Q3 2024 CareDx Inc Earnings Call

John Hanna

Thank you, Greg, and thank you to all who are listening to today’s call.
CareDx had another strong quarter with year over year growth across our business.
We reported revenue of 82.9 million, representing 23% year over year growth. We expanded our gross margins and managed our expenses well, leading to positive adjusted EBITDA 6.9 million above our guide of being EBITDA neutral.
We generated 12.5 million in cash from operations and ended the quarter with a strong balance sheet of 241 million in cash and cash equivalents and no debt.
We believe CareDx has turned the corner toward long term profitable growth in my prepared remarks. I will provide commentary on Q3 and insight into Q4 and our revised guidance.
Then I will turn the call over to Abhishek who will review our finances and guidance assumptions in further detail in testing services. We delivered approximately 44,600 tests up 16% from the prior year. This represents the fifth consecutive quarter of sequential growth in testing services volumes.
Testing services revenue was 60.8 million up 27% year over year including 1.2 million in revenue from tests performed in prior periods.
We have begun to execute the strategy we laid out at our 2024 investor day that will unlock profitable growth at CareDx by engaging transplant centers with solutions that include a synergistic portfolio of testing, digital and lab products and are seeing early successes with this strategy.
The first step was to reorganize our go to market team into a structure that places our customers at the center of everything we do to capture the testing services growth opportunities ahead of us. We have already added 15 of a plan, 30 sales and marketing team members to promote and sell our leading transplant solutions.
In addition, we are adding 20 team members to our billing organization of which we have already hired approximately 10 team members to date to drive greater collections and expand our ASP.
In Mid-August, the centers for Medicare and Medicaid services reaffirmed their commitment to covering testing for solid organ transplant monitoring including for surveillance. I anticipate. It will take 2 to 3 quarters for kidney transplant centers across the country to re adopt surveillance testing protocols.
Establishing a protocol at a transplant center is a departmental consensus process that may take several months to agree upon draft document and logistically implement the workflow.
Since the beginning of September, 10 transplant centers that we work with have established new protocols that include kidney surveillance testing.
And we began to see a shift in our testing mix towards surveillance in the second half of September that continued through the month of October, in their August press release. CMS signaled that a future draft LCD may be introduced that we anticipate may address the rapidly growing literature in this field including the recent Nature Medicine Multicenter study of 2,882 patients demonstrating that surveillance with aura kidney improves detection of all types of rejection.
We continue to maintain an open line of communication and message advancements in the evidence supporting our shore testing to the agency and our mac contractors.
For example, in October, the American Society of Transplant Surgeons issued a statement on the importance of serial testing using donor derived cell free DNA. In kidney and heart transplant patients in kidney, they recommended serial testing in patients with stable renal allograph function to exclude the presence of subclinical antibody mediated rejection and in patients with acute allograft dysfunction to exclude the presence of rejection in heart. They recommended using donor derived cell free DNA to rule out subclinical rejection.
They also recommended that clinicians using donor derived cell free DNA also utilize peripheral blood gene expression profiling such as our heart care solution as a non invasive diagnostic tool to rule out acute cellular rejection in stable low risk adult transplant recipients.
On the commercial payer side. In the third quarter, we added 4 million commercial covered lives. And last week, Highmark Blue Cross Blue Shield issued a policy providing coverage for aure kidney for heart care coverage was expanded by Highmark to begin two months post-transplant from the previous coverage beginning six months post transplant.
As of the end of the third quarter, we have gained approximately 31 million covered lives nationwide across our testing services business. We anticipate that this coverage coupled with the expansion of our revenue cycle management team will contribute to ASP growth that we will benefit from in future quarters.
Moving to our patient and digital solutions, we reported revenue of approximately 12 million representing 20% year over year growth.
First, as we migrate customers from on prem to SAS products, we generate monthly recurring revenue and are able to improve our pricing.
Second, HLA labs that utilize our lab products are increasingly adopting our HLA lab information management software solution which we believe is best in class in the industry.
And third among our testing services customers, we continue to sell our transplant, pharmacy and medication adherence solutions to drive revenue growth in October. We signed an agreement with the University of California Health System which includes UCLAU, CS fuc Davis, UC San Diego and UC Irvine to implement med action plan. Our medication adherence SAS software application med action plan is clinically proven to improve patient medication adherence has been shown to contribute to significantly lowering 30 day readmission rates.
Collectively, the University of California Health System is one of the highest volume transplant health systems in the US.
As we shared during our 2024 Investor Day, we’ve seen that the performance of accounts that had three or more KDX digital Solutions have a significantly higher new patient acquisition rate for testing services. We’re encouraged by this early result from our account and portfolio based approach aimed at addressing the needs of our center customers and creating long term customer stickiness.
Moving on to lab products, we reported revenue of 10.2 million representing 7% year over year growth.
The continued global adoption of our industry leading aice seek txngs based HL A typing kits primarily drove this growth.
We continue to innovate to offer best in class HLA typing products in the market.
Two weeks ago, at the annual meeting of the American Society for Histocompatibility and Immunogenetics or ASI, the largest annual HL A lab meeting. We presented new data on Aice TX 11. The next generation of our Aice Asay with increased coverage of class two loi.
We also announced the launch of our next generation assigned software for Aice Seek Txhl A typing featuring a newly improved user interface and streamlined workflow to view 24 or 96 multiplex, Aice seek TX samples in real time as results become available without waiting for the full batch to result.
We expect to make the new assigned software available to HL A lab customers in December of this year, adding a best in class software solution to complement our best in class A Seek NGS Chemistry at as we also announced our newly improved Q type rapid HL A typing solution for deceased donor organs, which now includes single bead antigen resolution to facilitate virtual cross matching for faster transplant organ allocation decisions.
And finally, at Ashi, we also announced a partnership with dovetail genomics to launch an early access program combining Car dx’s Aice Seek TX with dovetail genomics, high sea link prep technology to achieve high resolution genotyping and haplo typing. Without the need for family genotyping studies.
The pairing of these technologies has the potential to improve transplant outcomes through better matching at the haplo type level.
Our continued investment into HL A typing solutions demonstrates our ongoing commitment to delivering the most innovative solutions to support pre transplant recipient and donor matching across solid organ and stem cell transplantation.
Moving on to our corporate business updates and guidance.
In Q3, we also made significant corporate progress. First, I added new senior executives to the company including a Chief Operating Officer, chief, commercial officer, and chief data and A I officer and reorganized our operating structure for long term profitable growth.
In addition, this past week, Chris Caesar, a seasoned market access professional from Pfizer, Myriad Genetics and most recently, Delphi Diagnostics has joined KDX to lead our global market access initiatives to drive coverage and reimbursement of our products.
Second, during our 2024 investor day held mid-October, we laid out the CareDx three-year growth strategy and financial plan to becoming the most innovative company in diagnostics. We are targeting to exit 2027 with 500 million in revenue, 20% adjusted ebita profitability and an additional 100 million in cash on our balance sheet.
Third, the Doj closed its investigation into KDI X with no findings of wrongdoing.
The doj’s decision follows the sec’s decision in September of 2023 to close its investigation and take no action against KDX. We believe the closure of the doj’s investigation underscores that the underlying allegations which have now been reviewed by two separate government agencies were meritless and fourth, a competitor has dropped their pursuit of patent infringement claims and a potential injunction against our current allosure testing method.
While we believe competition is good for innovation and patient care, we will continue to defend the novel technology we first brought to market against what we view to be baseless claims of infringement. The jury verdict against K dx’s prior aure process remains under court review and we intend to continue to push for the invalidation of all patents that have been asserted against us.
Now, turning to our guidance, giving our strong year-to-date results and expected growth for the remainder of the year. We are raising our revenue guidance for fiscal year 2024 to the range of 327 million to 331 million. From our prior guidance of 320 million to 328 million. A growth rate of approximately 17% year over year at the midpoint of our guidance from the midpoint of our revised guidance. We continue to target a growth CAGR over the coming three years of approximately 15%.
We anticipate the pacing of that growth to accelerate from low teams in 2025 to high teams in 2027 excluding 14 million in one time revenue in 2024. The growth rate for 2025 is anticipated to be in the high 10s during our Q4 earnings call. We will provide further details on our full year 2025 guidance.
In summary, we had a strong quarter with year over year growth across all our solutions including testing services, digital and lab products.
I want to close by congratulating the transplant community including the hundreds of clinicians, thousands of patients and over a dozen members of Congress that advocated in support of monitoring assays for solid organ transplant rejection including for surveillance. We continue to advocate vigilantly on behalf of patients to ensure that they have the same longstanding access to monitoring assays that allow for early intervention of graft rejection and improved outcomes.
I will now turn the call over to Abhishek to share more details on our third quarter. Financials and our guidance. Abhishek.

Abhishek Jain

Thank you John. In my remarks today, I will discuss our third quarter results before turning to revised 2024 guidance. Unless otherwise noted, my remarks will focus on non-GAAP results. For further information, please refer to GAAP to non-GAAP reconciliations in our press release earnings presentation and recent SCC filings. Let me start with the key financial highlights report a total revenue of 82.9 million for the third quarter. Up 23% year over year delivered approximately 44,600 test results up 16% year over year and 2% as compared to the last quarter, representing the fifth consecutive quarter of sequential testing services volume growth reported testing services revenue of 60.8 million Up 27% year over year including 1.2 million associated with tests performed in the prior periods.
Reported patient and distal solutions revenue of 11.9 million. Up 20% year over year and products revenue of 10.2 million. Up 7% year over year reported an adjusted EBITDA gain of 6.9 million compared to a 10.9 million loss in the same quarter of last year.
Finally generated cash of 12.5 million from operations and ended the quarter with 241 million in cash cash equivalents and marketable securities.
Moving to the details starting with gross margin. Our non-GAAP gross margin for the third quarter was 69% up 240 basis points as compared to non-GAAP gross margin of 66.6% in the same quarter last year.
Our CareDx testing services growth margin was 79% in the third quarter compared to 74% in the third quarter of 2023 the improvement in testing services, gross margin was driven by volume growth is the expansion as well as continued efficiencies in managing our lab operations.
1.2 million in revenue associated with test performed in the prior period also added about 40 basis points to the non-capital margin.
Our patient and digital solutions non-GAAP gross margin for the third quarter was 37% as compared to 39% in the third quarter of 2023 excluding our transplant pharmacy, which has a low gross margin profile. Our patient in this solutions non-GAAP, gross margin for the third quarter was approximately 60%.
Our products non-GAAP gross margin was 46% in the third quarter, down from 58% in the third quarter of 2023. And in line with Nongaap gross margin of 47%. Last quarter, product gross margin can be impacted by the variability in our production schedule.
In the third quarter of 2023 gross margin was higher due to an end of life bulk bill for one of our HL A typing kits.
We anticipate another end of life bulk build in the fourth quarter of this year.
Moving down the P&L Nongaap operating expenses for the third quarter were 52.2 million. Down approximately 5.5 million from the third quarter of 2023 and down 3 million from the previous quarter.
The quarter over quarter decrease in our operating expenses was primarily associated with lower conference costs. Push out of some expenses related to clinical trials and lower legal spend.
Our adjusted debit again for the third quarter was 6.9 million compared to adjusted ifit a loss of 10.9 million in the third quarter of 2023. An improvement of 18 million.
This was driven by strong revenue growth, improved those margins and lower operating expenses excluding the 1.2 million in revenue associated with tests performed in the prior period adjusted again, would have been 5.7 million in the third quarter.
Turning to cash, we added approximately $12 million to our cash balance in the third quarter, primarily driven by cash generation from operating activities.
We ended the quarter in a strong position with cash, cash equivalent and marketable securities of 241 million and no debt.
Turning to guidance based on the performance across our business. In the third quarter of 2024 we are raising our full year revenue guidance to 327 to 331 million from our prior guidance of 320 to 328 million.
The midpoint of our 2024 guidance assumes testing services volume growth in the mid 10s and implied revenue growth of 30% year over year for the fourth quarter of 2024.
The difference in our assumptions between volume and revenue growth is driven by ASP expansion in October, we experienced an impact of approximately 1% in testing volumes due to hurricane Milton.
This is incorporated in our device guidance.
We are assuming blended ASP of approximately 1,335 per test for the fourth quarter and no changes to our Medicare coverage.
Our patient and Visal solutions is expected to grow in the mid 10 year over year.
In Q3, we recognized revenue of 1 million in one time initial set up fee for the completion of HL A lab management software implementation.
We do not anticipate this recording in the fourth quarter.
Our lab products will grow in the high 10s year over year moving to gross margin. We now expect our gross margin to be approximately 69% for the full year 2024 driven by the improved testing services growth margin.
We’re expecting a slight ramp up in our operating expenses in the fourth quarter associated with scaling of our commercial organization and billing operations to accelerate revenue growth in line with our growth strategy due to improved revenue expectations and gross margin. We expect our adjusted beda gain for the full year 24 to be between 18 and 22 million compared to previously guided gain of 9 to 15 million.
With that. I would now turn the call over to John to deliver closing remarks.

John Hanna

Thank you, Abhishek.
I want to reiterate how excited I am about CareDx future and the journey ahead we have the right team in place addressing the right market with the right products to deliver profitable growth.
I want to thank the entire global CareDx team for their strong execution in the third quarter. And with that, I’d like to ask the operator to open the line for questions.

Greg Chodaczek

(technical difficulty) Hello, are you there?

Operator

Yes, I did announce Bill Bonello with Craig Callum. Your line is open.

Hey, thanks. Hoping you guys are all there after that storm. So thank you.
Okay, good. Thank you so much for, for all of that information. I, a couple of questions just on the, on the Q4 guide. I guess I’ve, I’ve sort of thought in normalized circumstances as is Q4 being maybe a stronger quarter than, than Q3. Now, II, I get that, you know, you had a, you know, a little bit of prior period revenue this quarter, but even if you take that out, it, it seems like you’re, you know, you’re projecting revenue to be pretty flat. You know, sequentially, is there, is there anything you you’ve seen in October in terms of trends that that would make you a little more cautious than normal or how should we think about that?

Abhishek Jain

So, Bill in the Q4 guidance, you’re right that the revenue for Q4 is more or less in line with the Q3 and it’s primarily driven by a couple of factors, one the prior items that I called out the $1.2 million in the testing services business and about a million dollars that I called out in our patient in this solutions business. So if you actually exclude these two items, then the Q4 revenue actually grows as compared to the Q3. And in our testing services business, for example, we are baking in volume growth from Q3 to Q4 in line with how we have seen the volume growth in the last year. So there is volume growth in the testing services business as well as the revenue growth.

Okay. That’s helpful. I wasn’t thinking about the, the, the the the million on the patient because I, I think if you back out the 1.2 million, you’re still pretty flat. But maybe with the million, you, you get a little bit of growth and then I, I guess I, I’m just trying to wrap my head around the, the, the comment on, you know, the ramping of the growth and maybe being at low teams revenue growth for for next year. And I, I absolutely understand, you know what you’re saying about the pacing of surveillance testing coming back and, and how that, you know, that will, that will take some you know, certainly take some time. But I mean, you know, you just reported a quarter where you had, you know, 23.5% growth. And even if you take out the unusual items, I think it’s, you know, 20% plus growth and, you had a, you know, that kind of growth if not better, last quarter as well. And, you know, I think the, the implication for, for next quarter is, is sort of, you know, 25 ish percent, kind of year over year growth. So, so what happens that, that we just fall off all the way down to low 10s from sort of, you know, low 20s to mid 20s.

Abhishek Jain

I can quickly make one comment and I’ll give this back to John. So at the midpoint of our guide, year over year growth is about 17% is what we have called out be right? And if you were to take that one timer out, which is about $14 million then you’re back to about 12% to 13% growth, which is pretty much in line with what John basically mentioned from the pacing of the revenue growth in 2025. And of course, as we start to invest in the commercial team and the billing operations, we will scale the growth at a higher number in the outer years of our 2027 plan.

Yeah, I think.

John Hanna

That’s right.

I I mean, Q1 was a bad quarter. So somewhere along the line, we should probably factor in another bad quarter or how do we, you know, I mean, Q1 was a, you know, it was sort of left over in how you had been growing before. So I guess that explanation kind of doesn’t, I’m not tracking.

Abhishek Jain

And I thought that in Q1, there we grew like 6% on our testing services volume growth. So I thought that Q1 was like the growth was pretty decent. Maybe you might be kind of thinking from Q4 to Q1 and that would be more seasonal because of our product business.

Yeah. Okay. Well, I I can follow up more offline but it doesn’t, doesn’t make a heck of a lot of sense to me. But thanks.

Operator

And once more for your questions, that is star and one, you may withdraw yourself from the queue at any time by pressing Star two. We’ll move next to Jack Peterson with Jeffrey. Your line is open.

Zachary Petersen

Hey, good evening. This is Jack on for Tyco. Just one question on testing mix. Looks like surveillance mix increased nicely in September through October. Could you put a finer point on the magnitude of this and may maybe speak to the upper limit? You know, of surveillance mix versus new transplants?

John Hanna

Thanks, Jack. We haven’t, we haven’t provided any detail on the proportional mix rate. I think directionally though what we said is we have seen, you know, a modest shift in that mix and we are seeing centers adopt protocols for surveillance testing and that we anticipate 2 to 3 quarters for that to return.

Zachary Petersen

Okay, that’s fair. And then quickly on capital allocation and you’re making nice progress in the P&L have over 230 million in cash. I guess. How are you thinking about capital allocation if deals aren’t on the table? Should we assume any sort of buybacks in the near future? Thanks.

John Hanna

Thanks Zach. I think that for us primarily we’re thinking about growth and profitable growth long term. And, and then from there, we’re going to look at ways to invest into the core business to grow more rapidly before moving into share buybacks. And so that’s our, that’s our prioritization set.

Zachary Petersen

Okay. Thank you.

Operator

We’ll take our next question from Mark Massaro with BTIG. Your line is open.

Mark Massaro

Hey guys, thank you for taking the questions. Congrats on the solid beaten raise. It’s good to see the the feedback about the surveillance picking back up in the second half of September and continued through October. You guys talked about how and it makes sense to me that it may take 2 to 3 quarters for for transplant centers to establish surveillance protocols. But given that you saw a little bit of bounce back in September and October, I just want to make sure that doesn’t preclude some degree of recovery relative to say the first half of 24 sort of continuing into 25 even before these protocols are established.

John Hanna

Thanks, Mark, appreciate your question. No, we, we think this is additive on top of what we saw as we grew through the first half of 24 right? A lot of the growth we’ve seen in the, the five quarters since the change in the coverage kind of reset, the volume was really focused on the four cause area of indication and then growth in our heart care product.

Mark Massaro

Okay.
I also wanted to ask it, it seems like we are waiting for, I think it’s palmetto GB A to finalize the L CD for transplant testing. Do you have any sense for when this might hit? And is it your understanding or impression that that the L CD might be restored back to what it was originally? Just give us a sense for what your expectations are heading in?

John Hanna

Thanks. Thanks for the question mark. Yeah, we, we don’t have a specific timeline from the agency or from palmetto as to when a new draft L CD would be released. Currently, the active L CD is the 2021 L CD that was originally published covering this indication broadly. And we anticipate that any future L CD would include an update to the literature which has progressed significantly since 2021 to include some of the more I would say foundational studies like the nature and Medicine publication that I talked to in my prepared remarks.

Mark Massaro

Okay. I have one final two parter. Should we in Q4 from, from hurricane Milton? And then the second part, which is completely unrelated. How are you thinking about, potential expansion of com commercial payer lives in 2025? II, I saw you hired, you made a new hire on the commercial access team. Just give us a sense for what the order, you know, what the objectives are in 25. Obviously 24 was a good year of new payer coverage.

John Hanna

It was. Yeah, thanks for the questions mark. On your first question related to Milton. Yes, we have seen a 1% volume impact in the fourth quarter and we have not yet gain that volume back. And thus, Abhishek called that out in his prepared remarks as being incorporated into our guide for the fourth for the full year of 2024. And then as it relates to a payer expansion.
Yes, we absolutely believe that 2025 should be a significant year for covered lives expansion, particularly in Alao heart and Alao kidney. We have in heart additional publications that we anticipate from the shore study to come out in kidney. We are awaiting the publication of the Kor study which we think would be significant to drive coverage for a kid on top of the Nature Medicine Publication, which only has been out for about a quarter and we continue to talk with with Payers about that data and the significance of that data.

Mark Massaro

Okay, thanks for taking my question.

John Hanna

Thanks, Mark.

Operator

We’ll move next to Brandon Perry with Wells Fargo. Your line is open.

Brandon Perry

Hey, thanks, good afternoon. John, it’d be great if you could just talk about, you know, the 30 planned new heads in the commercial organization. How much of an increase in terms of percentage is that relative to the prior base where we kind of allocate to those people in terms of scope of focus. And then AJ is kind of 8 to $10 billion the right ballpark for incremental spend from that build out.

John Hanna

Yeah, great. Thanks Brandon. Appreciate the question. The the commercial heads are allocated between field sales and marketing. If you recall back in 2023 the company cut pretty significantly across the organization to control our spend and, and maintain our cash balance. So we drew down, you know, across the board. And so this is a reinvestment in the commercial organization that includes probably about third in marketing and two thirds in field sales that will be customer facing revenue generating team members.

Abhishek Jain

And I can take the quick the second part and your number is in the ballpark, Brandon, roughly $10 million for the head that we basically kind of mentioned here.

John Hanna

Okay. So this would.

Brandon Perry

Basically get you back to where you were before the C MS spelling article. Is, is that the right way to think about it then.

John Hanna

That’s kind of the way we’re thinking about it.
We, we have been incredibly efficient as a commercial organization over the past five quarters in driving growth and in order to continue to drive that growth and accelerate it over the next several years, we’re starting with this 30 head count and we’ll provide additional updates if we decide to add more in the field to capture that volume opportunity that we have.

Brandon Perry

Okay. That’s, that’s helpful. And then as far as I don’t know if you’re agree to what you’re willing to go into this much detail, but I’ll give it a shot. So, relative to the low teams kind of growth you pointed to next year, first AJ is the fourth quarter ASP a good jump off assumption for next year, assuming you will, you should continue to benefit from expanded commercial coverage. And should we expect that the second half of next year to be stronger than the first half? Given your comments about the, the, the lag that it will take for the surveillance protocols to come back online. Thanks.

Abhishek Jain

No, you’re thinking it the right way, Brandon because the ASP of 1,335 that will be the point of the 2025 numbers as you will start to think about it. And of course, the low teams guide for 2025 will provide more color in our earnings. But that’s where you should start to kind of think from the modeling standpoint, the 2025. And the last piece of your question around the second half being a little bit more stronger. You’re again thinking it the right way because as we build our commercial organization, as well as the billing organization, typically, it takes about 1 to 2 quarters before they become fully effective. And therefore you might be kind of thinking a little bit more growth in the second half of the year.

Brandon Perry

Good. Thank you.

John Hanna

Thanks Brandon.

Operator

We’ll take our next question from Yi Chen with HC Wainright. Your line is open.

Thank you for taking my question. Could you comment on the general trend that expect to occur regarding the number of transplant or transplantation procedures in 2025? And what are the factors driving this trend? Thank you.

John Hanna

Hi En for 2025. In our investor day, we talked about mid single digit secular growth of the transplant market as being the baseline that we built our plan off of.

Do you think there’s any reason that, that we should believe there, there should be more on a fewer number of a number of transplant procedures in 2025.

John Hanna

We don’t have any, any catalysts to point to right now in terms of more procedures. The I think that the introduction of perfusion technologies has accelerated the growth to where it is today across the full market. We’re seeing heart, heart and lung grow at a faster pace than kidney, obviously off a smaller end sample size. And I think the only changes that could really accelerate this further would be a government intervention of government programs. Recently, it was announced that the IOT a model for kidney transplant was going to be delayed in its implementation. And so we’re awaiting, you know, further guidance from the agency regarding that program and its impact that it’ll have on the market.

Operator

Got it.

John Hanna

Thank.

Operator

You.
We’ll take our next question from Mason Carrico with Stevens Inc, your line is open.

Hey guys, sorry if this has been asked jumping between a few calls tonight. But how should we be thinking about the framework for the surveillance opportunity going forward? You know, there are 25,000 or so kidney transplants a year. They’re obviously a lot more patients living with it transplant right now. Is the opportunity at least near term really more about rolling those newly transplanted patients into surveillance after that 1st year. Is there a plan to go out and expand patients who maybe are a few years out from transplant? You just more than 12 months give it, give us some color on how you’re thinking about it.

John Hanna

Thanks Mason. I, I appreciate the question. Yes, I think you’re thinking about it correctly. We’re really targeting the 1st year post transplant for an implementation of a protocol to perform surveillance testing. That’s where I believe the medical necessity is the greatest, right? The the vast majority of rejection occurs in that 1st year. And thus, as centers think about implementing protocols, calls and re initiating surveillance testing, they’re going to do so on newly transplanted patients, not on those that are, you know, 3 to 5 years out from transplant. We think in that, in that group, there continues to be interest particularly in for cause testing as we think about reducing immunosuppression in those patients. And then recently, there’s been a number of articles and studies, peer reviewed studies looking at antibody mediated rejection, including new therapeutics for antibody mediated rejection and the impact of those therapeutics when that condition is detected earlier. And we know that Aure in particular has demonstrated created the ability to detect antibody mediated rejection before biopsy proven rejection. And so we think as that market grows and more therapeutics come to market for that indication that there’ll be greater demand in the out years for surveillance testing to detect those events and treat and elongate graft survival.

Got it. I’ll keep it there. Thanks. That was helpful.

John Hanna

Thanks Mason.

Operator

We’ll move next to Thomas DeBourcy with Nephron Research. Your line is open.

Thomas DeBourcy

The guy is KDI.
We can. Okay, great. So my question just, I guess maybe goes back to a few years ago, maybe earlier the launch where, you know, there was a focus on a number of transplant centers. You know, I guess discussion at that point, you know, approximately 100 100 25 setters account for most of the volume. And I guess, you know, just kind of wondering, you know, with all that has transpired, you know, what, you know, I guess what has been your set of retention, you know, over the last few years and then also not that there is a generalization but in terms of implementing new protocols around surveillance, would you expect it to take, you know, on average, you know, 23 quarters longer and I know there’s maybe a dispersion but just kind of any thoughts you have there just, you know, related to, you know, kind of the blocking attack like around transplant centers.

John Hanna

Yeah, thanks. Thanks so much for the question, Thomas to your first question around retention. I mean, yes, we’ve seen a high level of retention and, and you know, our, our products tend to be sticky with our customers because of the large solution set that we offer them across digital HL A typing and testing services.
And then as it relates to protocols, there’s a, there’s a varying degree of readiness to implement. So as I shared in my prepared remarks, we have 10 centers across the country that have already drafted and implemented to varying degrees new protocols. Since September the first, many of the clinicians at the centers recognize that the care of their patients has been impacted by turning off surveillance. And so they’re eager to get going again and we are staffing up to support that effort by adding more commercial team members so that we’re prepared to support them in the logistics and workflow for implementing a ashore testing to get back to the high level of care and outcomes they expect for their patients.

Thomas DeBourcy

Great. That was all I had appreciate it.

John Hanna

Thank you.

Operator

And this does conclude the question and answer portion of the call. Thank you, ladies and gentlemen for joining, you may disconnect at this time and have a wonderful evening.