What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-28 · 377 added, 523 removed, 951 unchanged (49% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of CareDx, Inc.

To the stockholders and the Board of Directors of CareDx, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CareDx, Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2024, expressed an adverse opinion on the Company's internal control over financial reporting because of material weaknesses.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2025, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

Basis for Opinion

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Testing Services Revenue (non-Medicare) — Refer to Note 2 to the consolidated financial statements

Critical Audit Matter Description

The Company’s testing services revenue is recognized when results of the test are provided to the healthcare provider, at which time the Company generally bills for its services.

The Company estimates revenue for non-Medicare payers using transaction prices determined for each financial class of payers using history of reimbursements.

The transaction price estimate includes analysis of an average reimbursement per test and a percentage of tests reimbursed.

This estimate requires significant judgement.

The Company’s testing services revenue is recognized when the results of the test are provided to the healthcare provider, at which time the Company generally bills for its services.

The Company estimates revenue for non-Medicare payers using transaction prices determined for each financial class of payers using their history of reimbursements.

The transaction price estimate includes an analysis of the average reimbursement per test and a percentage of tests reimbursed.

This estimate requires significant judgment.

The Company monitors revenue estimates at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.

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The Company also considers whether historical collections per test are indicative of future collections or if there are any current or expected developments or changes that could affect reimbursement rates.

We identified management’s estimation of the transaction price for transaction services billed to non-Medicare payers as a critical audit matter due to the significant judgments required by management to estimate how coverage practices and policies of payers might affect amounts received.

This required a high degree of auditor judgment and an increased extent of effort, including the involvement of more experienced engagement team members, when performing audit procedures to evaluate the estimated transaction prices.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimation of transaction prices for testing services revenue, included the following, among others:

Our audit procedures related to management’s estimation of transaction prices for testing services revenue (non-Medicare) included the following, among others:

• We tested the effectiveness of controls over the Company’s testing services revenue, including those over the estimation of transaction prices.

• We tested the assumptions used by management to estimate transaction prices by:

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◦ We tested the accuracy and completeness of the lab billing report by tracing to source documents, including the test requisition form, fax support, proof of insurance, and payment support.

Testing Services Revenue (Medicare)— Refer to Note 2 to the consolidated financial statements

Critical Audit Matter Description

Revenue recognized for tests billed to Medicare is based on the agreed current reimbursement rate per test adjusted for historical collection trends where applicable.

During 2023, new billing articles (the Billing Articles) issued by Palmetto MolDX, or MolDX, impacted Medicare coverage for certain of the Company’s tests, including AlloSure Kidney, AlloSure Heart and AlloMap Heart, and required the Company to implement new processes to address the requirements related to the Medicare claim submissions for reimbursement.

We identified management’s determination of whether the reimbursement claim submission for an AlloSure Kidney, AlloSure Heart, or AlloMap Heart test for which Medicare is the payer complied with the requirements of the Billing Articles, as a critical audit matter because of the challenging judgments required to determine if a reimbursement claim submission complied with the requirements of the Billing Articles.

This required a high degree of auditor judgment and increased extent of effort when performing audit procedures to determine if the reimbursement claim submission for the test met the new requirements of the Billing Articles.

How the Critical Audit Matter Was Addressed in the Audit

• We read the Billing Articles regarding the requirements for Medicare reimbursement for each type of testing service.

• We made inquiries of members of the Company’s accounting department, billing department, and legal department regarding the impact of the Billing Articles and the effects on revenue recognition.

• We tested the Company’s revised billing practices in response to the Billing Articles and evaluation of whether collection of consideration was probable when Medicare was identified as the payer, by making selections and agreeing required test information to source documents and tracing to cash receipts received from Medicare through December 31, 2023.

Impact on Audit of Financial Statements Because of Material Weaknesses in Internal Control Over Reporting - Refer to Management’s Annual Report on Internal Control Over Financial Reporting

Critical Audit Matter Description

As discussed in Management’s Annual Report on Internal Control Over Financial Reporting, the Company identified material weaknesses across multiple components of the Internal Control – Integrated Framework (2013) issued by COSO.

Because these material weaknesses impact the Company’s controls over information technology (IT) systems and business processes, affect substantially all financial statement account balances and disclosures, and required us to increase the extent of our audit effort, including the need to modify the nature and extent of audit evidence obtained, we have identified the impact to our audit procedures as a result of the material weaknesses as a critical audit matter.

How the Critical Audit Matter Was Addressed in the Audit

As a result of the material weaknesses, in performing our audit procedures we lowered the threshold for investigating differences between recorded amounts and independent expectations developed by us that we would have otherwise used, and increased the number of selections we would have otherwise made if the Company’s controls were designed and operating

In addition, we performed additional procedures to test the completeness and accuracy of the information included in all system reports or information generated by the Company’s IT systems which were utilized for audit evidence.

/s/ Deloitte & Touche LLP

San Jose, California

San Francisco, California

February 27, 2025

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of CareDx, Inc.

To the stockholders and the Board of Directors of CareDx, Inc.

Opinion on Internal Control over Financial Reporting

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and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 27, 2025, expressed an unqualified opinion on those financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weaknesses

Material Weakness

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 the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management's assessment:

General Information Technology Controls (GITCs)

The Company did not design and maintain effective general information technology controls (“GITCs”) for information systems and applications that are relevant to the preparation of the consolidated financial statements.

Specifically, the Company did not design and maintain:

(i) sufficient user access controls to ensure appropriate segregation of duties, logical access controls to prevent unauthorized user access and adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel;

(ii) program change management controls to ensure that information technology (“IT”) program and data changes affecting financial IT

applications and underlying accounting records are identified, tested, authorized and implemented appropriately with appropriate segregation of duties;

and (iii) computer and network operations controls to ensure that batch and interface jobs are monitored and privileges are appropriately granted, authorized and monitored.

As a result, business process controls (automated and manual) that are dependent on the ineffective GITCs, or that rely on data produced from systems impacted by the ineffective GITCs, are also deemed ineffective, which affects substantially all financial statement accounts and disclosures.

Purchase Order Approval Workflow

The Company did not design and maintain effective process-level control activities related to procurement to ensure appropriate approval of purchase orders, which could affect the amount and classification of costs capitalized or expensed.

The following material weakness has been identified and included in management's assessment:

COSO Framework

The Company did not fully maintain components of the COSO framework, including elements of the control environment, information and communication, control activities and monitoring activities components, relating to:

(i) sufficiency of competent personnel to perform internal control activities and support the achievement of the Company’s internal control objectives;

(ii) enforcing accountability of personnel for the performance of their internal control responsibilities across the organization in the pursuit of objectives;

(iii) designing and maintaining general control activities over technology to support the achievement of the Company’s internal control objectives;

(iv) performing control activities in accordance with established policies in a timely manner;

and (v) performing sufficient reviews of information to assess its relevance, accuracy, and completeness in supporting the internal control components.

As such, the Company’s management concluded that the Company did not have an adequate process in place to complete its assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements.

The Company did not fully maintain components of the COSO framework, including elements of the control environment, risk assessment, control activities, and monitoring activities components, relating to (i) sufficiency of competent personnel to perform internal control activities and support the achievement of our internal control objectives;

(ii) monitoring and risk assessment are performed to monitor and identify risks related to complex and/or non-routine transactions;

and (iii) performing control activities in accordance with established policies in a timely manner.

Specifically, the Company determined that insufficient risk assessment was performed to identify risks related to complex and/or non-routine transactions and financial reporting personnel failed to perform control activities and to provide necessary oversight and monitoring of the accounting and reporting of complex and/or non-routine transactions.

This control deficiency creates a reasonable possibility that a material misstatement of the Company’s consolidated financial statements would not be prevented or detected on a timely basis and constitutes a material weakness in the Company’s internal control over financial reporting.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2024 of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

San Jose, California

San Francisco, California

February 27, 2025

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Deferred tax liability 164 136

Common stock warrant liability — 32

Deferred payments for intangible assets 2,461 2,418

Contingent consideration

Operating lease liability, less current portion 22,263 28,278

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54,771,203 shares issued and outstanding at December 31, 2024;

53,583,301 shares issued and 53,533,250 shares outstanding at December 31, 2022

51,503,377 shares issued and outstanding at December 31, 2023

Additional paid-in capital 1,013,193 946,511

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Restructuring costs

Litigation expense (Note 17)

1,783 2,320 —

Litigation expense

( 96,300 ) 96,300 —

Total operating expenses 293,020 483,687 399,024

Loss from operations ( 203,363 ) ( 77,231 ) ( 29,726 )

Income (loss) from operations

40,765 ( 203,363 ) ( 77,231 )

Other income (expense):

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329 1,343 ( 2,872 )

Total other income (expense)

Total other income

12,094 13,220 997

Loss before income taxes ( 190,143 ) ( 76,234 ) ( 32,088 )

Income tax (expense) benefit

Income (loss) before income taxes

52,859 ( 190,143 ) ( 76,234 )

Net loss $ ( 190,284 ) $ ( 76,613 ) $ ( 30,662 )

Net loss per share (Note 3):

Income tax expense

( 310 ) ( 141 ) ( 379 )

Net income (loss)

$ 52,549 $ ( 190,284 ) $ ( 76,613 )

Net income (loss) per share (Note 3):

Basic $ 1.00 $ ( 3.54 ) $ ( 1.44 )

Diluted $ 0.93 $ ( 3.54 ) $ ( 1.44 )

Weighted-average shares used to compute net loss per share:

Weighted-average shares used to compute net income (loss) per share:

Basic 52,773,247 53,764,705 53,321,625

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The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

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2024 2023 2022

Net loss $ ( 190,284 ) $ ( 76,613 ) $ ( 30,662 )

Net income (loss)

$ 52,549 $ ( 190,284 ) $ ( 76,613 )

Other comprehensive loss:

Foreign currency translation adjustments, net of tax ( 1,606 ) 540 ( 2,833 )

Net comprehensive loss $ ( 189,744 ) $ ( 79,446 ) $ ( 33,236 )

Net comprehensive income (loss)

$ 50,943 $ ( 189,744 ) $ ( 79,446 )

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

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Balance at December 31, 2021 52,923,360 $ 52 $ 853,683 $ ( 4,670 ) $ ( 383,189 ) $ 465,876

Issuance of common shares through public equity offering, net of commissions and offering costs of $ 12,495

2,211,538 2 188,853 — — 188,855

Contingent consideration classified as equity — — ( 222 ) — — ( 222 )

Issuance of common stock under employee stock purchase plan 93,422 — 2,230 — — 2,230

Repurchase and retirement of common stock ( 50,051 ) — — — ( 642 ) ( 642 )

RSU settlements, net of shares withheld 411,176 — ( 6,067 ) — — ( 6,067 )

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Issuance of common stock for cash upon exercise of stock options 142,579 — 2,435 — — 2,435

Issuance of common stock for cash upon exercise of warrants 3,132 — 205 — — 205

Employee stock-based compensation expense — — 46,206 — — 46,206

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Issuance of common stock for cash upon exercise of stock options 27,903 — 120 — — 120

Issuance of common stock for cash upon exercise of warrants 3,132 — 26 — — 26

Employee stock-based compensation expense — — 48,907 — — 48,907

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Issuance of common stock for cash upon exercise of stock options 527,009 — 8,936 — — 8,936

Issuance of common stock for cash upon exercise of warrants 3,132 — 26 — — 26

Employee stock-based compensation expense — — 66,267 — — 66,267

Foreign currency translation adjustment — — — ( 1,606 ) — ( 1,606 )

Net loss — — — — ( 190,284 ) ( 190,284 )

Net income — — — — 52,549 52,549

Balance at December 31, 2024 54,771,203 $ 51 $ 1,013,193 $ ( 8,569 ) $ ( 626,242 ) $ 378,433

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Operating activities:

Net loss $ ( 190,284 ) $ ( 76,613 ) $ ( 30,662 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Net income (loss)

$ 52,549 $ ( 190,284 ) $ ( 76,613 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation 66,406 49,086 46,553

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Revaluation of contingent consideration to estimated fair value 931 2,677 727

Accretion of discount and amortization of premium on short-term marketable securities, net

Amortization of premium and accretion of discount on short-term marketable securities, net

621 ( 4,927 ) 390

Other non-cash items — — ( 222 )

Changes in operating assets and liabilities:

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Operating lease liabilities, net ( 5,863 ) ( 5,418 ) ( 3,456 )

Refund liability - CMS advance payment — — ( 20,496 )

Change in deferred taxes ( 187 ) 566 ( 215 )

Net cash used in operating activities

Net cash provided by (used in) operating activities

38,048 ( 18,388 ) ( 25,239 )

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Purchases of short-term marketable securities ( 160,286 ) ( 201,165 ) ( 315,145 )

Purchases of long-term marketable securities — — ( 5,500 )

Purchase of corporate equity securities ( 634 ) ( 965 ) —

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Acquisition of business, net of cash acquired — ( 6,682 ) ( 610 )

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 483 ) 40,446 ( 228,502 )

Financing activities:

Proceeds from issuance of common shares in public equity offering, net of issuance costs paid — — 188,855

Payment of contingent consideration ( 5,325 ) ( 625 ) ( 2,625 )

Principal payments on finance lease obligations — — ( 66 )

Repurchase and retirement of common stock ( 522 ) ( 27,541 ) ( 642 )

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Taxes paid related to net share settlement of restricted stock units ( 10,092 ) ( 3,059 ) ( 5,933 )

Net cash (used in) provided by financing activities ( 29,606 ) ( 4,535 ) 185,642

Net cash used in financing activities

( 5,606 ) ( 29,606 ) ( 4,535 )

Effect of exchange rate changes on cash and cash equivalents 532 ( 112 ) 23

Net (decrease) increase in cash, cash equivalents and restricted cash ( 7,660 ) ( 258,253 ) 213,757

Net increase (decrease) in cash, cash equivalents and restricted cash

32,491 ( 7,660 ) ( 258,253 )

Cash, cash equivalents, and restricted cash at beginning of period 82,783 90,443 348,696

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(“CareDx” or the “Company”), together with its subsidiaries, is a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients and caregivers.

The Company offers testing services, products, and patient and digital solutions along the pre- and post-transplant patient journey.

The Company’s headquarters are in Brisbane, California.

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Omaha, Nebraska;

Fremantle, Australia;

and Stockholm, Sweden.

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The Company has initiated several clinical studies to generate data on its existing and planned future testing services.

In April 2020, the Company announced its first biopharma research partnership for AlloCell, a surveillance solution that monitors the level of engraftment and persistence of allogeneic cells for patients who have received cell therapy transplants.

The Company has 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.

The Company also offers 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.

The Company also provides digital solutions to transplant centers following the acquisitions of Ottr Complete Transplant Management (“Ottr”) and XynManagement, Inc.

(“XynManagement”), as well as the acquisitions of TransChart LLC (“TransChart”), MedActionPlan.com, LLC (“MedActionPlan”) and The Transplant Pharmacy, LLC (“TTP”) in 2021, HLA Data Systems, LLC (“HLA Data Systems”) in January 2023 and MediGO, Inc.

(“MediGO”) in July 2023.

Testing Services

AlloSure Kidney has been a covered service for Medicare beneficiaries since October 2017 through a Local Coverage Determination (“LCD”), first issued by Palmetto MolDX (“MolDX”), which was formed to identify and establish coverage and reimbursement for molecular diagnostics tests, and then adopted by Noridian Healthcare Solutions, the Company’s Medicare Administrative Contractor (“Noridian”).

The Medicare reimbursement rate for AlloSure Kidney is currently $ 2,841 .

AlloMap Heart has been a covered service for Medicare beneficiaries since January 2006.

The Medicare reimbursement rate for AlloMap Heart is currently $ 3,240 .

In October 2020, the Company received a final MolDX Medicare coverage decision for AlloSure Heart.

In November 2020, Noridian issued a parallel coverage policy granting coverage for AlloSure Heart when used in conjunction with AlloMap Heart, which became effective in December 2020.

In 2021, Palmetto and Noridian issued coverage policies written by MolDX to replace the former product-specific policies.

The foundational 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 .

Effective May 9, 2023, AlloSure Lung is covered for Medicare beneficiaries through the same MolDX LCD (Noridian L38629).

The Medicare reimbursement rate for AlloSure L ung is $ 2,753 .

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, subject to certain limitations, for Medicare beneficiaries through the same MolDX LCD (Noridian L38629) .

The Medicare reimbursement rate for HeartCare is $ 5,993 .

AlloSure Kidney has received positive coverage decisions from several commercial payers, and is reimbursed by other private payers on a case-by-case basis.

AlloMap Heart has also received positive coverage decisions for reimbursement from many of the largest U.S.

private payers.

In May 2021 and March 2023, the Company purchased a minority investment of common stock in the biotechnology company Miromatrix Medical, Inc.

(“Miromatrix”) for an aggregate amount of $ 5.1 million, and the investment is marked to market.

Miromatrix works to eliminate the need for an organ transplant waiting list through the development of implantable engineered biological organs.

In December 2023, Miromatrix was acquired by United Therapeutics Corporation.

Clinical Studies

In January 2018, the Company initiated the Kidney Allograft Outcomes AlloSure Kidney Registry study ( “K-OAR” ) to develop additional data on the clinical utility of AlloSure Kidney for surveillance of kidney transplant recipients.

K-OAR is a multicenter, non-blinded, prospective observational cohort study which has enrolled more than 1,900 renal transplant patients who will receive AlloSure Kidney long-term surveillance.

In September 2018, the Company initiated the Surveillance HeartCare ™ Outcomes Registry (“SHORE”).

SHORE is a prospective, multi-center, observational registry of patients receiving HeartCare for surveillance.

HeartCare combines the gene expression profiling technology of AlloMap Heart with the dd-cfDNA analysis of AlloSure ® Heart in one surveillance solution.

In September 2019, the Company announced the commencement of the Outcomes of KidneyCare on Renal Allografts (“OKRA”) study, which is an extension of K-OAR.

OKRA is a prospective, multi-center, observational, registry of patients receiving KidneyCare for surveillance.

KidneyCare combines the dd-cfDNA analysis of AlloSure Kidney with the gene expression profiling technology of AlloMap Kidney and the predictive artificial intelligence technology of iBox for a multimodality surveillance solution.

The Company has not yet made any applications to private payers for reimbursement coverage of AlloMap Kidney or KidneyCare.

In December 2021, the Company initiated the ALAMO study.

ALAMO is a multicenter observational study and focuses on surveillance in lung transplant recipients within the first post-transplant year.

Beyond demonstrating the clinical validity of AlloSure in detecting Acute Lung Allograft Dysfunction, a composite outcome of acute rejection and clinically meaningful infections, the study explores its clinical utility by capturing clinician decision-making processes to further demonstrate the practical clinical application of AlloSure.

In addition, the study will collect samples to enable development of AlloMap Lung.

The Company’s suite of AlloSeq products are commercial next generation sequencing (“NGS”)-based kitted solutions.

These products include:

AlloSeq ™ Tx, a high-resolution Human Leukocyte Antigen (“HLA”) typing solution, AlloSeq ™ cfDNA, a surveillance solution designed to measure dd-cfDNA in blood to detect active rejection in transplant recipients, and AlloSeq ™ HCT, a solution for chimerism testing for stem cell transplant recipients.

The Company's other HLA typing products include:

Olerup SSP ® , based on the sequence specific primer (“SSP”) technology;

and QTYPE ® , which uses real-time polymerase chain reaction (“PCR”) methodology, to perform HLA typing .

In March 2021, the Company acquired certain assets of BFS Molecular S.R.L.

(“BFS Molecular”), a software company focused on NGS-based patient testing solutions.

BFS Molecular brings extensive software and algorithm development capabilities for NGS transplant surveillance products.

Patient and Digital Solutions

Following the acquisitions of both Ottr and XynManagement, the Company is a leading provider of transplant patient management software (“Ottr software”), as well as of transplant quality tracking and waitlist management solutions.

Ottr software provides comprehensive solutions for transplant patient management and enables integration with electronic medical record (“EMR”) systems providing patient surveillance management tools and outcomes data to transplant centers.

XynManagement provides two unique solutions, XynQAPI software (“XynQAPI”) and XynCare.

XynQAPI simplifies transplant quality tracking and Scientific Registry of Transplant Recipients reporting.

XynCare includes a team of transplant assistants who maintain regular contact with patients on the waitlist to help prepare for their transplant and maintain eligibility.

In September 2020, the Company launched AlloCare, a mobile app that provides a patient-centric resource for transplant recipients to manage medication adherence, coordinate with Patient Care Managers for AlloSure scheduling and measure health metrics.

In January 2021, the Company acquired TransChart.

TransChart provides EMR software to hospitals throughout the U.S.

to care for patients who have or may need an organ transplant.

As part of the Company’s acquisition of TransChart in January 2021, the Company acquired TxAccess, 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 June 2021, the Company acquired the Transplant Hero patient application.

The application helps patients manage their medications through alarms and interactive logging of medication eve nts .

Also in June 2021, the Company entered into a strategic agreement with OrganX, which was amended in April 2022, to develop clinical decision support tools across the transplant patient journey.

Together, the Company and OrganX will develop advanced analytics that integrate AlloSure with large transplant databases to provide clinical data solutions.

This partnership delivers the next level of innovation by incorporating a variety of clinical inputs to create a universal composite scoring system.

The Company has agreed to potential future milestone payments.

In November 2021, the Company acquired MedActionPlan, a New Jersey-based provider of medication safety, medication adherence and patient education.

MedActionPlan is a leader in patient medication management for transplant patients and beyond.

In December 2021, the Company acquired TTP, a transplant-focused pharmacy located in Mississippi.

TTP provides individualized transplant pharmacy services for patients at multiple transplant centers located throughout the U.S.

In January 2023, the Company acquired HLA Data Systems, a Texas-based company that provides software and interoperability solutions for the histocompatibility and immunogenetics community.

HLA Data Systems is a leader in the laboratory information management industry for human leukocyte antigen laboratories.

In July 2023, the Company acquired MediGO, an organ transplant supply chain and logistics company.

MediGO provides access to donated organs by digitally transforming donation and transplantation workflows to increase organ utilization.

Liquidity and Capital Resources

The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $ 678.3 million at December 31, 2023.

As of December 31, 2023, the Company had cash and cash equivalents and marketable securities of $ 235.4 million and no debt outstanding.

Shelf Registration Statement

On May 10, 2023, the Company filed a universal shelf registration statement (File No.

333-271814) (the “Registration Statement”), whereby the Company can sell from time to time up to $ 250.0 million of shares of its common stock, preferred stock, debt securities, warrants, units or rights comprised of any combination of these securities, for the Company’s own account in one or more offerings under the Registration Statement.

The terms of any offering under the Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Registration Statement filed with the Securities and Exchange Commission (the “SEC”) prior to the completion of any such offering.

Stock Repurchase Program

On December 3, 2022, the Company's Board of Directors approved a stock repurchase program (the "Repurchase Program"), whereby the Company may purchase up to $ 50 million of shares of its common stock over a period of up to two years , commencing on December 8, 2022.

The Repurchase Program may be carried out at the discretion of a committee of the Company's Board of Directors through open market purchase, one or more Rule 10b5-1 trading plans and block trades and in privately negotiated transactions.

During the year ended December 31, 2023 , the Company purchased an a ggregate of 2,942,997 shares of its common stock under the Repurchase Program for an aggregate purchase price of $ 27.5 million.

As of December 31, 2023, $ 21.9 million remained available for future repurchase under the Repurchase Program.

The Company also provides digital solutions to transplant centers and various offerings.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Concentrations of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, marketable securities and accounts receivable.

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents and marketable securities.

The Company’s policy is to invest its cash and cash equivalents in money market funds, obligations of U.S.

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The Company is exposed to credit risk in the event of default by the financial institutions to the extent of amounts recorded on the balance sheets that may be in excess of insured limits.

The Company is also subject to credit risk from its accounts receivable, which are derived from revenue earned from AlloSure Kidney, AlloSure Heart and AlloMap Heart tests provided for patients located in the U.S.

and Canada, and billed to various third-party payers, from sales of products to distributors, strategic partners and transplant laboratories in Europe, Asia, the Middle East, Africa, the U.S., Latin America and other geographic regions, from sales of patient and digital solutions software.

The Company is also subject to credit risk from its accounts receivable, which are derived from revenue earned from AlloSure Kidney, AlloSure Heart, AlloMap Heart, HeartCare and AlloSure Lung tests provided for patients located in the U.S.

and Canada, and billed to various third-party payers, from sales of products to distributors, strategic partners and transplant laboratories in Europe, Asia, the Middle East, Africa, the U.S., Latin America and other geographic regions, and from sales of patient and digital solutions software.

The Company has not experienced any significant credit losses and does not require collateral on receivables.

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As of December 31, 2024 and 2023, approximately 27 % and 36 %, respectively, of accounts receivable was due from Medicare.

No other payer represented more than 10% of accounts receivable at either December 31, 2023 or 2022.

No other payer or customer represented more than 10% of accounts receivable at either December 31, 2024 or 2023.

Cash and Cash Equivalents

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The Company considers all highly liquid investments in securities with a maturity of greater than three months at the time of purchase to be marketable securities.

As of December 31, 2023, the Company’s short-term marketable securities consisted of corporate debt securities with maturities of greater than three months but less than twelve months at the time of purchase, which were classified as current assets on the consolidated balance sheet .

As of December 31, 2024, the Company’s short-term marketable securities consisted of corporate debt securities with maturities of greater than three months but less than 12 months at the time of purchase, which were classified as current assets on the consolidated balance sheet .

The Company classifies its short-term marketable securities as held-to-maturity at the time of purchase and reevaluates such designation at each balance sheet date.

The Company has the positive intent and ability to hold these marketable securities to maturity.

Short-term marketable securities are carried at amortized cost and are adjusted for amortization of premiums and accretion of discounts to maturity, which is included i n interest income (expense), net, on the consolidated statements of operations.

Realized gains and losses and declines in value judged to be other-than-temporary, if any, on short-term marketable securities are included in interest income (expense), net.

The cost of securities sold will be determined using specific identification.

The Company considers investments in securities with remaining maturities of over one year as long-term investments.

As of December 31, 2023, the Company’s long-term marketable securities consisted of corporate equity securities.

These long-term marketable securities are classified as other assets on the consolidated balance sheet .

The Company records its long-term marketable equity securities at fair market value.

Unrealized gains and losses from the remeasurement of the long-term marketable equity securities to fair value are included in other income (expense), net, on the consolidated statements of operations.

Inventory is finished goods, work in progress, and raw materials and consists of reagent plates, laboratory supplies, reagents and finished goods kits.

Inventories are used in connection with tests performed, kits produced and prescription drugs, and may also be used for research and product development efforts.

Laboratory supplies subsequently designated for research and product development use are expensed.

Obsolete or damaged inventories are written off.

Certain inventories are stated at the lower of purchased cost, determined on an average cost basis, or net realizable value.

Short-term marketable securities are carried at amortized cost and are adjusted for amortization of premiums and accretion of discounts to maturity, which is included i n interest income, net, on the condensed consolidated statements of operations.

Realized gains and losses and declines in value judged to be other-than-temporary, if any, on short-term marketable securities are included in interest income, net.

The cost of securities sold is determined using specific identification.

Inventories are stated at the lower of actual purchased cost, determined on an average cost basis, on a first-in, first-out basis, or at net realizable value.

Excess and obsolete inventories are determined primarily based on expiration dates and future demand forecasts, and write-downs of excess and obsolete inventories are recorded as a component of cost of product.

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation.

Property and equipment are stated at historical cost, less accumulated depreciation.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets.

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The Company remeasures this liability each reporting period and records changes in the fair value as a component of operating expenses.

In circumstances where the contingent consideration is classified as equity, the Company recognizes it at fair value at the acquisition date.

Contingent consideration classified as equity is not subsequently remeasured.

Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses.

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Instead, it is tested for impairment on an annual basis and whenever events or changes in circumstances indicate its carrying amount may not be recoverable.

The Company has a single reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole.

The Company’s annual impairment test date is December 1 st .

A qualitative assessment is initially made to determine whether it is necessary to perform a quantitative assessment.

A qualitative assessment includes, among others, consideration of:

(i) past, current and projected future earnings;

(ii) recent trends and market conditions;

and (iii) valuation metrics involving similar companies that are publicly-traded and acquisitions of similar companies, if available.

If this qualitative assessment indicates that it is more likely than not that an impairment exists, or if the Company decides to bypass this option, it proceeds to the quantitative assessment.

The quantitative assessment consists of a comparison between the estimated fair value of the Company’s reporting unit and its respective carrying amount including goodwill.

Where the carrying value of the reporting unit exceeds its estimated fair value, the Company will record an impairment charge based on that difference.

The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

During the goodwill impairment review, the Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount, including goodwill.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and the market considerations, and the Company's overall financial performance.

If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of the reporting unit is less than the carrying amount, then no additional assessment is deemed necessary.

Otherwise, the Company proceeds to compare the estimated fair value of the reporting unit with the carrying value, including goodwill.

If the carrying amount of the reporting unit exceeds the fair value, the Company records an impairment loss based on the difference.

The Company elects to bypass the qualitative assessment in a period and proceeds to perform the quantitative goodwill impairment test.

When necessary, to determine the reporting unit’s fair value under the quantitative approach, the Company uses a combination of income and market approaches, such as estimated discounted future cash flows of that reporting unit, multiples of earnings or revenues, and analysis of recent sales or offerings of comparable entities.

The Company also considers its market capitalization on the date of the analysis to ensure the reasonableness of the reporting unit’s fair value.

In connection with the Company’s annual goodwill assessment on December 1, 2023, the Company performed a qualitative assessment taking into consideration past, current and projected future earnings, recent trends and market conditions;

and the Company's market capitalization.

Based on this analysis, the Company 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, 2023, no impairment of goodwill has been identified.

Intangible assets not subject to amortization

The Company evaluates 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.

The Company also considers its market capitalization on the date of the analysis to assess the reasonableness of the reporting unit’s fair value.

Indefinite-lived intangible assets

The Company evaluates the carrying value of indefinite-lived intangible assets, 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.

Accordingly, amortization of the acquired in-process technology assets and the favorable license agreement will not occur until the products reach commercialization.

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If and when development is complete, which generally occurs when the products are made commercially available, the associated acquired in-process technology asset and the favorable license agreement will be deemed finite-lived and will then be amortized based on the estimated useful life.

As of December 31, 2023, no impairment of acquired in-process technology assets and the favorable license agreement has been identified.

Intangible assets and long-lived assets subject to amortization

The Company evaluates its finite-lived intangible assets and its long-lived assets for indicators of possible impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company then compares the carrying amounts of the assets with the future net undiscounted cash flows expected to be generated by such asset.

If an impairment exists, the Company measures the impairment based on the excess carrying value of the asset over the asset’s fair value determined using discounted estimates of future cash flows.

The Company has not identified any material impairment losses to date.

Finite-lived intangible assets and long-lived assets

The Company then compares the carrying amounts of the asset group with the future net undiscounted cash flows expected to be generated by such asset group.

If an impairment exists, the Company measures the impairment based on the excess carrying value of the asset group over the asset group’s fair value determined using discounted estimates of future cash flows.

Intangible assets subject to amortization are carried at cost less accumulated amortization.

Amortization expenses are recorded to cost of testing services, cost of product, cost of patient and digital solutions, and sales and marketing expenses in the consolidated statements of operations.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received from selling an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, and it takes into consideration the assumptions that market participants would use when pricing the asset or liability.

The Company’s assessment of the significance of a particular input to the fair value measurement of an asset or liability requires management to make judgments and to consider specific characteristics of that asset or liability.

The carrying amounts of certain financial instruments of the Company, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

The Company uses the U.S.

GAAP fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Inputs that include quoted prices in active markets for identical assets and liabilities.

Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of certain financial instruments of the Company, including accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their short maturities.

The carrying amount of the contingent consideration liability also represents its fair value.

The Company adopted ASC Topic 842, Leases (“ASC 842”) and determines if an arrangement is or contains a lease at contract inception.

A right-of-use (“ROU”) asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the consolidated balance sheet at lease commencement based on the present value of the payment obligation.

The Company determines if an arrangement is or contains a lease at contract inception.

For leases with an initial term of 12 months or less, a right-of-use (“ROU”) asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the consolidated balance sheet at lease commencement based on the present value of the payment obligation.

For operating leases, expense is recognized on a straight-line basis over the lease term.

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The Company also has lease arrangements with lease and non-lease components.

The Company elected the practical expedient not to separate non-lease components from lease components for the Company's facility leases.

The Company does not separate non-lease components from lease components for the Company's facility leases.

The Company also elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for leases with an initial term of 12 months or less.

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The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.

As of December 31, 2023, the Company’s leases had remaining terms of 0.42 years to 9.09 years, some of which include options to extend the lease term.

The Company recognizes revenue from testing services, product sales, and patient and digital solutions revenue in the amount that reflects the consideration that it expects to be entitled in exchange for goods or services as it transfers control to its

Revenue is recorded considering a five-step revenue recognition model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

Testing Services Revenue

AlloSure Kidney, AlloMap Heart, AlloSure Heart and AlloSure Lung patient tests are ordered by healthcare providers.

AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare and AlloSure Lung patient tests are ordered by healthcare providers.

The Company receives a test requisition form with payer information along with a collected patient blood sample.

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The healthcare providers that order the tests and on whose behalf the Company provides testing services are generally not responsible for the payment of these services.

The first and second revenue recognition criteria are satisfied when the Company receives a test requisition form with payer information from the healthcare provider.

Generally, the Company bills third-party payers upon delivery of an AlloSure Kidney, AlloMap Heart, AlloSure Heart or AlloSure Lung test result to the healthcare provider.

The first criterion, identify the contracts(s) with a customer, and the second criterion, identify the performance obligations in the contract, of revenue recognition are satisfied when the Company receives a test requisition form with payer information from the healthcare provider.

Generally, the Company bills third-party payers upon delivery of an AlloSure Kidney, AlloMap Heart, AlloSure Heart, HeartCare or AlloSure Lung test result to the healthcare provider.

Amounts received may vary amongst payers based on coverage practices and policies of the payer.

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Revenue recognized for Medicare and other contracted payers is based on the agreed current reimbursement rate per test, adjusted for historical collection trends where applicable.

The Company estimates revenue for non-contracted payers and self-payers using transaction prices determined for each financial class of payers using history of reimbursements.

This includes analysis of an average reimbursement per test and a percentage of tests reimbursed.

This estimate requires significant judgment.

The Company estimates revenue for non-contracted payers and self-payers using transaction prices determined for each financial class of payers using a history of reimbursements.

This includes analysis of the average reimbursement per test and a percentage of tests reimbursed.

These estimates require significant judgment.

The Company monitors revenue estimates at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.

Changes in transaction price estimates are updated quarterly based on actual cash collected or changes made to contracted rates.

In March and May 2023, MolDX issued new billing articles related to the LCD entitled Molecular Testing for Solid Organ Allograft Rejection.

The billing article issued in May 2023 (the “Revised Billing Article”) and together with the billing article issued in March 2023 (the “Billing Articles”) impacted Medicare coverage for AlloSure Kidney, AlloSure Heart, AlloMap Heart and AlloSure Lung, and required certain companies, including the Company, to implement new processes to address the requirements related to Medicare claim submissions.

Noridian adopted the Revised Billing Article on August 17, 2023, with a retroactive effective date of March 31, 2023.

Although the Company believes the Billing Articles are inconsistent with the LCDs, Noridian’s and MolDX’s responses to public comments explaining the intended scope of various LCDs, and medical necessity, the Company determined to pause its Medicare reimbursement submissions for AlloSure Kidney commencing on March 7, 2023 to allow the Company further time to evaluate the implications of the Billing Article and update the Company's billing processes for AlloSure Kidney tests by educating clinicians and working with centers to update the Company's test order forms to capture the new information required under the Billing Article.

Accordingly, the Company did not submit claims for approximately 3,200 AlloSure Kidney tests for Medicare reimbursement for the period from March 7, 2023 through March 31, 2023 and did not recognize revenue on these claims in the first quarter of 2023 aggregating to approximately $ 8.9 million (the “Impacted March Tests”).

On May 18, 2023, the Company submitted a letter to Noridian explaining, among other things, (i) its belief that the Billing Articles impose new restrictions on Medicare coverage for the CareDx tests from those contained in the existing LCDs, (ii) that the Company planned to submit claims for reimbursement for the Impacted March Tests for which it had not obtained additional information from the ordering physicians to be able to specifically determine whether these tests meet the new coverage restrictions contained in the Billing Articles, and (iii) that AlloSure Kidney orders with a date of service on or after March 31, 2023 for other indications outside the parameters of the Revised Billing Article, or where the reason for testing is not specified by the ordering physician, will either not be billed pending the receipt of additional information regarding whether the orders meet the coverage restrictions contained in the Revised Billing Article or be submitted with a test description that is intended to identify those tests as falling outside the parameters of the Revised Billing Article.

Following the submission of this letter to Noridian on May 18, 2023, the Company submitted claims for reimbursement for the Impacted March Tests for which the Company subsequently received payment from Noridian and recognized revenue totaling approximately $ 7.8 million in the second quarter of 2023.

The Company continued the Medicare reimbursement submissions for AlloMap Heart or AlloSure Heart following the issuance of the Billing Articles.

In addition, the Company informed Noridian on May 18, 2023 that until Noridian adopts the Revised Billing Article, the Company would continue to submit AlloSure Heart tests for reimbursement only when used in conjunction with AlloMap Heart according to requirements of the Billing Article currently effective at Noridian.

The Company also informed Noridian on May 18, 2023 that (i) until June 30, 2023, the Company plans to submit claims for reimbursement for AlloMap Heart and AlloSure Heart tests for which the Company has not obtained additional information from the ordering physicians to be able to specifically determine whether these tests meet the new coverage restrictions contained in the Billing

Articles, and (ii) AlloSure Heart and AlloMap Heart orders placed on or after June 30, 2023 for other indications outside the surveillance and for-cause parameters of the Revised Billing Article, or where the reason for testing is not specified by the ordering physician, will either not be billed pending the receipt of additional information regarding whether the orders meet the coverage restrictions contained in the Revised Billing Article or be submitted with a test description that is intended to identify those tests as falling outside the parameters of the Revised Billing Article.

On August 28, 2023, the Company submitted a subsequent letter to Noridian regarding its AlloSure Heart and AlloMap Heart testing submissions, explaining, among other things, that (i) prior to August 17, 2023, the Company submitted claims as outlined in its prior communications, including submitting AlloSure Heart and AlloMap Heart claims that were in compliance with the billing article in effect for Noridian (but that were not necessarily in compliance with the Revised Billing Article that had not yet been adopted by Noridian);

(ii) for claims with dates of service of August 17, 2023 or later, the Company is submitting AlloSure Heart and AlloMap Heart testing claims in compliance with the Revised Billing Article, including submitting AlloSure Heart claims when not used in conjunction with AlloMap Heart, and submitting HeartCare (AlloSure Heart and AlloMap Heart used together in a single patient encounter) claims for surveillance testing in lieu of a biopsy from 55 days to 370 days post-transplant;

and (iii) for AlloSure Heart and AlloMap Heart tests performed on or after August 17, 2023 that are outside the parameters of the Revised Billing Article, certain billing codes will be used to enable any additional review deemed appropriate by Noridian and potential appeal by the Company of the denied claims.

On August 10, 2023, MolDX and Noridian released a draft proposed revision to the LCD (DL38568, Palmetto;

DL38629, Noridian) that, if adopted, would revise the existing foundational LCD, MolDX:

Molecular Testing for Solid Organ Allograft Rejection (L38568 and L38629).

On August 14, 2023, MolDX released a draft billing article (DA58019) to accompany the proposed draft LCD, which generally reflected the changes in coverage included in the Revised Billing Article.

The comment period end date for this proposed LCD was September 23, 2023.

The Company presented at public meetings regarding the proposed draft LCD held on September 18, 2023 and September 20, 2023, with MolDX and Noridian respectively.

The Company also submitted written comments on the proposed draft LCD.

Changes in transaction price estimates are updated quarterly based on actual cash collected or changes made to contracted rates, the Company's discussions with payers, and other pertinent information.

In addition, consistent with ASC 606-10-25-1, the Company continues to assess whether it is probable that it will collect substantially all of the consideration to which it will be entitled when determining if a contract with a customer exists.

For the year ended December 31, 2024, the Company recognized $ 17.4 million in revenue for the tests performed in prior periods, as all performance obligations were satisfied at the time the contract was established.

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.

The Company generally has 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 and products are delivered and the risk of loss is passed to the customer upon either shipping or delivery, as per the terms of the agreement.

The Company generally has a contract or a purchase order from a customer with the specified required terms, including the number of products ordered.

Transaction prices are determinable in the contract.

The products are delivered and control is transferred to the customer upon either shipping or delivery, as per the terms of the agreement.

There are no further performance obligations related to a contract and revenue is recognized at the point of delivery consistent with the terms of the contract or purchase order.

Patient and Digital Solutions Revenue

Patient and digital solutions revenue is mainly derived from a combination of software as a service (“SaaS”) and perpetual software license agreements entered into with various transplant centers, which are the Company’s customers for this class of revenue.

Patient and digital solutions revenue is primarily derived from a combination of software as a service (“SaaS”) and perpetual software license agreements entered into with various transplant centers, which are the Company’s customers for this class of revenue.

The main performance obligations in connection with the Company’s SaaS and perpetual software license agreements are the following:

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The Company allocates the transaction price to each performance obligation based on relative stand-alone selling prices of each distinct performance obligation.

Digital revenue in connection with perpetual software license agreements is recognized over time based on the Company’s satisfaction of each distinct performance obligation in each agreement.

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.

The Company records deferred revenue in relation to these agreements when cash payments are received or invoices are issued in advance of the Company’s performance, and generally recognizes revenue over the contractual term, as performance obligations are fulfilled.

The Company records 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 recognizes revenue over the contractual term, as performance obligations are fulfilled.

In addition, the Company derives patient and digital solutions revenue from software subscriptions and medication sales.

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The components of cost of product are materials costs, manufacturing and kit assembly costs, direct labor costs, equipment and infrastructure expenses associated with preparing kitted products for shipment, shipping, and allocated overhead including rent, information technology, equipment depreciation and utilities.

Cost of product also includes amortization of acquired developed technology and adjustments to inventory values, including write-downs of impaired, slow moving or obsolete inventory.

Cost of product also includes amortization of acquired developed technology and adjustments to inventory values, including write-downs of excess or obsolete inventory.

Cost of Patient and Digital Solutions

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Research and Development Expenses

Research and development expenses, including clinical operations, represent costs incurred to develop diagnostic products and services, high quality evidence to support use of the Company’s tests, as well as continued efforts related to improving the Company’s existing products and patient and digital solutions service lines.

Research and development expenses, including clinical operations, represent costs incurred to develop diagnostic products and services, high-quality evidence to support the use of the Company’s tests, as well as continued efforts related to improving the Company’s existing products and patient and digital solutions offerings.

These expenses include payroll and related expenses, consulting expenses, laboratory supplies, clinical studies and certain allocated expenses as well as amounts incurred under certain collaborative agreements.

Research and development costs are expensed as incurred.

The Company records accruals for estimated study costs comprised of work performed by contract research organizations under contract terms.

The Company records accruals for estimated study costs comprised of work performed by contract research organizations based on measure of progress.

Stock-based Compensation

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Treasury zero-coupon issues with a remaining term equal to the expected option lives, and estimates dividend yield using the Company’s 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.

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 the Company’s common stock on the date of the grant.

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Forfeitures are estimated based on the Company’s historical experience.

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 Company accounts for income taxes under the liability method.

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Foreign currency translation gains and losses on revenue and expenses are recognized in the consolidated statements of operations.

Comprehensive Loss

Comprehensive loss consists of net loss and other losses affecting stockholders’ equity that, under U.S.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other losses affecting stockholders’ equity that, under U.S.

GAAP, are excluded from net income or loss.

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Recent Accounting Pronouncements

There were no recently adopted accounting standards which would have a material effect on the Company’s consolidated financial statements and accompanying disclosures, and no recently issued accounting standards that are expected to have a material impact on the Company’s consolidated financial statements and accompanying disclosures.

Effective in Future Periods

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In December 2024, the Company adopted the new segment reporting standard issued by the Financial Accounting Standards Board (“FASB”) under Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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All current annual disclosures about a reportable segment’s profit or loss and assets will also be required in interim periods.

The new guidance also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments set forth in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption of the amendments is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

This ASU will be effective for the Company’s annual disclosures in fiscal year 2024 and interim-period disclosures in fiscal year 2025.

As the amendments only relate to disclosures, there will be no impact on the Company’s financial position or results of operations.

The new guidance also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

This ASU is effective for the Company’s annual disclosures in fiscal year 2024 and interim-period disclosures in fiscal year 2025.

See Note 15, Segment Reporting .

Effective in Future Periods

In December 2023, the FASB issued ASU No.

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This guidance will be effective for the Company’s annual disclosures in fiscal year 2025.

As the amendments only relate to disclosures, there will be no impact on the Company’s financial position or results of operations.

NET LOSS PER SHARE

Basic and diluted net loss per share have been computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of common share equivalents as their effect would have been antidilutive.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures .

This standard requires entities to disaggregate certain costs and expenses into specific categories and by relevant expense caption in the statement of operations.

The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

This guidance will be effective for the Company's annual disclosures in fiscal year 2027 and for interim period disclosures beginning in fiscal year 2028.

The Company is currently evaluating the impact of adopting of the new standard on its consolidated financial statements and related disclosures.

NET INCOME (LOSS) PER SHARE

Basic and diluted net income (loss) per share have been computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period.

For the year ended December 31, 2024, common share equivalents have been included in the calculation of diluted net income per share.

For the years ended December 31, 2023 and 2022, all common share equivalents have been excluded from the calculation of diluted net loss per share, as their effect would be antidilutive.

The following tables set forth the computation of the Company’s basic and diluted net loss per share (in thousands, except shares and per share data):

The following tables set forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except shares and per share data):

Year Ended December 31,

2024 2023 2022

Net loss used to compute basic net loss per share

Net income (loss) used to compute basic net income (loss) per share

$ 52,549 $ ( 190,284 ) $ ( 76,613 )

Net loss used to compute diluted net loss per share

Net income (loss) used to compute diluted net income (loss) per share

$ 52,549 $ ( 190,284 ) $ ( 76,613 )

Weighted-average shares used to compute basic net loss per share

Weighted-average shares used to compute basic net income (loss) per share

52,773,247 53,764,705 53,321,625

Weighted-average shares used to compute diluted net loss per share

Weighted-average shares used to compute diluted net income (loss) per share

56,620,590 53,764,705 53,321,625

Net loss per share:

Net income (loss) per share:

Basic $ 1.00 $ ( 3.54 ) $ ( 1.44 )

Diluted $ 0.93 $ ( 3.54 ) $ ( 1.44 )

The following potentially dilutive securities have been excluded from diluted net loss per share because their effect would be antidilutive:

The following potentially dilutive securities have been excluded from diluted net income (loss) per share because their effect would be antidilutive:

Year Ended December 31,

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Shares of common stock subject to outstanding common stock warrants

— 3,132 3,132

Restricted stock units 543,479 5,001,370 3,092,467

Total common stock equivalents 3,039,542 8,056,578 6,017,524

On January 25, 2021 and February 11, 2021, the Company completed an underwritten public offering, including the sale of shares pursuant to the exercise of the underwriters' over-allotment option, pursuant to which the Company sold 1,923,077 and 288,461 shares of common stock, respectively.

FAIR VALUE MEASUREMENTS

The Company records its financial assets and liabilities at fair value.

The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Inputs that include quoted prices in active markets for identical assets and liabilities.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth the Company’s financial assets and liabilities, measured at fair value on a recurring basis, as of December 31, 2024 and 2023 (in thousands):

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Money market funds $ 60,525 $ — $ — $ 60,525

Long-term marketable securities:

Corporate equity securities 2,076 — — 2,076

Total $ 60,525 $ — $ — $ 60,525

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Contingent consideration — — 2,461 2,461

Common stock warrant liability — — 32 32

Total $ — $ — $ 7,930 $ 7,930

The following table presents the issuances, exercises, changes in fair value and reclassifications of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis (in thousands):

The following table presents the exercise, changes in estimated fair value, additions, deduction and payments of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis (in thousands):

Common Stock Warrant Liability and Contingent Consideration

Balance at December 31, 2022

Exercise of warrants

Change in estimated fair value of common stock warrant liability ( 10 )

Change in estimated fair value of contingent consideration on business combination

Change in estimated fair value of contingent consideration on asset acquisition

Additions to contingent consideration 2,269

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Balance at December 31, 2023

Exercise of warrants ( 22 )

Change in estimated fair value of common stock warrant liability ( 10 )

Change in estimated fair value of contingent consideration on business combination

Change in estimated fair value of contingent consideration on asset acquisition

Additions to contingent consideration 2,269

Deduction from contingent consideration

Payment related to contingent consideration ( 5,325 )

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In July 2023, the Company entered into a Securities Holders’ Agreement (the “Agreement”) with a private entity based in France.

The private entity was established to continue Cibiltech's activity, which consists of designing, developing, publishing, promoting, distributing, and marketing of software related to predictive solutions, to monitoring and/or to remote monitoring in the field of human organ allotransplantation, allografting, and chronic organ diseases.

The private entity was established to continue Cibiltech's activity, which consists of designing, developing, publishing, promoting, distributing, and marketing of software related to predictive solutions, monitoring and/or remote monitoring in the field of human organ allotransplantation, allografting, and chronic organ diseases.

The private entity retained all assets of Cibiltech, including its licenses.

Pursuant to the Agreement, the Company agreed to invest a certain amount in the private entity, in order to continue the commercialization of the iBox technology.

In December 2024, the Company made an additional investment.

As of December 31, 2024, the Company has invested a total of $ 1.4 million.

The Company's investment is in the form of ordinary and Class B shares carried at cost.

This investment is not considered material to the Company's consolidated financial statements.

In December 2023, Miromatrix was acquired by United Therapeutics Corporation.

The Company tendered and sold all of its shares of Miromatrix to United Therapeutics Corporation for $ 2.5 million.

The Company recognized a $ 1.5 million gain from the disposal of its Miromatrix shares and recorded as other income (expense), net, on the consolidated statements of operations for the year ended December 31, 2023.

In December 2023, Miromatrix was acquired by United Therapeutics Corporation ("United Therapeutics").

The Company tendered and sold all of its shares of Miromatrix to United Therapeutics in the transaction for $ 2.5 million.

The Company recognized a $ 1.5 million gain from the disposal of Miromatrix and recorded it as other income (expense), net, on the consolidated statements of operations for the year ended December 31, 2023.

The Company received contingent value rights from United Therapeutics which will expire on December 31, 2025.

In determining fair value, the Company uses various valuation approaches within the fair value measurement framework.

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At December 31, 2024 and 2023, money market funds were included as cash and cash equivalents in the consolidated balance sheets.

• Long-term marketable equity and debt securities – Investments in long-term marketable equity securities are classified within Level 1.

The securities are recorded at fair value based on readily available quoted market prices in active markets.

The securities are recorded at fair value based on observable inputs for quoted prices for identical or similar assets in markets that are not active.

Long-term marketable securities are located within other assets on the consolidated balance sheets.

• Contingent consideration – Contingent consideration is classified within Level 3.

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The Company recorded the estimate of the fair value of the contingent consideration based on its evaluation of the probability of the achievement of the contractual conditions that would result in the payment of the contingent consideration.

Contingent consideration was estimated using the fair value of the milestones to be paid if the contingency is met based on management’s estimate of the probability of success and projected revenues for revenue-based considerations at discounted rates ranging from 6 % and 12 % at December 31, 2023 and 12 % at December 31, 2022.

The significant input in the Level 3

measurement that is not supported by market activity is the Company’s probability assessment of the achievement of the milestones.

The value of the liability is subsequently remeasured to fair value at each reporting date, and the change in estimated fair value is recorded as income or expense within operating expenses in the consolidated statements of operations until the milestones are paid, expire or are no longer achievable.

Increases or decreases in the estimation of the probability percentage result in a directionally similar impact to the fair value measurement of the contingent consideration liability.

Contingent consideration was estimated using the fair value of the milestones to be paid if the contingency is met based on management’s estimate of the probability of success and projected revenues for revenue-based considerations at discounted rates ranging from 7 % to 12 % at December 31, 2024 and 6 % to 12 % at December 31, 2023.

The significant input in the Level 3 measurement that is not supported by market activity is the Company’s probability assessment of the achievement of the milestones.

or are no longer achievable.

Increases or decreases in the estimation of the probability percentage results in a directionally similar impact to the fair value measurement of the contingent consideration liability.

The carrying amount of the contingent consideration liability represents its fair value.

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The intrinsic value is computed as the difference between the fair value of the Company’s common stock on the valuation date and the exercise price of the warrants.

Increases (decreases) in the Company’s stock price discussed above result in a directionally similar impact to the fair value of the common stock warrant liability.

Increases (decreases) in the Company’s stock price result in a directionally similar impact to the fair value of the common stock warrant liability.

CASH AND MARKETABLE SECURITIES

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Marketable Securities

All short-term marketable securities were considered held-to-maturity at December 31, 2023.

At December 31, 2023, some of the Company’s short-term marketable securities were in an unrealized loss position.

The Company determined that it had the positive intent and ability to hold until maturity all short-term marketable securities that have been in a continuous loss position, thus there was no recognition of any other-than-temporary impairment at December 31, 2023.

All short-term marketable securities with unrealized losses as of the balance sheet date have been in a loss position for less than twelve months.

Contractual maturities of the short-term marketable securities were within one year or less.

The long-term marketable equity securities were recorded in the consolidated balance sheets at fair market value with changes in the fair value recognized in earnings at December 31, 2023.

The long-term marketable debt securities were considered available-for-sale.

The contractual maturity of the long-term marketable debt securities are less than three years.

During 2022, the Company wrote off $ 0.5 million of long-term marketable debt securities.

The amortized cost, gross unrealized holding losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the table below (in thousands):

All short-term marketable securities were considered held-to-maturity at December 31, 2024 and 2023.

The Company determined that it had the positive intent and ability to hold until maturity all short-term marketable securities that have been in a continuous loss position.

The Company assesses whether the decline in value of short-term marketable securities is temporary or other-than-temporary.

In making its assessment, the Company evaluates the current market and interest rate environment as well as specific issuer information.

There has been no recognition of any other-than-temporary impairment at December 31, 2024 and 2023.

The amortized cost, unrealized holding gains, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below (in thousands):

December 31, 2024

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Total short-term marketable securities $ 145,964 $ 2,366 $ 148,330

Total $ 153,221 $ 2,749 $ 155,970

December 31, 2023

Amortized Cost Unrealized Holding Gains (Losses) Fair Value

Amortized Cost Unrealized Holding Gains

Short-term marketable securities:

2 unchanged sentences

Total short-term marketable securities $ 153,221 $ 2,749 $ 155,970

Long-term marketable securities:

Corporate equity securities 5,000 ( 2,924 ) 2,076

Total long-term marketable securities 5,000 ( 2,924 ) 2,076

Total $ 208,168 $ ( 2,692 ) $ 205,476

Contractual maturities of the marketable securities at each balance sheet date are as follows (in thousands):

Within one year $ 153,221 $ 203,168

After one year through five years — —

Total $ 153,221 $ 203,168

BUSINESS COMBINATIONS AND ASSET ACQUISITION

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The Company accounted for the transaction as a business combination using the acquisition method of accounting.

Acquisition-related costs of $ 0.4 million associated with the acquisition were expensed as incurred, and classified as part of general and administrative expenses in the consolidated statement of operations.

Goodwill of $ 2.1 million arising from the acquisition primarily consists of synergies from integrating HLA Data Systems’ technology with the current testing and digital solutions offered by the Company.

The acquisition of HLA Data Systems will provide a robust and comprehensive Laboratory Information Management System and support the laboratory workflows.

None of the goodwill is expected to be deductible for income tax purposes.

of the goodwill is expected to be deductible for income tax purposes.

All of the goodwill has been assigned to the Company’s existing operating segment.

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A discount rate of 24 % was utilized in estimating the fair value of these three intangible assets.

The pro forma impact of the HLA Data Systems acquisition is not material, and the results of operations of the acquisition have been included in the Company’s consolidated statements of operations from the respective acquisition date.

The pro forma impact of the HLA Data Systems acquisition is not material, and the results of operations of the acquisition has been included in the Company’s consolidated statements of operations from the acquisition date.

In July 2023, the Company acquired MediGO, an organ transplant supply chain and logistics company.

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The Company accounted for the transaction as a business combination using the acquisition method of accounting.

Acquisition-related costs of $ 0.3 million associated with the acquisition were expensed as incurred, and classified as part of general and administrative expenses in the consolidated statement of operations.

Goodwill of $ 0.6 million arising from the acquisition primarily consists of synergies from integrating MediGO’s technology with the current testing and digital solutions offered by the Company.

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Customer relationships acquired by the Company represent the fair value of future projected revenue that is expected to be derived from sales of MediGO’s products to existing customers.

The customer relationships’ fair value has been estimated utilizing a multi-period excess earnings method under the income approach, which reflects the present value of the projected cash flows that are expected to be generated by the customer relationships, less charges representing the contribution of other assets to those cash flows that use projected cash flows with and without the intangible asset in place.

assets to those cash flows that use projected cash flows with and without the intangible asset in place.

The economic useful life was determined based on the distribution of the present value of the cash flows attributable to the intangible asset.

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Combined Consideration Paid

The following table summarizes the consideration paid for HLA Data Systems and MediGO and the provisional amounts of the assets acquired and liabilities assumed recognized at their estimated fair value at the acquisition date (in thousands):

The following table summarizes the consideration paid for HLA Data Systems (final amount) and MediGO (final amount) of the assets acquired and liabilities assumed recognized at their estimated fair value at the acquisition date (in thousands):

Consideration

Cash and contingent consideration

Total consideration

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Other current liabilities ( 810 )

Contingent considerations ( 1,620 )

Contingent consideration

Other liabilities ( 7 )

2 unchanged sentences

Total consideration $ 6,682

The preliminary allocation of the purchase price to assets acquired and liabilities assumed was based on the fair value of such assets and liabilities as of the acquisition date.

The allocation of the purchase price to assets acquired and liabilities assumed was based on the fair value of such assets and liabilities as of the acquisition date.

Asset Acquisition

1 unchanged sentence

The asset consists of a licensing agreement with a university institution.

What changed 10-K

Item 8. Financial Statements and Supplementary Data