any cybersecurity risk that meets pre-established reporting thresholds. Annually, the Board and the Audit and Finance Committee discuss our approach to overseeing cybersecurity threats with our Chief Technology Officer, or CTO, and other senior management members.
In addition, an application, data security or network incident may allow unauthorized access to our systems or data or our customers’ data, disable access to our service, harm our reputation, create additional liability and adversely impact our financial results ” risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition.
Material Effects of Cybersecurity Incidents Except as described in the section entitled “Risk Factors” included in Part I, Item 1A, including, without limitation, the risk factor above titled “ Security breaches, loss of data, or other disruptions could compromise sensitive information prevent access to critical information, expose us to liability, and adversely affect our business and our reputation ” risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition.
Removed
Material Effects of Cybersecurity Incidents Except as described in the section entitled “Risk Factors” included in Part I, Item 1A, including, without limitation, the risk factor above titled “ We face four primary risks relative to protecting critical information: loss of access risk, inappropriate disclosure risk, inappropriate modification risk and the risk of our being unable to identify and audit our controls over the first three risks.
Added
We collaborate with third parties to assess the effectiveness of our cybersecurity prevention and response systems and processes.
Added
These third parties include cybersecurity assessors, consultants and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks. • Education and Awareness: We provide quarterly, regular, mandatory training for all employees regarding cybersecurity threats as a means to equip our employees with tools to make employees aware of and to address cybersecurity threats, as well as to communicate our evolving information security policies, standards, processes, and practices.

Item 2. Properties

Properties — owned and leased real estate

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The following is a summary of the locations, functions and approximate square footage of those facilities as of December 31, 2024: Location Function Square Footage United States Brisbane, California Corporate headquarters 26,506 Brisbane, California Research & development and clinical laboratories 61,444 West Chester, Pennsylvania Sales office and distribution 6,336 Omaha, Nebraska Digital solutions office 24,984 Columbus, Ohio Digital solutions office 3,806 Flowood, Mississippi Transplant pharmacy 4,800 Europe Stockholm, Sweden Research & development and product manufacturing 24,940 Australia Fremantle Research & development 5,199 We do not own any real property.
The following is a summary of the locations, functions and approximate square footage of those facilities as of December 31, 2025: Location Function Square Footage United States Brisbane, California Corporate headquarters 26,506 Brisbane, California Research & development and clinical laboratories 61,444 West Chester, Pennsylvania Sales office and distribution 6,336 Omaha, Nebraska Digital solutions office 24,984 Flowood, Mississippi Transplant pharmacy 4,800 Europe Stockholm, Sweden Research & development and product manufacturing 24,940 Australia Fremantle Research & development 5,199 We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS The information set forth in Note 9, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations” is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 Table of Contents PART II
ITEM 3. LEGAL PROCEEDINGS The information set forth in Note 8, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations” is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 57 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Item 4. Mine Safety Disclosures 54 PART II 55 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 55 Item 6. [Reserved] 56 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 67 Item 8.
Item 4. Mine Safety Disclosures 57 PART II 58 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 58 Item 6. [Reserved] 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 71 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Any payment of cash dividends will also depend on our financial condition, results of operations, capital requirements and other factors deemed relevant by our Board of Directors and will be at the discretion of our Board of Directors.
Any payment of cash dividends will depend on our financial condition, results of operations, capital requirements and other factors deemed relevant by our Board of Directors and will be at the discretion of our Board of Directors.
The following stock performance graph compares total stockholder returns for CareDx, Inc. from December 31, 2019 through December 31, 2024 against the Nasdaq Market Composite Index and Nasdaq Biotech Index, assuming a $100 investment made on December 31, 2019. Each of the two comparative measures of cumulative total return assumes reinvestment of dividends.
The following stock performance graph compares total stockholder returns for CareDx, Inc. from December 31, 2019 through December 31, 2025 against the Nasdaq Market Composite Index and Nasdaq Biotech Index, assuming a $100 investment made on December 31, 2019. Each of the two comparative measures of cumulative total return assumes reinvestment of dividends.
In addition, we satisfied certain U.S. federal and state tax withholding obligations due upon the vesting of restricted stock unit awards by automatically withholding from the shares being issued in connection with such award a number of shares of our common stock with an aggregate fair market value on the date of vesting equal to the minimum tax withholding obligations.
Issuer Repurchases of Equity Securities and Withholding of Equity Securities We satisfied certain U.S. federal and state tax withholding obligations due upon the vesting of restricted stock unit awards by automatically withholding from the shares being issued in connection with such award a number of shares of our common stock with an aggregate fair market value on the date of vesting equal to the minimum tax withholding obligations.
Holders of Record As of February 24, 2025, there were approximately 59 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Holders of Record As of February 19, 2026, there were approximately 55 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Dividend Policy We have never declared or paid cash dividends on our common stock, and currently do not have any plans to do so in the foreseeable future . We expect to retain our future earnings, if any, for use in the operation and expansion of our business.
Dividend Policy We have never declared or paid cash dividends on our common stock, and currently do not have any plans to do so in the foreseeable future .
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K regarding information about securities authorized for issuance under our equity compensation plans.
Sales of Unregistered Securities There were no sales of unregistered securities by us during the fourth quarter of 2025. 58 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K regarding information about securities authorized for issuance under our equity compensation plans.
The stock performance shown on the graph below is not necessarily indicative of future price performance. Sales of Unregistered Securities 55 Table of Contents There were no sales of unregistered securities by us during the fourth quarter of 2024.
The stock performance shown on the graph below is not necessarily indicative of future price performance.
Shares repurchased by us or withheld to satisfy tax withholding obligations during each month of the quarter ended December 31, 2024 were as follows: Total Number of Shares Purchased or Withheld Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) October 1, 2024 - October 31, 2024 32,051 (1) $ 32.05 — $ 21.4 (2) November 1, 2024 - November 30, 2024 77,889 (1) 23.04 — 21.4 (2) December 1, 2024 - December 31, 2024 17,952 (1) 22.80 — — (2) Total 127,892 — (1) Represents shares of our common stock withheld from employees for the payment of taxes.
Shares repurchased by us or withheld to satisfy tax withholding obligations during each month of the quarter ended December 31, 2025 were as follows: Total Number of Shares Purchased or Withheld Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) October 1, 2025 - October 31, 2025 Stock Repurchase Program (1) — $ — — $ 24.4 Employee Transactions (2) 13,345 $ 14.93 N/A N/A November 1, 2025 - November 30, 2025 Stock Repurchase Program (1) 772,856 $ 15.79 772,856 $ 12.2 Employee Transactions (2) 58,152 $ 14.96 N/A N/A December 1, 2025 - December 31, 2025 Stock Repurchase Program (1) — $ — — $ 12.2 Employee Transactions (2) 28,140 $ 19.10 N/A N/A Total — Stock Repurchase Program (1) 772,856 $ 15.79 772,856 $ 12.2 Employee Transactions (2) 99,637 $ 16.13 N/A N/A (1) See Part II, Item 8 of this Annual Report on Form 10-K under the heading “Stockholders' Equity” for further information relating to our stock repurchase programs.
Removed
Issuer Repurchases of Equity Securities and Withholding of Equity Securities During the quarter ended December 31, 2024, we did not purchase any shares of our common stock pursuant to our stock repurchase program.
Added
(2) Represents shares of our common stock withheld from employees for the payment of taxes.
Removed
(2) On December 3, 2022, our Board of Directors approved our stock repurchase program, authorizing us to purchase up to $50 million in shares of our common stock over a period of up to two years, commencing on December 8, 2022.
Removed
The Repurchase Program may be carried out, subject to approval by the committee of the Board of Directors, through open market purchases, one or more Rule 10b5-1 trading plans and block trades and in privately negotiated transactions.
Removed
The Repurchase Program was renewed on February 20, 2025 where we may purchase up to $50 million in shares of our common stock over a period of up to two years, commencing on February 20, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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As of December 31, 2024, no impairment of acquired in-process technology assets has been identified. Intangible assets and long-lived assets subject to amortization We evaluate our finite-lived intangible assets and our long-lived assets for indicators of possible impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
As of December 31, 2025, no impairment of acquired in-process technology assets has been identified. Intangible assets and long-lived assets subject to amortization We evaluate our finite-lived intangible assets and our long-lived assets for indicators of possible impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, which is available without charge on the SEC's website at www.sec.gov and on our investor relations website at caredx.com.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025, which is available without charge on the SEC's website at www.sec.gov and on our investor relations website at caredx.com.
In addition, patient solutions offered by TTP in Flowood, Mississippi include hospital-affiliated pharmacies located on-site at the transplant center and specialty pharmacies that provide transplant-specific care and dispensing services. With the addition of HLA Data Systems, we are now able to support HLA laboratories in managing their day-to-day workflow.
In addition, patient solutions offered by TTP in Flowood, Mississippi include hospital-affiliated pharmacies located on-site at the transplant center and specialty pharmacies that provide transplant-specific care and dispensing services. Additionally, with of HLA Data Systems, we are able to support HLA laboratories in managing their day-to-day workflow.
Some of these accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of 63 Table of Contents matters that are inherently uncertain. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.
Some of these 65 Table of Contents accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.
For a discussion regarding our cash flows for the year ended December 31, 2022, please refer to the discussion under the heading “Results of Operations—Liquidity and Capital Resources” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
For a discussion regarding our cash flows for the year ended December 31, 2023, please refer to the discussion under the heading “Results of Operations—Liquidity and Capital Resources” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025.
We also consider our market capitalization on the date of the analysis to ensure the reasonableness of the reporting unit’s fair value. In connection with our annual goodwill assessment on December 1, 2024, we performed a qualitative assessment taking into consideration past, current and projected future earnings, recent trends and market conditions, and our market capitalization.
We also consider our market capitalization on the date of the analysis to ensure the reasonableness of the reporting unit’s fair value. In connection with our annual goodwill assessment on December 1, 2025, we performed a qualitative assessment taking into consideration past, current and projected future earnings, recent trends and market conditions, and our market capitalization.
Based on this analysis, we concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying amount. As such, it was not necessary to perform the quantitative goodwill impairment assessment at that time. As of December 31, 2024, no impairment of goodwill has been identified.
Based on this analysis, we concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying amount. As such, it was not necessary to perform the quantitative goodwill impairment assessment at that time. As of December 31, 2025, no impairment of goodwill has been identified.
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2024 was $5.6 million and primarily related to repurchase and retirement of common stock of $0.5 million, taxes paid related to net share settlements of restricted stock units of $10.1 million and payments of contingent consideration of $5.3 million.
Net cash used in financing activities for the year ended December 31, 2024 was $5.6 million and primarily related to repurchase and retirement of common stock of $0.5 million, taxes paid related to net share settlements of restricted stock units of $10.1 million and payments of contingent consideration of $5.3 million.
A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented under Results of Operations of this Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2023 compared to 2022 have been omitted from this Annual Report on Form 10-K, but can be found in "Item 7.
A discussion regarding our financial condition and results of operations for fiscal 2025 compared to fiscal 2024 is presented under Results of Operations of this Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2024 compared to 2023 have been omitted from this Annual Report on Form 10-K, but can be found in "Item 7.
Continued Growth of Patient and Digital Sales The growth of our patient and digital revenues is tied to the continued successful implementation of our Ottr, MedActionPlan and XynQAPI software businesses, as well as continued support and maintenance of existing MedActionPlan, Ottr and XynManagement customers.
Continued Growth of Patient and Digital Sales The growth of our patient and digital revenues is tied to the continued successful implementation of our pharmacy solutions, Ottr, MedActionPlan and XynQAPI software businesses, as well as continued support and maintenance of existing pharmacy, MedActionPlan, Ottr and XynManagement customers.
Our noncash items included $66.4 million in stock-based compensation expense, $14.2 million of depreciation and amortization expense, $5.6 million of amortization of right-of-use assets, $0.6 million of amortization of premium on short-term marketable securities, net, and revaluation of contingent consideration to estimated fair value of $0.9 million.
Our noncash items included $66.4 million in stock-based compensation expense, $14.2 million of depreciation and amortization expense, $5.6 million of amortization of right-of-use assets, $0.6 million of amortization of premium on marketable securities and revaluation of contingent consideration to estimated fair value of $0.9 million.
The Repurchase Program may be carried out, subject to approval by the committee of the Board of Directors, through open market purchases, one or more Rule 10b5-1 trading plans and block trades and in privately negotiated transactions.
The May 2025 Repurchase Program may be carried out, subject to approval by a committee of our Board of Directors, through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions.
We incur costs in connection with collecting and 57 Table of Contents shipping all samples and a portion of the costs when we cannot ultimately issue a report. As a result, the number of patient samples received largely correlates directly to the number of patient results reported.
We incur costs in connection with collecting and shipping all samples and a portion of the costs when we cannot ultimately issue a report. As a result, the number of patient samples received largely correlates directly to the number of patient results reported.
We have a single reporting unit and consequently evaluate goodwill for impairment based on an evaluation of the fair value of our company as a whole. 65 Table of Contents Our annual impairment test date is December 1 st .
We have a single reporting unit and consequently evaluate goodwill for impairment based on an evaluation of the fair value of our company as a whole. Our annual impairment test date is December 1 st .
Cash Flows from Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $0.5 million and primarily related to purchase of short-term marketable securities of $160.3 million, additions of capital expenditures of $6.5 million and purchase of corporate equity securities of $0.6 million, offset by maturities of short-term marketable securities of $166.9 million.
For the year ended December 31, 2024, net cash used in investing activities was $0.5 million and primarily related to purchase of marketable securities of $160.3 million, additions of capital expenditures of $6.5 million and purchase of corporate equity securities of $0.6 million, offset by maturities of marketable securities of $166.9 million.
Contractual Obligations For a discussion regarding our significant contractual obligations as of December 31, 2024 and the effect those obligations are expected to have on our liquidity and cash flows in future periods, please refer to Note 9, Commitments and Contingencies , of the consolidated financial statements, and “Results of Operations—Liquidity and Capital Resources”, respectively, included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations For a discussion regarding our significant contractual obligations as of December 31, 2025 and the effect those obligations are expected to have on our liquidity and cash flows in future periods, refer to Note 8, Commitments and Contingencies , of the consolidated financial statements, and “Results of Operations—Liquidity and Capital Resources”, respectively, included elsewhere in this Annual Report on Form 10-K.
In those circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC Topic 480, Distinguishing Liabilities from Equity , we recognize a liability equal to the fair value of the contingent payments that we expect to make as of the acquisition date.
In those circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under Accounting Standard Codification, or ASC, Topic 480, Distinguishing Liabilities from Equity , we recognize a liability equal to the fair value of the contingent payments that we expect to make as of the acquisition date.
We conduct clinical studies to validate our new products, as well as on-going clinical and outcome studies to further the published evidence to support our commercialized tests.
We conduct clinical studies to validate our new products, as well as ongoing clinical and outcome studies to further the published evidence to support our commercialized tests.
The Ottr software, TransChart, Tx Access and XynQAPI are currently implemented in multiple locations in the U.S. The Ottr software implementation and XynQAPI implementation and support teams are based in Omaha, Nebraska.
The Ottr software, TransChart, Tx Access and XynQAPI are currently implemented in multiple locations in the United States. The Ottr software implementation and XynQAPI implementation and support teams are based in Omaha, Nebraska.
These payments were partially offset by the proceeds from exercises of stock options of $0.1 million and proceeds from issuances of shares of common stock under our employee stock purchase plan of $1.5 million.
These payments were partially offset by the proceeds from exercises of stock options of $5.7 million and proceeds from issuances of shares of common stock under our employee stock purchase plan of $2.3 million.
Our commercially available testing services consist of AlloSure® Kidney, a donor-derived cell-free DNA, or dd-cfDNA, solution for kidney transplant patients, AlloMap® Heart, a gene expression solution for heart transplant patients, AlloSure® Heart, a dd-cfDNA solution for heart transplant patients, and AlloSure® Lung, a dd-cfDNA solution for lung transplant patients.
Our commercially available post-transplant testing services consist of AlloSure® Kidney, a donor-derived cell-free DNA, or dd-cfDNA, solution for kidney transplant patients, AlloMap® Heart, a gene expression profiling solution for heart transplant patients, AlloSure® Heart, a dd-cfDNA solution for heart transplant patients, HeartCare, the combined use of AlloMap Heart and AlloSure Heart, and AlloSure® Lung, a dd-cfDNA solution for lung transplant patients.
We also offer high-quality products that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. We also provide digital solutions to transplant centers and various offerings in patient and digital solutions.
We also offer high-quality products in the pre-transplant space that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. We also provide digital transplant solutions and various offerings that help transplant centers with patient management, outcomes quality and operational support.
Cash Flows The following table summarizes our cash flows for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ 38,048 $ (18,388) $ (25,239) Investing activities (483) 40,446 (228,502) Financing activities (5,606) (29,606) (4,535) Effect of exchange rate changes on cash, cash equivalents and restricted cash 532 (112) 23 Net increase (decrease) in cash, cash equivalents and restricted cash $ 32,491 $ (7,660) $ (258,253) Cash Flows from Operating Activities Net cash provided by (used in) operating activities consists of net income (loss), adjusted for certain noncash items in the consolidated statements of operations and changes in operating assets and liabilities.
Cash Flows The following table summarizes our cash flows for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by (used in): Operating activities $ 42,032 $ 38,048 $ (18,388) Investing activities 2,158 (483) 40,446 Financing activities (93,394) (5,606) (29,606) Effect of exchange rate changes on cash, cash equivalents and restricted cash (90) 532 (112) Net (decrease) increase in cash, cash equivalents and restricted cash $ (49,294) $ 32,491 $ (7,660) Cash Flows from Operating Activities Net cash provided by (used in) operating activities consists of net income (loss), adjusted for certain noncash items in the consolidated statements of operations and changes in operating assets and liabilities.
Acquired in-process technology assets and a favorable license agreement are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts.
Intangible assets subject to amortization are amortized over their estimated useful lives. Acquired in-process technology assets and a favorable license agreement are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts.
Recently Issued Accounting Standards Refer to Note 2, Summary of Significant Accounting Policies - Recent Accounting Pronouncements, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial position and cash flows. 66 Table of Contents
Amortization expenses are recorded to cost of testing services, cost of product, cost of patient and digital solutions, research and development expenses and sales and marketing expenses in the consolidated statements of operations. 69 Table of Contents Recently Issued Accounting Standards Refer to Note 2, Summary of Significant Accounting Policies - Recent Accounting Pronouncements , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial position and cash flows. 70 Table of Contents
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $260.7 million, and no debt outstanding.
As of December 31, 2025, we had cash, cash equivalents and marketable securities of $201.4 million, and no debt outstanding.
Net cash used in financing activities for the year ended December 31, 2023 was $29.6 million and primarily related to repurchase and retirement of common stock of $27.5 million, taxes paid related to net share settlements of restricted stock units of $3.1 million and payments of contingent consideration of $0.6 million.
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2025 was $93.4 million and primarily related to repurchase and retirement of common stock of $87.8 million, taxes paid related to net share settlements of restricted stock units of $12.1 million and payments of contingent consideration of $1.5 million.
With the addition of MediGO, we are now serving the organ procurement market for organ logistical needs. Development of Additional Services and Products Our development pipeline includes other solutions to help clinicians and transplant centers make personalized treatment decisions throughout a transplant patient’s lifetime. We expect to invest in research and development in order to develop additional services and products.
Development of Additional Services and Products Our development pipeline includes other solutions to help clinicians and transplant centers make personalized treatment decisions throughout a transplant patient’s lifetime. We expect to invest in research and development in order to develop additional services and products.
Income tax expense For the year ended December 31, 2024, we recorded an income tax expense of $0.3 million on an income before income taxes of $52.9 million.
Income tax expense For the year ended December 31, 2025, we recorded an income tax expense of $0.3 million on a loss before income taxes of $21.1 million.
Digital revenue in connection with perpetual software license agreements is recognized at the point in time when control of the license is transferred and made available for the customer's use and benefit. Perpetual software license agreements typically require advance payments from customers upon the achievement of certain milestones.
Digital revenue in connection with software license agreements is recognized at the point in time when control of the license is transferred and made available for the customer's use and benefit.
We re-measure this liability each reporting period and record changes in the fair value as a component of operating expenses. Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition.
We remeasure this liability each reporting period and record changes in the fair value as a component of operating expenses. Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses.
We generally bill software subscription fees in advance. Revenue from software subscriptions is deferred and recognized ratably over the subscription term. The medication sales revenue is recognized based on the negotiated contract price with the governmental, commercial and non-commercial payers with any applicable patient co-pay. We recognize revenue from medication sales when prescriptions are delivered.
The medication sales revenue is recognized based on the negotiated contract price with the governmental, commercial and non-commercial payers with any applicable patient co-pay. Based on the individual agreement, we recognize revenue from medication sales when prescriptions are shipped or delivered.
Interest income, net Interest income, net, decreased by $0.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in interest rates.
Interest income, net Interest income, net, decreased by $2.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to a decrease in cash, cash equivalents, and marketable securities.
During the year ended December 31, 2024 , we purchased an aggregate of 55,500 shares of our common stock under the Repurchase Program for an aggregate purchase price of $0.5 million.
During the year ended December 31, 2025, we purchased an aggregate of 5.8 million shares of our common stock under the February 2025 and May 2025 Repurchase Programs, for a total purchase price of $87.8 million.
Intangible assets not subject to amortization We evaluate the carrying value of intangible assets not subject to amortization, related to acquired in-process technology assets and a favorable license agreement, which are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts.
Intangible assets not subject to amortization We evaluate the carrying value of intangible assets not subject to amortization, related to acquired in-process technology assets and a favorable license agreement.
Cost of testing services Cost of testing services decreased by $2.0 million, or (4)%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease is primarily driven by efficiency measures to lower laboratory expenses.
The increase was primarily attributed to higher testing services volume, partially offset by the continuous efficiency measures to lower laboratory expenses. 62 Table of Contents Cost of product Cost of product decreased by $0.4 million, or 2%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
The Repurchase Program was renewed on February 20, 2025 where we may purchase up to $50 million in shares of our common stock over a period of up to two years, commencing on February 20, 2025.
Following the completion of the February 2025 Repurchase Program, on May 30, 2025, our Board of Directors authorized a new share repurchase program of up to $50.0 million in shares of our common stock over a period of up to two years, commencing on May 30, 2025, or the May 2025 Repurchase Program.
Cost of patient and digital solutions Cost of patient and digital solutions increased by $4.7 million, or 18%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Cost of testing services Cost of testing services increased by $6.4 million, or 12%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
We record deferred revenue in relation to these agreements when cash payments are received, or invoices are issued in advance of our performance, and generally recognize revenue over the contractual term, as performance obligations are fulfilled. 64 Table of Contents In addition, we derive patient and digital solutions revenue from software subscriptions and medication sales.
We record deferred revenue in relation to these agreements when cash payments are received for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met, and generally recognize revenue over the contractual term, as performance obligations are fulfilled. In addition, we derive patient revenue from medication sales.
Product revenue Product revenue increased by $7.3 million, or 22%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher demand of our commercial NGS-based kitted solutions.
Product revenue Product revenue increased by $7.6 million, or 19%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily due to higher sales of our commercial NGS-based kitted solutions resulting from growth in our existing business including conversions of targeted customers.
If the carrying amount of the reporting unit exceeds the fair value, we record an impairment loss based on the difference. We elect to bypass the qualitative assessment in a period and proceeds to perform the quantitative goodwill impairment test.
If the carrying amount of the reporting unit exceeds the fair value, we record an impairment loss based on the difference.
Our net loss also included the following noncash items: $49.1 million in stock-based compensation expense, $14.4 million of depreciation and amortization expense, amortization of right-of-use assets of $5.4 million, asset impairments and write-downs of $1.0 million, amortization of premium on short-term marketable securities, net of $4.9 million, gain on settlement of obligation and recovery of written-off investment of $2.1 million and revaluation of contingent consideration to estimated fair value of $2.7 million.
Our noncash items included $34.9 million in stock-based compensation expense, $15.0 million of depreciation and amortization expense, $5.4 million of amortization of right-of-use assets, $2.3 million of impairment of 64 Table of Contents intangible asset and associated construction in progress, $1.3 million of amortization of premium on marketable securities, net, and revaluation of contingent consideration to estimated fair value of $0.7 million.
Treasury zero-coupon issues with a remaining term equal to the expected option lives, and estimate dividend yield using our expectations and historical data. The fair value of each restricted stock unit is calculated based upon the closing price of our common stock on the date of the grant. We use the straight-line attribution method for recognizing compensation expense.
Treasury zero-coupon issues with a remaining term equal to the expected option lives, and estimate dividend yield using our expectations and historical data. Compensation expense for stock options issued to nonemployees is calculated using the Black-Scholes Model and is recorded over the service performance period using the straight-line attribution method.
For the year ended December 31, 2023, net cash provided by investing activities was $40.4 million and primarily related to proceeds from maturities of marketable securities of $256.0 million and sale of corporate equity securities of $2.5 million.
Cash Flows from Investing Activities For the year ended December 31, 2025, net cash provided by investing activities was $2.2 million and primarily related to maturities of marketable securities of $154.7 million, partially offset by purchase of marketable securities of $145.9 million, additions of capital expenditures of $5.9 million and $0.7 million related to acquisition of an intangible asset.
Product Revenue Product revenue is recognized from the sale of products to end-users, distributors and strategic partners when all revenue recognition criteria are satisfied. We generally have a contract or a purchase order from a customer with the specified required terms of order, including the number of products ordered. Transaction prices are determinable in the contract.
We generally have a contract or a purchase order from a customer with the specified required terms of order, including the number of products ordered. Transaction prices are determinable in the contract. The products are delivered and risk of loss passed to the customer upon either shipping or delivery, as per the terms of the agreement.
Acquired Intangible Assets Amortizable intangible assets include customer relationships, developed technology, commercialization rights, trademarks and in-process technology assets acquired as part of a business combination or asset acquisition. Intangible assets subject to amortization are amortized over their estimated useful lives.
Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition. 68 Table of Contents Acquired Intangible Assets Amortizable intangible assets include customer relationships, developed technology, commercialization rights, trademarks and trade names and in-process technology assets acquired as part of a business combination or asset acquisition.
Patient and Digital Solutions Revenue Patient and digital solutions revenue is primarily derived from a combination of SaaS and perpetual software license agreements entered into with various transplant centers, which are our customers for this class of revenue.
There are no further performance obligation related to a contract and revenue is recognized at the point of shipment or delivery consistent with the terms of the contract or purchase order. 66 Table of Contents 67 Table of Contents Patient and Digital Solutions Revenue Patient and digital solutions revenue is primarily derived from software as a service, or SaaS, agreements entered into with various transplant centers, which are our customers for this class of revenue.
Sales and marketing Sales and marketing expenses decreased by $1.6 million, or (2)%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in stock-based compensation expense of $1.4 million, a decrease in travel costs of $0.6 million and a decrease in tradeshows and events of $1.6 million, offset by an increase in personnel-related costs of $2.2 million.
The increase was primarily attributable to increases of $15.4 million in personnel-related costs, $4.5 million in marketing expenses, $3.2 million in consulting expenses and $0.5 million in travel expenses, partially offset by a decrease of $2.9 million in stock-based compensation expense.
Cost of product 59 Table of Contents Cost of product increased by $5.0 million , or 27%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to an increase in product revenue.
Other income, net Other income, net increased by $0.2 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to an increase in foreign exchange gains.
Stock Repurchase Program On December 3, 2022, our Board of Directors approved our Stock Repurchase Program, or the Repurchase Program, whereby we may purchase up to $50 million in shares of our common stock over a period of up to two years, commencing on December 8, 2022.
Stock Repurchase Programs On February 20, 2025, our Board of Directors approved the February 2025 Repurchase Program, whereby we were authorized to purchase up to $50.0 million in shares of our common stock over a period of up to two years, commencing on February 20, 2025 , through open market purchases , one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions.
Spending on research and development for both experiments and studies may vary significantly by quarter depending on the timing of these various expenses. 58 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 (In thousands) Year Ended December 31, 2024 2023 Change Revenue: Testing services revenue $ 249,381 $ 209,685 $ 39,696 Product revenue 40,783 33,517 7,266 Patient and digital solutions 43,621 37,122 6,499 Total revenue 333,785 280,324 53,461 Operating expenses: Cost of testing services 55,611 57,642 (2,031) Cost of product 23,381 18,379 5,002 Cost of patient and digital solutions 30,638 25,978 4,660 Research and development 72,405 81,866 (9,461) Sales and marketing 81,718 83,334 (1,616) General and administrative 123,784 117,868 5,916 Restructuring cost 1,783 2,320 (537) Litigation expense (96,300) 96,300 (192,600) Total operating expenses 293,020 483,687 (190,667) Income (loss) from operations 40,765 (203,363) 244,128 Other income: Interest income, net 11,765 11,867 (102) Change in estimated fair value of common stock warrant liability — 10 (10) Other income, net 329 1,343 (1,014) Total other income 12,094 13,220 (1,126) Income (loss) before income taxes 52,859 (190,143) 243,002 Income tax expense (310) (141) (169) Net income (loss) $ 52,549 $ (190,284) $ 242,833 Testing services revenue Testing services revenue increased by $39.7 million, or 19%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Spending on research and development for both experiments and studies may vary significantly by quarter depending on the timing of these various expenses. 61 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 (In thousands) Year Ended December 31, 2025 2024 Change Change % Revenue: Testing services revenue $ 274,495 $ 249,381 $ 25,114 10 % Product revenue 48,377 40,783 7,594 19 % Patient and digital solutions 56,933 43,621 13,312 31 % Total revenue 379,805 333,785 46,020 14 % Operating expenses: Cost of testing services 62,045 55,611 6,434 12 % Cost of product 22,953 23,381 (428) (2) % Cost of patient and digital solutions 38,241 30,704 7,537 25 % Research and development 71,429 72,510 (1,081) (1) % Sales and marketing 102,643 81,975 20,668 25 % General and administrative 107,565 125,139 (17,574) (14) % Litigation expense 5,710 (96,300) 102,010 (106) % Total operating expenses 410,586 293,020 117,566 40 % (Loss) income from operations (30,781) 40,765 (71,546) (176) % Other income: Interest income, net 9,174 11,765 (2,591) (22) % Other income, net 524 329 195 59 % Total other income 9,698 12,094 (2,396) (20) % (Loss) income before income taxes (21,083) 52,859 (73,942) (140) % Income tax expense (271) (310) 39 (12) % Net (loss) income $ (21,354) $ 52,549 $ (73,903) (141) % Testing services revenue Testing services revenue increased by $25.1 million, or 10%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
The difference in the effective tax rate for the year ended December 31, 2023 from the federal statutory tax rate is mainly due to the state income tax expense per the new research and development regulations, whereas in prior years we only recognized the deferred tax assets from foreign losses with the full valuation allowance. 61 Table of Contents Liquidity and Capital Resources We have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $626.2 million at December 31, 2024.
The effective tax rate for year ended December 31, 2025 differs from the federal statutory tax rate mainly due to the change in unrecognized tax benefits, non-deductible executive compensation and stock-based compensation. 63 Table of Contents Liquidity and Capital Resources We have incurred significant losses and negative cash flows from operations and had an accumulated deficit of $735.4 million at December 31, 2025.
Fourth Quarter Business Highlights • Sixth consecutive quarter of sequential testing services volume growth • AlloSure® Kidney surveillance testing continued to increase in the fourth quarter • Submitted first manuscript of the Kidney Outcomes Allograft Rejection (KOAR) study for publication • Published study in the journal Transplant International shows AlloSeq cfDNA highly accurate in detecting organ transplant rejection Full Year 2024 Financial Highlights • Revenue of $333.8 million, driven by testing services revenue growth of 19% year-over-year • Testing services revenue of $249.4 million, increased 19% year-over-year, and testing services volume of approximately 176,000, increased 6% year-over-year • Patient and digital solutions revenue of $43.6 million and product revenue of $40.8 million, representing year-over-year growth of 18% and 22%, respectively • GAAP net income of $52.5 million • Cash flow from operations of $38 million • Cash, cash equivalents, and marketable securities of $261 million, with no debt, as of December 31, 2024 Factors Affecting Our Performance The Number of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung Tests We Receive and Report The growth of our testing services is tied to the number of AlloSure Kidney, AlloMap Heart and AlloSure Heart, HeartCare and AlloSure Lung patient samples we receive and patient results we report.
Fourth Quarter Business Highlights • Revenue of $108 million, an increase of 25% year-over-year • Testing services revenue of $78 million, an increase of 23% year-over-year, and testing services volume of approximately 53,000, an increase of 17% year-over-year • Patient and digital solutions revenue of $16.8 million and product revenue of $13.3 million, representing year-over-year growth of 47% and 17%, respectively • Average revenue per test of approximately $1,480 including approximately $5 million in prior period revenue • Net loss of $4 million, compared to net income of $88 million for the fourth quarter of 2024 • Cash flow from operations of $21.4 million • Share repurchases of $12 million during the quarter of 773,000 shares at an average price of $15.79 per share Full Year 2025 Financial Highlights • Revenue of $380 million, an increase of 14% year-over-year • Testing services revenue of $275 million, an increase of 10% year-over-year, and testing services volume of approximately 200,000, an increase of 14% year-over-year • Patient and digital solutions revenue of $57 million and product revenue of $48 million, representing year-over-year growth of 31% and 19%, respectively • Net loss of $21 million • Cash flow from operations of $42 million • Cash, cash equivalents and marketable securities of approximately $200 million as of December 31, 2025 • Share repurchases of $88 million during the year of 5.8 million shares at an average price of $15.16 per share 60 Table of Contents Factors Affecting Our Performance The Number of AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung Tests We Receive and Report The growth of our testing services is tied to the number of AlloSure Kidney, AlloMap Heart and AlloSure Heart, HeartCare and AlloSure Lung patient samples we receive and patient results we report.
Net cash used in operating activities for the year ended December 31, 2023 was $18.4 million. Our net loss of $190.3 million was our primary use of cash in operating activities.
Net cash provided by operating activities for the year ended December 31, 2025 was $42.0 million. Net operating assets increased by $3.8 million.
Research and development Research and development expenses decreased by $9.5 million, or (12)%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in clinical trials of $6.5 million, a decrease in consulting and professional fees of $2.4 million and a decrease in software costs of $0.5 million.
The increase was primarily due to an increase in the cost of goods from our pharmacy business resulting from higher sales. Research and development Research and development expenses decreased by $1.1 million, or 1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Patient and digital solutions revenue Patient and digital solutions revenue increased by $6.5 million, or 18%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to revenue generated from HLA Data Systems, MediGO, Transplant Pharmacy and other core digital offerings.
Patient and digital solutions revenue Patient and digital solutions revenue increased by $13.3 million, or 31%, during the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily driven by higher pharmacy sales and growth in our digital solutions, particularly an expanded customer base from Ottr software.
Compensation expense for stock options issued to nonemployees is calculated using the Black-Scholes Model and is recorded over the service performance period using the straight-line attribution method. Options subject to vesting are required to be periodically re-measured over their service performance period, which is generally the same as the vesting period.
Options subject to vesting are required to be periodically remeasured over their service performance period, which is generally the same as the vesting period. The fair value of each restricted stock unit is calculated based upon the closing price of our common stock on the date of the grant.
General and administrative General and administrative expenses increased by $5.9 million, or 5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to an increase in stock-based compensation expense of $19.5 million, and an increase in personnel-related costs of $8.8 million, offset by a decrease in legal expenses of $18.5 million, a decrease in other expenses of $4.5 million.
The decrease was primarily due to certain cost reduction efforts offset by an increased sales of our commercial NGS-based kitted solutions. Cost of patient and digital solutions Cost of patient and digital solutions increased by $7.5 million, or 25%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
During the year ended December 31, 2024, there was a $0.5 million gain from a reduction in contingent consideration and an increase in other business expense of $0.3 million. These resulted in a decrease in other income, net, of $1.0 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
This increase was partially offset by an increase in the refunds reserve of $3.5 million, and a decrease of $7.8 million in collections during the year ended December 31, 2025, as compared to the year ended December 31, 2024, under ASC 606 related to specific tests performed in prior periods.
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Overview We are a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients and caregivers. We offer testing services, products, and patient and digital solutions along the pre- and post-transplant patient journey, and we are a leading provider of genomics-based information for transplant patients.
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Overview We are a precision medicine company dedicated to improving outcomes for transplant patients and advancing organ health. We deliver solutions designed to empower clinicians and improve patient outcomes. Our integrated solutions include non-invasive molecular testing for heart, kidney, and lung transplants; laboratory products; digital health technologies; and patient solutions that support care before and after transplant.
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We have initiated several clinical studies to generate data on our existing and planned future testing services. We have signed multiple biopharma research partnerships for AlloCell, a surveillance solution that monitors the level of engraftment and persistence of allogeneic cells for patients who have received cell therapy.
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CareDx is the leading provider of genomics-based information for transplant patients.
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Revenue increase is primarily driven by testing services volume growth of 6%, and improved average selling price driven by increased collections including collections related to tests performed in prior periods.
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We have initiated several clinical studies to generate data on our existing and planned future testing services. From time to time, we partner with pharma and biopharma companies to use our technology and tests, often in clinical trials, to identify or screen for patients that may be appropriate candidates for their products.
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The increase in the cost of patient and digital solutions is in line with the increase in revenue for patient and digital solutions and is primarily due to an increase in cost of goods from sales in the pharmacy business and our digital offerings.
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The increase was primarily driven by testing services volume growth of approximately 14% as compared to the year ended December 31, 2024.
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The increase in stock-based compensation expense was primarily due to accelerated vesting over a shortened service period for awards held by the former CEO and former General Counsel of $14.3 million.
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The decrease was primarily attributable to decreases of $4.7 million in clinical trial expenses, $2.0 million in consulting and licensing expense and $1.5 million in stock-based compensation expense, partially offset by increases of $5.5 million in personnel-related costs and $1.6 million in software-related expenses.
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Restructuring costs Restructuring costs decreased by $0.5 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to lesser headcount impacted by restructuring. Litigation expense Litigation expense relates to the patent infringement claims filed by Natera against us and alleged that our product, AlloSure, infringes Natera's U.S. Patent 11,111,544.
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Sales and marketing Sales and marketing expenses increased by $20.7 million, or 25%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
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The jury awarded Natera an amount of $96.3 million and we recorded the amount as litigation expense for the year ended December 31, 2023. In February 2025, the District Court ruled that the patents asserted against us are invalid. We reversed the $96.3 million of litigation expense in the year ended December 31, 2024.
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General and administrative General and administrative expenses decreased by $17.6 million, or 14%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
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Other income, net During the year ended December 31, 2023, the following events occurred: a $1.0 million gain from settlement of an obligation and a $1.1 million gain from the recovery of an impaired loan that was already written-off, offset by a decrease in unrealized investment loss of $0.3 million.
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The decrease was primarily attributable to decreases of $25.7 million in stock-based compensation expense and $2.4 million in legal and consulting expenses, partially offset by increases of $3.7 million in software-related costs, $2.9 million in personnel-related costs, $2.3 million in a one-time impairment charge related to an intangible asset and associated construction in progress, $1.0 million in equipment related expenses and $0.6 million in travel expenses.
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The effective tax rate for the twelve months ended December 31, 2024 differs from the federal statutory tax rate mainly due to the change in valuation allowance, windfall tax benefits from stock-based compensation, nondeductible executive compensation and tax credits. 60 Table of Contents For the year ended December 31, 2023, we recorded an income tax expense of $0.1 million on a loss before income taxes of $190.1 million.
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Litigation expense The change in litigation settlement expense was mainly due reversal of litigation expense in 2024 related to the favorable outcome of patent infringement claims filed by Natera against us where the District Court ruled that the patents asserted against us were invalid, which was partially offset by settlement of the Securities Class Action lawsuit during 2025.
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Cash used in operating activities was also due to an increase in accounts receivable of $16.0 million. Cash used in operating activities was partially offset by an increase in net 62 Table of Contents operating assets of $90.6 million including litigation expense of $96.3 million recorded as other liabilities related to the jury award in the Natera IP infringement matter.
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See Note 8, Commitments and Contingencies , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K under the caption “Litigation and Indemnification Obligations”, which is incorporated herein by reference.
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These proceeds were partially offset by the purchase of short-term marketable securities of $201.2 million, additions of capital expenditures of $8.3 million, payments for acquired intangibles of $0.9 million, purchase of corporate equity securities of $1.0 million and acquisition of business, net of cash acquired of $6.7 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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A portion of our operating expenses are incurred outside of the U.S. and are denominated in Swedish Krona, and the Euro, which are also subject to fluctuations due to changes in foreign currency exchange rates.
A portion of our operating expenses are incurred outside of the U.S. and are denominated in Swedish Krona, Australian Dollar and the Euro, which are also subject to fluctuations due to changes in foreign currency exchange rates.
However, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 100 basis point increase or decrease in interest rates during any of the periods presented would have an approximate impact of $1.1 million on our consolidated balance sheets.
However, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 100 basis point increase or decrease in interest rates during any of the periods presented would have an approximate impact of $2.0 million on our consolidated balance sheets.
We will continue to reassess our approach to managing our risk relating to fluctuations in foreign currency exchange rates. 67 Table of Contents
We will continue to reassess our approach to managing our risk relating to fluctuations in foreign currency exchange rates. 71 Table of Contents
An unfavorable 10% change in foreign currency exchange rates for our assets and liabilities denominated in foreign currencies at December 31, 2024, would have negatively impacted our consolidated balance sheets for the year ended December 31, 2024 by $0.1 million and our product revenue by $1.5 million.
An unfavorable 10% change in foreign currency exchange rates for our assets and liabilities denominated in foreign currencies at December 31, 2025, would have negatively impacted our consolidated balance sheets for the year ended December 31, 2025 by $0.2 million and would have negatively impacted our product and patient and digital solutions revenue by $1.9 million for the year ended December 31, 2025.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are exposed to market risks in the ordinary course of our business. We had cash and cash equivalents of $114.7 million at December 31, 2024, which consisted of bank deposits and money market funds.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are exposed to market risks in the ordinary course of our business. We had cash, cash equivalents and marketable securities of $201.4 million at December 31, 2025, which consisted of bank deposits, money market funds, corporate debt securities and U.S government securities.

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