CareDx Q4 Revenue Falls 20% on Medicare Billing Changes
Testing services revenue dropped 29%, overshadowing growth in digital solutions and product segments. Full-year results, however, topped revised guidance.
CareDx (NASDAQ: CDNA) reported a significant downturn in its fourth-quarter financial results, revealing a 20% year-over-year revenue decline as the company grapples with major changes in Medicare reimbursement policies.
The transplant-focused biotechnology firm announced preliminary fourth-quarter revenue of $65.6 million, a substantial drop from the $82.4 million recorded in the same period of the prior year. The decline was primarily driven by a sharp 29% contraction in its core Testing Services segment, which saw revenues fall to $46.7 million. According to the company's announcement, the shortfall was a direct result of the negative impact from recent Medicare Billing Article changes that have disrupted reimbursement for its flagship diagnostic tests.
This core operational challenge overshadowed areas of growth within the company. CareDx's Patient and Digital Solutions segment posted a 14% increase in revenue to $9.6 million, while its Product revenue grew 8% to $9.2 million. Despite the quarterly headwinds, the company's management highlighted its resilience in other metrics. Patient test results for its primary AlloSure and AlloMap offerings totaled approximately 39,900 for the quarter, and the company noted it was the fifth consecutive quarter where cash collections exceeded 100% of Testing Services revenue.
For the full year 2023, CareDx reported total revenue of $280.3 million, a 13% decrease from the $321.8 million generated in 2022. While a notable decline, the figure surpassed the upper end of the company's most recent financial guidance for the year, a point of emphasis for the firm as it navigates the complex market environment.
The company’s bottom line was heavily impacted by legal challenges. CareDx reported a net loss of $190.3 million for the full year, a figure that includes a substantial $96.3 million accrual related to damages from a jury decision in an alleged patent infringement case, which the company is seeking to appeal.
Financially, CareDx ended the year with a solid balance sheet, holding approximately $235.4 million in cash and marketable securities and carrying no debt. Its market capitalization stands at approximately $911 million.
Wall Street remains divided on the company's prospects amidst these challenges. Current analyst ratings are split, with four analysts recommending a 'Buy' and four maintaining a 'Hold' position on the stock. The consensus analyst price target sits at $23.00, suggesting potential upside from its current trading levels.
Looking ahead to 2024, CareDx stated it will focus on delivering high-value clinical and digital solutions, generating further evidence to support expanded payer coverage for its tests, and accelerating its path back to profitability.