Good day, ladies and gentlemen. Welcome to CareDx, Inc. Fourth Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Greg Chodaczek. Please go ahead. Good afternoon, and thank you for joining us today. Earlier today, CareDx released financial results for the quarter ending December 31st, 2022. The release is currently available on the company's website at www.CareDx.com. Reg Seeto, Chief Executive Officer, and Abhishek Jain, Chief Financial Officer, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of the Federal Securities Law, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation, are examination of historical operating trends, expectations regarding coverage decisions, pricing and enrollment matters, and our financial expectations and results are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list of descriptions of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, February 27, 2023. CareDx disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections or other forward-looking statements, whether because of new information, future events, or otherwise. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliations are the most directly comparable GAAP financial measure may be found in today's earnings release filed with the SEC. I will now turn the call over to Reg. Thanks, Greg. Good afternoon, everyone, thank you for joining us. Welcome to CareDx's fourth quarter and full year 2022 earnings conference call. During 2022, the company made significant progress towards our vision of being the leader in the transplant ecosystem while delivering on our mission of bringing innovation across the transplant patient journey. The focus of today's call will be on the execution and progress in three key areas. The first is the path to profitability as we share CareDx's differentiated financial profile versus our peers. The second is the focus on the three Cs: catalysts, collections, and coverage, where we hit an inflection point with collections during the fourth quarter of 2022. The third is building leadership in the transplant ecosystem, especially with the development of our digital ecosystem. Turning to the first topic on our financial profile. The economic environment during the past year, with high inflation and the threat of recession, has further emphasized the importance of companies to maintain a strong financial position. Given this, we're focused on retaining a robust balance sheet with a plan to achieve profitable adjusted EBITDA in the first half of 2023. The following support this commitment. First, the company announced an authorized share buyback program in December of 2022 of up to $50 million over two years, demonstrating the board of directors' and management's confidence in the business, cash position, and long-term growth opportunities. As of the end of 2022, we repurchased 0.6 million shares and have continued executing our program in early 2023. Secondly, we ended 2022 with $293 million in cash and cash equivalents and marketable securities on the balance sheet and have no debt. Our solid cash performance was driven by improved cash collections infrastructure that we invested in significantly during 2022, which led to record collections for testing services in Q4 at 110% of our testing service revenues. We also generated $7 million of positive cash from operations in Q4 of 2022. Thirdly, even with the share buyback, CareDx's strong balance sheet and improved cash collections allows CareDx the flexibility to deploy our capital without raising additional capital. Turning to the financial results. We delivered quarterly revenues of $82.4 million, representing a 4% year-over-year growth. For the full year 2022, CareDx recorded revenues of $321.8 million, representing a 9% year-over-year growth. Our testing services volume grew 19% year-over-year, which continued to outpace market growth of 4%. Our product revenues and patient and digital solution revenues showed meaningful growth year-over-year for the fourth quarter and full year 2022. Notably, in the fourth quarter, products and digital accounted for more than 20% of our total revenues, consistent with our strategy of growing business lines to scale. Importantly, excluding some elevated related milestones and clinical study startup costs in Q4, we have continued our trend of improved sequential adjusted EBITDA. As we move into 2023, we remain on track to deliver adjusted EBITDA profitability in the first half of 2023. As revenues continue to grow, we see further improvement opportunities in gross margins. We have multiple levers in our testing services as we drive to our long-term non-GAAP gross margin target of 75%+. Although not expected to have an impact in 2023, we have consolidated our products operations to improve product margins with a planned closure of the Fremantle site in the middle of 2024 and a planned reduction in the footprint of the Stockholm site. Turning to our key 2023 to 2024 focus drivers. CareDx's three catalysts, three Cs: catalysts, coverage, and collections. Each represents a pivotal opportunity for growth as part of our strategy. Starting with catalysts. We're excited by the potential addition of AlloMap Kidney, UroMap, and AiKidney. When launched, these best-in-class offerings will join the number on portfolio of post-transplant monitoring solutions, which include AlloMap Heart, which was introduced in 2005; AlloSure Kidney, which was introduced in 2017; AlloSure Heart, which was introduced in 2020; and AlloSure Lung, introduced in 2021. We have a long and successful and proven history of delivering transplant innovation. Moving on to AlloMap Kidney. This is currently under MolDX LCD review process. AlloMap is built on a proven FDA-cleared transplant gene expression platform and provides a quantified result that can be measured longitudinally. The infrastructure is already in place, and we're excited to bring this innovation to patients upon achieving approval from MolDX. Regarding UroMap, we're preparing the final stages for MolDX submission. As a reminder, UroMap is a gene signature in urine that assesses both the probable rejection and the likelihood of a BK virus nephropathy. With publications in New England Journal of Medicine, we have a strong clinical validation across multiple publications and have best-in-class data. Over the last few years, we've invested in artificial intelligence as a core part of the company's pipeline catalyst development in kidney and heart. As seen with the latest developments in AI in other industries, the use of AI will play a key role in transplant management. We plan to share more about AiKidney and AI COV throughout the year. Turning to our second C, coverage. Despite the lack of broad reimbursement coverage in recently launched tests, we continue to support transplant patients and the community with new product launches. Over the past years, we have built extensive reimbursement coverage expertise in diagnostics through our experience with AlloMap Heart and AlloSure Kidney. These serve as our gold standard for obtaining strong pay coverage, with a total coverage of greater 75% and greater than 70% respectively. This has taken time to achieve with AlloMap Heart and AlloSure Kidney, which were launched more than 15 and five years ago, respectively. Our newer products, including AlloSure Heart and AlloSure Lung, are only one and two years post-launch, respectively, and are thus relatively early in their coverage life cycle. It will take time to increase coverage, but we have a plan to repeat the success of AlloMap Heart and AlloSure Kidney. During the fourth quarter, the International Society for Heart and Lung Transplantation announced new guidelines which support the expanded use of CareDx's HeartCare solutions, AlloMap and now AlloSure, in routine monitoring of transplant patients. The previous guidelines were more than a decade old, this update is more consistent with what has evolved over the last decade with the shift away from invasive surveillance biopsies. These new guidelines recommend early use of AlloMap Heart starting at two months post-transplant. This should allow us to capture multiple months of reimbursement for which we currently have limited coverage from some commercial payers. We've initiated discussions with these payers regarding this guideline update. Additionally, new guidelines support remote use of gene expression profiling in donor recipient heart transplant surveillance, as in HeartCare. This inclusion in ISHLT guidelines should lead to increased reimbursement over time. On AlloSure Lung, we are working with MolDX to achieve a determination of coverage by Medicare. There is clear demand in the lung transplant community, and with one in four new patients starting AlloSure Lung in Q4, it is quickly becoming the standard of care for surveillance of these highly vulnerable patients. This potential improvement in coverage represents the single greatest opportunity for the company. For 2022, CareDx estimates non-reimbursed tests across our commercial portfolio represented greater than $180 million in potential revenue and hence EBITDA. Abhishek will cover this in more detail in his section. Now, turning to our third C, collections. As mentioned, we invested heavily in building our collections infrastructure during 2022 as we saw a shift in our pay mix to commercial, including Medicare Advantage. The necessary infrastructure has been built to address the increased number of prior authorizations and denials and appeals. In Q2 and Q3 of last year, we saw signs of improvements within our cash collections, and the fourth quarter offered a significant proof point to our strategy. For the fourth quarter, we achieved our highest-ever cash collections at 110% of revenues for testing services, representing an approximately 10% year-over-year increase and demonstrating strong operational progress on this key initiative. Collections will continue to be a significant focus for CareDx moving forward. With the historical catch-up with Medicaid Advantage, the improved process for future collections, and the ability to deal with new coverage through collections. We now continue to build on our vision of leadership in the transplant ecosystem. Not only has CareDx remained 100% focused on transplant, but the company's established leadership building blocks across the entire patient journey. Our leadership position is the cornerstone of our strategy as we deepen our moat, enabling the continuous monitoring of patients before and after transplant. We recently acquired HLA Data Systems, a digital lab platform which manages and connects over 20 HLA labs to EMR systems such as Epic and Cerner. This addition to our leading digital ecosystem expands our capabilities, allowing us to provide timely and accurate lab results to clinicians for transplant decision-making and patient care. This joins our leadership ecosystem. We are either number one or number two in that space. To date, we've already established the leading position in post-transplant patient care. With molecular marking, we have over 100,000 unique patients that have used AlloSure and/or AlloMap offerings. With medication discharge management, this is now at than 90+ transplant centers with MedActionPlan. With our transplant-focused app, we have over 65,000 downloads with AlloCare. Recently, we've built leadership in the transplant center, we're number one in quality analytics with over 45 centers within XynQAPI, we're number two with transplant EMRs with OTTR and TransChart. Now we're building leadership in the pre-transplant setting. We're number one in next-generation sequencing or NGS HLA with AlloSeq Tx in the United States. We're number two in dialysis patient referrals with over 70,000 patients referred through TxAccess, now we're proud to have added HLA Data Systems, which is number two in the space. We are the only company 100% focused on the transplant patient journey, which sets us apart as a patient-centric company. Now, before turning to 2023 guidance, we wanted to revisit transplant volume dynamics. COVID-19 has created an extended timeline for recovery. We believe we're still in the early stages. Q4 2022 marked the first quarter where volumes were slightly above the pandemic baseline of Q2 2021, with most of the recovery driven by heart and deceased donors in kidney. That said, transplant volumes in Q4 2022 only grew 2% sequentially. This downward sequential trend has continued into Q1 2023, with curren quarterly data for the first seven weeks showing a negative or -3% sequential decline, with decreases across all organs, including kidney, heart, and lung. We'd hoped the sequential trend increase would have continued. This is what happened so far in Q1 of this year. One of the key reasons behind this trend is that living donor kidney transplants remain below the pre-COVID levels. Staffing shortages continue in the transplant and hospital centers. We recognize that we're still early in the stages of transplant volume recovery, but we believe there is potential volumes to double in the next five to 10 years. Drivers behind this future volume growth include increased use of high-risk organs, increase in expanded use of organs through perfusion and improved transport, increased transplantation rates and post-transplant monitoring from the Advancing American Kidney Health Initiative, and finally, a rebound in living donors. Our testing service remains our core strength with leadership across kidney, heart, and lung, and the rate of adoption has been faster with each new organ that's been introduced. This core business has enabled us to build out across the transplant ecosystem and to be called the transplant company. This enables us to readily add services to transplant patients and to be considered the partner of choice. Moving to guidance. For the full year, we expect revenues of $328 million-$338 million. Note, this guide excludes any contribution from pipeline catalysts and excludes any contributions from any major coverage changes. Importantly, we do expect to see cash collections to grow above testing service revenues as we now have a catch-up in the collection process for revenues not previously captured through collections. Abhishek will cover this in more detail during this section. In closing, we're committed to maintaining a strong financial profile and remain on our path to adjusted EBITDA profitability. Our core testing service business continues to gain commercial market share and grew 5x above market for the full year. Our products and digital businesses are growing nicely and now represent approximately 20% of our business. We remain focused on the three Cs: catalyst, coverage, and collections. We continue to drive leadership throughout the patient journey and continue to unify our solutions to target better outcomes and better transplant care. Before I turn over the call to Abhishek to go over the financials, I want to thank all the employees of CareDx who worked tirelessly during 2022 to support patients and the board of transplant ecosystem. Thank you, Reg. We are pleased with the results from the fourth quarter and are excited about our leadership position across the transplant ecosystem and our ability to support patients and deliver life-saving services. I'll focus on the following in my prepared remarks: Q4 and 22 financial results, coverage, collections, and guidance for FY 23. I'll start with CareDx's differentiated financial profile versus our peers. We ended the quarter with $293 million in cash equivalent, and marketable securities. It is a $2 million increase as compared to the previous quarter, which included stock repurchases of $600K in the quarter. I would also like to highlight net cash provided by operating activities was $7 million in the quarter, driven by solid cash collections. We saw an inflection point in Q4 in collections, a result of our investments in improving processes and scaling infrastructure in this key area. In Q4, we had our highest-ever cash collections quarter, collecting 110% of our testing services revenue. This higher collection is particularly important as we recognize revenues for the present quarter based on the historical collections per test. Therefore, revenue for the fourth quarter declined by 5% year-over-year to $65.4 million and was up 1% as compared to last quarter. For the full 2022, testing services revenues were $263.8 million, which grew 2% year-over-year. Notably, our testing volumes grew by 14% year-over-year and 2% sequentially to approximately 47,700 tests in Q4. For the year, we provided approximately 182,000 tests, up 19% year-over-year. Importantly, our volume growth at 19% significantly outpaced the transplant volume market growth of 4%. Let me now provide some color on the drivers for the differences in year-over-year volume growth and year-over-year revenue growth for testing services. Firstly, the primary driver of this lower revenue growth is our payer mix. Let me explain this. Our ASP on paid tests has not changed since the start of 2021 at approximately $2,500. As a reminder, since last quarter, we started to share this new metric to highlight that there's no price degradation for our test. However, what has changed since the start of 2021 is the percentage of tests that are being reimbursed. This increase in non-reimbursed tests has been a result of our commercial strategy of driving innovation with the launch of AlloSure Heart and AlloSure Lung, and expanding in community nephrology to gain further market share. This commercial strategy resulted in increasing our commercial mix to 68% in Q4 this year, as compared to 62% in the same quarter last year. As Reg alluded in his remarks earlier, we are relatively early in the coverage life cycle for AlloSure Lung and AlloSure Heart, resulting in lower number of paid tests. This change in paid mix explains 2/3 of the difference in our revenue growth and volume growth. This is why we focus on our first C, coverage. As we build coverage in these areas, it provides a significant opportunity for future growth and profitability. Second point is the shift from Medicare to Medicare Advantage, which negatively impacted revenue growth by low single digits. As discussed in our prior calls, we have seen a shift of patients from Medicare to Medicare Advantage. To provide further clarity, we are sharing a new metric of the potential opportunity if we were to get paid on Medicare Advantage tests at the same rate as other reimbursed tests. This opportunity represents approximately $20 million in incremental cash revenue for FY 2022 alone. This is why we focused on our second C, collections. As the collections process and infrastructure continues to improve, we expect to be able to collect much of this cash and revenue opportunity. We'll share this metric on an annual basis. Third point is Medicare sequestration impact in 2022 that was reintroduced in Q2 last year and will have a marginal impact on the growth rate in the first half of 2023. Turning to non-testing services business. In Q4, product revenues increased 11% year-over-year to $8.6 million, while increasing 19% as compared to last quarter, and digital and patient solutions revenue increased 190% year-over-year to $8.4 million, driven primarily by our acquisition of The Transplant Pharmacy last year and up 13% as compared to last quarter. For the full year 2022, product revenue of $29.3 million grew 9% year-over-year, and our digital and patient solutions revenue grew by 180% to $28.8 million. Turning to gross margins. GAAP gross margin for the fourth quarter 2022 was 64% as compared to 66% in the fourth quarter of 2021. The non-GAAP gross margin for the quarter was 67%, same as last quarter and as compared to 68% in the fourth quarter of 2021. GAAP gross margin for the full year 2022 was 65% as compared to 67% in 2021. The non-GAAP gross margin for the full year 2022 was 68% as compared to 70% in 2021. The change in our GAAP and non-GAAP gross margin year-over-year was primarily driven by lower gross margin profile of our transplant pharmacy business impacting overall mix. We continue to maintain healthy GAAP gross margin for our testing services, and it remained unchanged at 73% in 2022 and 2021 respectively. Non-GAAP gross margin for our testing services for 2022 was at 74%, similar to 2021, despite strong test volume growth in areas where we have lower coverage. Our lab operations and supply chain teams drove efficiencies in multiple areas to absorb the cost associated with these incremental tests. We are pleased with the durability of our gross margin profile for our testing services business, despite the investments that we are making in providing tests where we do not yet have broad coverage. It provides us a significant opportunity for the future. GAAP gross margin for our products business was 40% in 2022 as compared to 29% in 2021. The non-GAAP products gross margin improved by 10 percentage points year-over-year for the year 2022 at 49% as compared to 39% in FY 2021. As mentioned, this stays an area of focus for products business with further plans to consolidate our manufacturing sites to drive efficiencies and improve margins. GAAP gross margin for our digital and patient solutions business was 23% in 2022 as compared to 30% in 2021. The non-GAAP digital and patient solutions gross margin was 31% in 2022 as compared to 44% last year. As discussed earlier, this change in non-GAAP gross margin year-over-year was primarily driven by our acquisition of The Transplant Pharmacy business. Non-GAAP operating expenses for the fourth quarter were $60.4 million, up about $3.4 million sequentially from Q3 2022. The increase in our non-GAAP operating expenses was mostly driven by R&D as we paid for milestone payments and elevated start-up costs related to clinical studies in Q4. Increase in our SG&A expenses were driven by higher collection costs as we ramped up our efforts in this area. For the fourth quarter of 2022, we recorded negative adjusted EBITDA of $3.7 million compared to negative adjusted EBITDA of $2.5 million in the previous quarter. Excluding Q4 specific elevated R&D expenses of approximately $2 million, we would have continued to make progress on our goal of achieving positive adjusted EBITDA. We remain on track to deliver adjusted EBITDA profitability in the first half of 2023. Moving to regulatory updates. First, we are pleased to report that a previously disclosed inquiry from a state regulatory agency in Q3 2021 has now been closed with no further information or action required. The agency recently advised the company that it has completed its review of our response and the information we provided to them. Second, as you will see in our recently filed 10-K, we have identified material weaknesses in our internal controls over financial reporting, primarily related to general information technology controls. We have not identified any misstatements in the financial statements as a result of these deficiencies. We have taken a number of actions to begin remediation, we will consider the material weaknesses to be remediated if and when the applicable controls operate for a sufficient period of time, and we conclude through testing that the controls are operating effectively. Turning to guidance. For the full year 2023, we expect revenues to be in the range of $328 million-$338 million. Our goal in setting the guidance this way is to set a baseline for the year while awaiting for the positive inflections from the pipeline catalyst and major payer coverage. The guidance assumes no contribution from pipeline catalyst, assumes no major payer coverage decisions, assumes no ASP price degradation for reimbursed tests consistent with what we have seen since the start of 2021. The guidance assumes continued shift to commercial payers, resulting in low double-digit declines in overall ASP or close to approximately 10%, which will be an improvement as compared to mid-teen declines last year. This improvement is driven by improved collection efforts, which we expect to continue. Assumes patient testing volume growth in the low teens. It should be noted that market growth is still in early stages of recovery post-COVID-19 and have been uncertain as seen in the current Q1 2023 quarter-to-date data that shows sequential declines in transplant volumes across kidney, heart, and lung. To summarize, we have an excellent balance sheet with $293 million in cash equivalents, and marketable securities, and no debt. We hit an inflection point with collections and collected 110% of our Q4 testing services revenue. We generated $7 million of net cash from operating activities in Q4, reduced AR as compared to last quarter, and improved DSOs. We continued to gain commercial market share in testing services with volume growth of 19% year-over-year in 2022, significantly outpacing the market growth of 4%. We maintained our gross margin for testing services year-over-year, despite a large increase in our tests that are not reimbursed and improved gross margin for our products business. We continue to move towards our goal of achieving positive adjusted EBITDA in the first half of 2023. With that, I'll open the call for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Andrew Cooper with Raymond James. Please proceed. Thanks for the time. Excuse me. Maybe just first, I want to talk about gross margins a little bit. I think it's been really impressive over the course of the last really two years that you've been able to hold those testing services margins where you have. I guess thinking about the ASP dynamics you just laid out that don't assume any improvements from some of the catalysts, et cetera, you know, how much can you continue to absorb that, call it low double-digit price decrease without having a bigger impact on the testing services gross margin? Because it's been really impressive what you've done so far. Just wanna get a sense for, you know, what efficiencies are left to find. Yeah, Andrew. Firstly, thanks for the, you know, the positive feedback there. The team has worked extremely hard with the efficiencies around the gross margins. There are multiple levers, you know, across that in the testing service. You know, we look at automation, where there's increased volume, where there's payer reimbursement, and you know, where we've had multimodality. There's a series of levers that we continue to add on, and it's something that's built into our plan. I think, you know, as we look at also the, you know, the ASP dynamics, there has been improvement through the collections and, you know, part of the plan is also work, you know, obviously on our coverage, now overall as part of this plan. I'll let Abhishek provide any additional commentary. Yeah, sure. Reg, thanks for adding that color there. Andrew, in my mind, there are so many levers in our Cox bucket, right? In the lab, you can automate a lot of pieces of stuff. There are pieces in our shipping and the freight charges that there are opportunities there. Of course, I'm so proud of the team there, both on the lab operation side and on the supply chain side, the way they will engage with the vendors to negotiate and make sure that we are not impacted by the inflationary pressures that we are seeing in the market. I would say a lot of things that the team has done in the past, but how much can they really absorb going forward? I'm really hopeful that they will continue to proceed the way they have done it in the past and will continue to find the efficiencies going forward as well. One other thing I'll say is that if you look at gross margins, it's not just with the testing services as noted during the call. I mean, with the products business, we're actually looking at improving the gross margins there, as we've shared with some of the site consolidation we're doing across the organization. You know, as a company, particularly in this environment, we do think, you know, gross margins is important. It's not just in testing services where we've had that established, but also now looking at the products business and taking some efficiency opportunities there as well. Okay, great. Maybe just one more kinda combo question, still kinda linked to the P&L. I guess, one, can you give us a sense for in that ASP that you're including in the guide, how much benefit from some of the accruals of that 110% you just collected in the fourth quarter should we start to see sort of flow through the year and maybe the pacing of that? Secondly, just a little bit more color on some of the R&D spend in Q4 that you're calling out as one time. Just what exactly it is and why it's gonna fall off in Q1 and beyond as well would be great. I'll let others jump in. Sure. There are two pieces of your question, Andrew. The first one around the collection improvements and how that is going to help us bridge the gap between the headwind that we see on the paid mix and, of course, the benefit of the volume. The way I've guided this time, our ASP was mid-teens decline last year, but this time we are assuming a low double digit or probably at somewhere around 10% decline. The 5% is what I'm assuming based on the improved collection efforts, right? That is basically what I'm baking in throughout the year as we move along. As our collections of 110% that we've seen in the quarter, last quarter, if we continue to collect more, Of course this is going to help us going forward as a positive. On your second part of the question around the R&D. The R&D expenses, there were a couple of things going on this quarter. The first one was the milestone payment. Of course, we had these agreements with some of the partners in the past where we basically pay them while achieving certain milestones. One of those contracts basically required us to pay for the milestone, and that's where that payment came in. That was a one-time one. The second one, of course, is the clinical study payments. As you would know that the start of cost would always stay a little bit of more bumpy. We paid some start of costs in Q4 that basically increased the R&D spend. Yeah. One thing quickly, and just to lay out the expectations as well for some of the subsequent quarters for this year at least. That metric of looking at, you know, cash collections versus testing service revenues is something that we, you know, anticipate to keep on sharing in a positive way as well. I think that should be just to set the cadence as well, but thank you again for the questions. Thanks. I'll jump back in the queue. Our next question is from Matthew Sykes with Goldman Sachs. Please proceed. Hi, good afternoon. Thanks for taking my questions. Maybe my first one. You had mentioned, Reg, that post the ISHLT guidelines that you had further conversations with payers. Would love to know kind of what the feedback is from those conversations in terms of are these guidelines what they're waiting for, and do you think you can achieve some momentum from that you're obviously not baking to your guide, but that we could see in 2023 from a coverage standpoint? Yeah. No, absolutely, Matt. No, we were thrilled to get the ISHLT guidelines and what was shared at the end of last year as one of the areas we thought would be important for the organization, particularly as we look at our pay coverage. I think I'd break it under twofold. The first is on AlloMap. I think firstly, AlloMap is our FDA-paid test gene expression profiling, sort of, published in New England. You know, what was clear to us in the guidelines is there should be earlier coverage, starting at month two. There are some commercial payers today that don't cover us that early. This has led us to actually initiate several discussions already with some national and regional payers already this quarter to start those discussions. It has been firstly receptivity to have those discussions. Secondly, to allow us to present the information and then allow us to, you know, present some further, you know, rationale behind that earlier start, particularly because it's given in the guidelines and named specifically. I think it's an ongoing process, but one we're particularly pleased with. The second is, if you look at, you know, heart care itself, this is an area which has now allowed us to actually trigger some of those discussions. As a reminder, previously we weren't necessarily getting those discussions on a ad hoc basis or even a routine basis with AlloSure Heart. Now there's guidelines coming through, particularly with the recommended testing and also looking at some of the settings such as during COVID, has now allowed us to initiate those ad hoc discussions that is off cycle and allow those to take place as well. That's how I'd bifurcate it. I think the first one is probably, you know, more readily sort of on a cadence perspective to capture. I think the other one is, you know, based on now initiating those discussions. Certainly from accounting perspective, happy to have, you know, had that come through. Got it. Thanks for that, Reg. Abhishek Jain, just a little more details on the additional disclosure in the 10-K on the material weaknesses. Is there sort of a timeline for remediation that we should be thinking about? Is there gonna be any additional costs incurred as a result of maybe further investment in technology stack or other types of costs that would be involved in the remediation efforts? Yes, Matt. Basically recently identified this and then It does not have any impact on the financial statements. I just wanted to call that out very specifically here. The second piece is that you need to actually remediate these weaknesses over a period of time, and then you need to test and prove it out before you can actually fully call it out remediated. It will take a few quarters before we are able to kind of fully remediate and then also disclose that phase. That's the first part. The second part to your point is that I think we as a company has grown quite rapidly in the last few years, and then we are trying to catch up on our infrastructure in some of our infrastructural areas. This is a piece where we will be making some investments, but we are already having those things in our plan. Got it. how- Thank you. Yeah. Our next question is from Mason Carrico with Stephens. Please proceed. Hey, guys. Maybe a couple here on the adjusted EBITDA goal. Sorry if I missed this, do you anticipate maintaining positive adjusted EBITDA going forward once you achieve that milestone in the first half? Yeah, I'll take that question. Yes, absolutely. That is what the goal is, Mason. I'm hoping that we will be using our operating leverage after the Q2 to be able to kind of stay positive. At the same time, I just want to also make a mention that we will be evaluating our investment opportunities as they come up in the second half and going forward, and we will let you guys know if something were to happen that way. Okay, got it. Then two other quick ones here. One, I guess if we were to, you know, take a step back and say, look high level, what do you view, I guess, is the biggest risk to either not being able to achieve that positive adjusted EBITDA in the first half or maybe it flipping back negative? What's the biggest risk there? Then the second part of the question is what are you expecting stock comp to be in the upcoming year? On the adjusted EBITDA, I think, the biggest risk that I foresee is around the market volume growth. If something were to go wrong there, that probably is the only thing that I can think of. We are trying to do as a company, a lot of stuff to manage our expenses and stay prudent there. That is the risk that I foresee to hit our goal there. The second question, second part of your question was around... What was the second question, Mason? Can you say that one more time, please? stock comp, how we should be thinking about stock comp in the upcoming year? Yeah, you know, I would basically assume a very similar trajectory of the stock comp going forward as well. I wouldn't be thinking of too many changes there. Got it. Thanks, guys. Our next question is from Alexander Nowak with Craig-Hallum Capital Group. Please proceed. Okay, great. Good afternoon, everyone. Just first of all, how much revenue does the HLA Data Systems add, that acquisition? How much does that add in 2023? Not material, Alex. I wouldn't call it out as one of the reconciling items to the guidance. Okay. I just wanna understand the testing volume growth that you're expecting in 2023. 2%-5% top line growth. Digital products are growing, call it mid-teen. That's, you know, that's gonna push the testing piece down a little bit. The market's indicating down to start the year on the testing volume side. Do you expect, I guess, at the end of the day, testing volumes to decline in 2023? How do we think about that growth in that business when you strip out all the ASP dynamics? Yeah. I still feel there will be a positive growth because, when I build the guide, I'm looking at mid-teens volume growth, right? Yes, of course, the start of the quarter has been relatively slow, but I expect that the market growth will pick up, and at least it will play out very similar to how it has played out last year. That's the first part. The second part is that when I talk about the paid mix change, our ASPs are going to be better as compared to how it fared last year by about five percentage points. The mid-single digit is what I'm calling because of our collection efforts. The delta between those two will basically provide us the increase in the testing, services revenue growth. That's how I see it. Okay, that is helpful. Kind of a two-part question here, kind of on the regulatory side. Just any update from the MolDX CAC meeting? Any discussions with Medicare, KOLs? When should we expect a conclusion there? The second part is the inquiry that was settled, was that with the DOJ or the SEC inquiry, or was that a state inquiry? If it's just the state, what's the status of the DOJ, SEC, other state inquiries? Thanks. Yeah, I think with, you know, the recent CAC meetings. These are things that are initiated by, for regular review. I think, you know, there hasn't been any, you know, recent or further updates from that. I think as we've talked in the past, like in terms of benchmarks, if something was to happen, it's typically around a 15-month plus sort of, you know, timeline. This includes a, you know, period of public, you know, comments as well as part of that. I think, you know, we've received, you know, extensive support across all organs from KOLs that we've talked about. You know, the, you know, the different biomarkers we've brought to space and what they represent in terms of clinical practice across kidney, heart, and lungs. You know, for us, it's, even as recent as, you know, this weekend at CI, you know, the importance of what we do as an organization in bringing this breakthrough innovation is just something that, you know, all KOLs to a T have spoken about. We really feel thrilled about that level of support. It's important for us. Again, you know, we have this obligation as an innovator in the space to continue to drive that innovation, and it's gratifying to see that consistency, come across from KOLs. There's also, I think the timing of that meeting had just preceded the guidelines as well, which had come out from ISHLT. It's always good to get that reinforcement from an international organization. Sure. Let me take the second part of your question on the state regulatory update that I provided this time around. It wasn't the DOJ, SEC matter. This was basically a state regulatory agency. That's the first part. The second part of your question was if there is any other update on that whole CID DOJ investigation, and the answer is that there are no material updates to report on that particular matter. We continue to cooperate with the requests that we are receiving from these guys, and of course, there hasn't been any questions raised around the safety efficacy of our products. The other inquiry that happened late 2022, that was related to the DOJ piece, just so I'm clear. No, this was a completely different inquiry. I think we should have some. Yeah. Yeah. Any comment, I guess, around, I get if it's a separate one, then any comment around that just to make sure we're all clear. I didn't quite get the question, but I think in October of 2021, we disclosed what was in the filings at the time point, and this is one that's been, you know, finished and completed from the feedback we received. Yeah. Yeah. Okay. It just looks like late 2022, it looks like in the 10-Q there's another inquiry that came, but we can talk about it later, I guess. Late 2022, there was another state inquiry that we have received. This is basically a recent one, and it's an isolated case, state from a single vendor in a state. That's what we have disclosed. There's a single vendor in a state that we have disclosed. Okay. Understood. Thank you. Yeah. Our next question is from Mark Massaro with BTIG. Please proceed. Hey, guys. Thank you for taking the questions. Just kind of parsing through the guidance. You know, I appreciate all the color. Low teens volume growth in test services, low double-digit decline in ASPs. That kinda nets me out at around 3% or so, call it low to mid-single on testing services revenue. For the full year, you know, you're guiding 2%-5%. When I look at last year, and I add up the buckets for products, digital and products, I think you grew about 57% last year. It represented 18%-20% of revenue. Really strong growth in products last year, but I'm not seeing a really strong outlook for products in 2023. Can you just give me a sense if there were any one-timers in 2022 that aren't likely to repeat, just to give us a sense for what, you know, the different scenarios are with respect to the range? Sure, Mark. I think the one piece on the non-testing services side that I've been calling out is around the distant patient solutions, because that business grew, like, 180% year-over-year, and that was primarily because of our acquisition of The Transplant Pharmacy. That's not gonna happen again in 2023. That is the bit that probably you need to bake in. That's super helpful. I guess, can you give us a sense for what the underlying growth of The Transplant Pharmacy is? In sort of transplant pharmacy, let me provide you color on the testing services, and let me call the other two businesses as the non-testing services. I'm expecting the testing services revenue growth to be very similar to what you called out from the low single digit% to the mid single digit%, and our non-testing services would be high single digit%, very similar to what you have seen in the last year. Yeah. I think the question that Mark was asking, what is The Transplant Pharmacy? The Transplant Pharmacy is essentially a white glove service, you know, business that we have, and it essentially, you know, serves transplant centers and patients. It's really built a reputation on, you know, this white glove service and focused on, you know, just on transplant patients. Pretty similar with our mission and our vision to lead in the transplant ecosystem. That's one area that has grown or had grown through that through that acquisition last year. Okay, great. Reg, maybe just to clarify, did I hear you say that the underlying volume growth in transplant is call it around negative 3% here in Q1? You know, I know that you've called out a number of drivers to the challenging end market, things like staffing shortages, you know, living donor transplant changes. You know, I think a lot of the items that you call as potential, you know, benefits to the volumes, many of those appear to be kind of multi-year drivers over time. I'm just curious if you see any, you know, short-term potential changes with respect to staffing shortages, for instance, as maybe one, but what are some things that you guys can actively do to manage this in the near term? You know, it's really interesting, this whole market dynamic. I think, you know, we, as you can see in the prepared slides as part of the webcast, I mean, you know, you'd seen this increase in Q2 of, you know, last year of, you know, going to 6% then 4% then 2% sequential. Year to date on 7 quarters, 7 weeks of weekly data, it's at 3%- across the total, but each organ group has had a decline, so that hasn't gone the way that we'd expected. That said, I do think the drivers and all the intrinsics are there. You know, I meet with transplant centers every week, Mark, I ask them the same question to see what's happening as well, from their viewpoint. There's been various answers, but some of the consistent ones are definitely the, you know, the living donor has not rebounded. You know, staffing shortages means that they can't always do procedures as they'd like to. This is something that's seen across all, you know, groups as well. We have seen an increase in deceased donors, though, for example, on the kidney side. I think, you know, at the end of the day, some of the, some of the different areas that you described, they will happen faster than later in terms of the drivers. If you talk about, you know, the transportation or perfusion devices, for example, that expands the pool of patients. For example, in heart, you know, historically it's been what you call, you know, DBD or brain dead, donors, but now you've expanded the pool by adding deceased donors, which historically hadn't been there. Even recently as, you know, at CEoT on the weekend, I talked to one center which has, you know, increased the number of, you know, transplants they plan to do on the, on the heart side, for example, by you know, using this alternative approach of, using deceased organs. I do think that there'll be changes that you'll start seeing, you know, you know, hopefully sooner rather than later. I do think living donors, however, is the biggest data, the biggest driver of delta that one could, you know, achieve, you know, during that time period. I do think, you know, the government initiatives they'll put in actually enforce, you know, that donation transplantation rate and really forces the whole ecosystem to play together. I do think those unifying factors will play a role. You're right, it'll be a different cadence. Probably the, you know, the deceased expanding the donor pool is the first one. Over time, I think some of those government initiatives will kick in quite nicely. Excellent. If I can sneak in one final, two-parter. How are you guys doing with respect to RemoTraC? I know that used to hover around 40% of your volumes. You know, finally, you know, you guys have $293 million of cash. Historically, you've done a great job of bolting on tuck-ins, sort of differentiating the product suite across your portfolio. You recently acquired HLA Data Systems. How should we think about, you know... You're about to achieve adjusted EBITDA positivity. How should we think about M&A funnel, what sorts of things are you potentially looking at? No, Mark, it's a great question. I mean, historically, we've always done, you know, anywhere from 1-3 acquisitions a year. That's, you know, these are small bolt-ons consistent with the HLA Data Systems. We have a unique ability to find, you know, smaller opportunities that really can add either to the moat or add, you know, such in the case of Transplant Pharmacy to some of the top line. We feel good about these opportunities 'cause every one of them, people have come to us. It hasn't been one where we've had to solicit out. I mean, we get so many inbounds, but it's really finding those that can drive leadership marks. Those would be one two. It doesn't really make sense to get something where it's still nascent or one where it's not gonna be in a leadership position. That's probably one of the key things to note. I think always one is to look across, you know, the board for opportunities, but also which makes sense for us as an organization. I mean, we're committed to the transplant space, so I think, you know, there's a defined number of opportunities. Again, we get these on a very routine basis and, you know, we assess them with a lot of rigor. Again, you know, excited by the year ahead. Great to be in this financial position and able to deploy our capital in the appropriate way as we have done historically. Okay. Any update on RemoTraC or mobile phlebotomy? No, nothing significant change, there, Mark. Okay, guys. Thanks for all the questions. Thank you again. Our next question is from Yi Chen with H.C. Wainwright. Please proceed. Thank you for taking my question. My first question is there additional room for... Hello? Is there additional room for cash collection improvements? Yeah. As we, as we mentioned, this is an area that we'll start sharing, you know, quality paces each end. I think what we've signaled is that we expect, you know, the cash collections to exceed the testing services, you know, revenues as we now play a bit of catch up with, you know, for example, some of the delayed processes and collections of passes as Medicare Advantage and also as we also add more commercial, you know, pay coverage on a regional basis. So, there's certainly the opportunity. We'll, we'll compare this year-over-year for you and provide that metric. Yeah. Okay. When do you expect to generate meaningful revenue from cell therapy monitoring? It's an excellent question. I mean, I think for us, we've always signaled that, you know, our cell therapy franchise, whether AlloCell or talking about some of the other, AlloHome and some other offerings we have, is something probably more on the, you know, greater than the five-year horizon. The reason we say that is because it's really predicated on having the actual cell therapies make it to market. As of date in the U.S., none of the allogeneic cell therapies have made it to market. There's a lot of activity, preclinical phase Is, phase IIs, unfortunately, no one's got over the line yet. We look forward to those in the future. Our goal now is to be very early in that process to develop those research and clinical partnerships so that we can be there once, you know, this, transformative type of opportunity makes it to, you know, critical scale and mass. Similar to what we've done with our, approach in the solid organ space. Got it. Lastly, maybe you touched upon this before. What evidence have you observed that make you feel confident the number of living donors will actually rebound in the coming quarters or years? Yeah, I think living donors is such a huge area of an opportunity, and I think I'll share a real example for you, Yi Chen. I think you know how we think of, you know, behavior in the community and, you know, one of our team members actually, his wife was actually needing a transplant and actually put out a post to get, you know, an organ in the altruistic sense. You know, during that week, you know, there were probably, you know, more than 12 plus, you know, altruistic donors that stepped up and offered to help out during that time. I do think there is that opportunity. I do think addressing staffing shortages, I do think making sure there's theater time. I think now seeing the, you know, before, you know, last quarter go away will be important. I do think, you know, just knowing at least on the altruistic side, not including directed donor, that there's always, you know, an incredible opportunity of human behavior that we're seeing where people are willing to, you know, help out in this, you know, critical organ space, and we've seen it, you know, real time in our organization. Okay. Thank you. Thank you. We have reached the end of our question and answer-. You know, everyone looks at CareDx to really play that role, and you know, it's a role that we've gladly taken as to be leader in this space. I think if you think of anything involving transplant, then you know we'll be involved in it. I wanna thank again, you know, the CareDx, you know, team for, you know, working so hard during 2022. I also wanna thank you to the analysts for the great questions and also to any shareholders or investors who may be listening in and hopefully, you know, supporting this space. It's such a critical one, and it's a great one to be in. Thank you again, and have a wonderful evening or afternoon, depending where you are. Thank you. Thank you. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.