0001217234-26-000033
SEC filingRevenue grew 39% YoY driven by 48% testing services growth, achieving net profitability of $2.8M.
For the three months ended March 31, 2026, CareDx reported total revenue of $117.7 million, a 39% increase from $84.7 million in the prior year period. The growth was primarily fueled by testing services revenue, which rose 48% to $91.4 million, driven by a 17% volume increase and $17.7 million of prior-period revenue collected under ASC 606, partially offset by $3.4 million in refund reserves. Product revenue declined 4% to $10.3 million due to lower NGS kit sales, while patient and digital solutions revenue grew 33% to $16.0 million, supported by higher pharmacy sales and expanded Ottr software adoption.
Operating expenses increased 19% to $116.5 million, but at a slower rate than revenue, leading to operating income of $1.2 million compared to an operating loss of $13.4 million in Q1 2025. Cost of testing services rose 13% to $17.1 million, reflecting volume growth, partially offset by efficiency gains. Cost of product decreased 13% to $4.8 million due to lower sales and improved manufacturing costs. Cost of patient and digital solutions jumped 52% to $11.7 million, primarily from higher pharmacy cost of goods. Research and development spending increased 16% to $21.4 million, mainly from higher personnel costs. Sales and marketing rose 32% to $30.4 million, driven by additional headcount and marketing investments. General and administrative expenses increased 34% to $30.5 million, including stock-based compensation and legal costs. Litigation settlement expense fell sharply to $0.6 million from $5.4 million.
Net income was $2.8 million versus a net loss of $10.4 million, reflecting the operating turnaround. Interest income decreased to $1.9 million due to lower cash balances.
Testing services remained the dominant segment, contributing 78% of total revenue. Volume growth of 17% was augmented by favorable revenue adjustments, highlighting the impact of payer collection efforts. Patient and digital solutions maintained its 14% share, with strong growth from pharmacy and digital offerings. Product revenue declined in share from 13% to 9% as kit sales softened. The mix shift toward higher-margin testing services supported overall margin improvement.
Management expressed confidence in existing liquidity ($198.1 million in cash and marketable securities, no debt) to fund operations for the next 12 months. The company highlighted investments in R&D to expand its testing pipeline and digital solutions. A new $100 million share repurchase program was authorized in April 2026, signaling management's view of undervaluation. No formal revenue or earnings guidance was provided, but the positive cash flow from operations and net profitability represent a key inflection point.
As of March 31, 2026, CareDx held $77.9 million in cash and equivalents and $120.2 million in marketable securities, totaling $198.1 million in liquid assets. Total assets were $411.1 million, with shareholders' equity of $313.5 million. The company has no outstanding debt, with total liabilities of $97.5 million primarily consisting of operating lease liabilities ($24.5 million) and accrued liabilities. Inventory remained stable at $26.4 million.
Operating lease commitments total $27.6 million through 2033, with a weighted-average remaining lease term of 3.82 years. The company also has royalty commitments under license agreements with rates ranging from low single to low double digits. No significant inventory or purchase commitments were disclosed. Contingent consideration liabilities of $0.3 million relate to prior acquisitions.
CareDx does not pay dividends and has no debt. Capital expenditures were $3.8 million in Q1 2026. The company maintains an active share repurchase program: the May 2025 program had $12.2 million remaining, and on April 24, 2026, the board authorized a new $100.0 million repurchase program. No repurchases occurred in Q1 2026.
The company operates as a single reportable segment. Revenue is generated from three categories: Testing services ($91.4M, up 48% YoY), Product revenue ($10.3M, down 4%), and Patient and digital solutions ($16.0M, up 34%). Geographically, 96.6% of revenue comes from the United States. The CODM uses consolidated net income to assess performance and allocate resources. Note 12 provides a detailed reconciliation from revenue to net income, including functional cost categories like personnel ($42.2M) and stock-based compensation ($9.8M).
Net income of $2.8M was lower than operating cash flow of $4.3M, driven by $9.8M stock-based compensation, $3.9M depreciation, and $1.4M right-of-use asset amortization, partially offset by working capital outflows (e.g., $2.1M increase in accounts receivable, $17.8M decrease in accrued compensation, and $2.9M increase in prepaids). Capex of $3.8M represented 88% of CFO, indicating moderate reinvestment. No share repurchases or dividends were reported. Investing activities included $39.9M in purchases and $54.7M in maturities of marketable securities, resulting in a net inflow. Financing activities were net negative due to $2.5M taxes paid on RSU settlements and $1.5M contingent consideration, partially offset by equity proceeds. Overall, cash flow strengthened significantly from the prior year.